MCI Execs Resign After Scathing Reports
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Two executives of MCI, formerly known as WorldCom, have resigned in the wake of two scathing reports that detailed extensive "mismanagement" of the telecommunications giant leading up to its collapse into bankruptcy.
Michael Salsbury, executive vice president and general counsel of the company and Susan Mayer, senior vice president and treasurer, tendered their resignations Tuesday.
In a statement Tuesday, MCI said Salsbury had worked with MCI for the past 24 years, and has been a champion for competition within the telecommunications industry. "During the past year," the statement read, "Salsbury and his team have worked diligently to ensure the company remains on track to emerge from Chapter 11 protection this fall."
WorldCom, which now operates as MCI, is working to emerge from bankruptcy reorganization, and is also moving toward getting court approval of its $500 million settlement with the Securities and Exchange Commission regarding charges of fraudulent accounting practices.
Lawmakers and citizens' groups are also urging that the settlement be rejected. New York Congressman Gregory Meeks (D.-N.Y.) on Monday called for a federal judge overseeing MCI-WorldCom's $500 million settlement with the SEC to reject the arrangement in favor of a tougher deal.
As internetnews.com reported, Meeks was part of a five-person panel in New York City representing the major stakeholders in the $500 settlement between WorldCom, which now operates as MCI, and the SEC.
"I am very troubled and disappointed with the proposed settlement between the SEC and MCI WorldCom," Meeks said. "The settlement agreement is grossly inadequate, a miscarriage of justice, and insulting for the 950,000 New York public sector employees whose pension was victimized by MCI WorldCom's fraud."
In addition, a group called Citizens Against Government Waste (CAGW) has called on Senate Governmental Affairs Committee Chairman Susan Collins (R-Maine) to "investigate why the government has failed to stop using taxpayer dollars to do business with the company."
As previously reported, one of the two reports released late Monday was an independent auditor's report known as the Thornburgh Report, based on former U.S. Attorney General Richard Thornburgh's leading role in gathering the findings of federal investigators of WorldCom.
A second, internal report was chaired by former SEC director of enforcement William McLucas and assisted by accounting firm PricewaterhouseCoopers. The McLucas report points to practices by Ebbers and his chief lieutenants, saying that Ebbers engaged in "financial gimmickry" when he was the head of the company.
Among the findings criticized in the Thornburgh report was Ebbers' move to sell $70 million worth of company stock, despite advice by outside counsel that he not do so. The report said that Ebbers ignored warnings about financial improprieties, and brazenly flouted the law.
The reports also detailed reportedly "lax internal financial controls" and reportedly "weak oversight" by the board of directors over a period of several years. Those errors of judgment and policy, the reports said, led to WorldCom amassing $41 billion in debt and to eventually overstating its earnings by $9 billion.