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.”
The resignations came just two days after two independent reports were
released that detailed “serious mismanagement,” including fraudulent
practices, and a lack of oversight by its board of directors leading up to
WorldCom’s bankruptcy filing.
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.
