NEW YORK — Former WorldCom finance boss Scott Sullivan, the government’s key
witness in its fraud trial against former boss Bernard Ebbers, told a jury Monday that he cooked company books in order to inflate earnings and make the telecom appear profitable.
“I falsified financial statements of the company, made adjustments to revenue for the purpose of meeting analyst expectations,” Sullivan said on the stand.
Sullivan was in federal court to testify against Ebbers, the former WorldCom Chief Executive Officer and President. Ebbers is on trial for securities fraud, conspiracy and filing false reports with the Securities
and Exchange Commission. He faces a maximum of 25 years.
The government claims Ebbers instructed Sullivan to adjust the
Mississippi-based company’s accounting numbers over a two year period
in
order to keep receiving positive reports from Wall Street analysts.
“We didn’t disclose the adjustments,” Sullivan said. “We didn’t talk
about the adjustments, and the information was false.”
After admitting he adjusted revenue for the purpose of meeting Wall
Street expectations, Sullivan said Ebbers was one of several executives
that
helped him do it.
Sullivan, 42, is the first witness to implicate Ebbers in the
scandal
that cost WorldCom $11 billion and drove it to bankruptcy in 2002. It has since been renamed MCI.
Defense attorneys for Ebbers have claimed that their client was hoodwinked by Sullivan into believing the company’s finances were in good shape.
For his part in the shady dealings, Sullivan has already pleaded
guilty to fraud and is now testifying on behalf of the government. He also currently faces up to 25 years in prison.
In an effort to dispel suggestions Ebbers was an unwitting dupe in the accounting scam, Sullivan described Ebbers, 63, as a gifted businessman who guided the company from a small regional player in the telecommunications
game to a powerful multinational.
“He’s got a hands-on grasp of financial information,” Sullivan said,
but
he also noted that his former boss’s tendency to micromanage reached even
the
lowest levels of business. On several occasions during high level staff
meetings Ebbers would discuss such seemingly mundane issues as cutting
back
on coffee filters for employees.
He also accused Ebbers of being prone to mood swings depending on
the day
of the week and said he could be intimidating at times.
Sullivan also told jurors about his own cocaine and marijuana use
while at WorldCom. He said he used both drugs maybe four to five times a year
during his tenure at the company.
Sullivan plead guilty to fraud last year and is expected to tie
the government’s case against Ebbers when he continues testifying.
The trial is expected to continue Tuesday with Sullivan scheduled to be back on the stand answering questions from prosecutors. He could be
cross-examined by defense lawyers as early as Tuesday morning.
