E-mail Blackmail at WorldCom

A series of damaging e-mails released by congressional investigators seems to show a top WorldCom exec threatening a director who questioned the cooked books that eventually plunged the firm into bankruptcy. 

Disgraced former WorldCom controller David Myers scalded Steven Brabbs, director of international finance in the U.K. headquarters of the embattled telecom, in an e-mail directing Brabbs to "not have any more meetings with AA [Arthur Andersen] for any reason." 

"I do not want to hear an excuse just stop. Don't make me tell you again," Myers warned in the Jan. 22, 2002, e-mail obtained by investigators on the House Financial Services committee. 

Brabbs, now vice president of international finance and control, didn't listen.He continued to air his concerns and disagreements about accounting treatments.On June 26, the day Myers and then-WorldCom chief financial officer Scott Sullivan were fired and the company announced at $3.9 billion restatement, Brabbs wrote an e-mail to his superiors about a $33.6 million accounting change. 

Brabbs' note said that he had been pressured to make a "journal entry" on first-quarter 2000 numbers - per "a directive from Scott Sullivan" - to reduce "our line costs by $33,600,000." 

"Despite repeated requests we were given no support or explanation for the entry," his e-mail to senior vice president Lucy Woods continues. "Shortly afterwards I received an e-mail from David Myers indicating he was not pleased this matter had been raised with Andersen without his knowledge." 

The e-mail correspondence, said Peggy Peterson, spokeswoman for the House Financial Services committee, "shows what Brabbs was up against when he raised questions about the company's accounting practices." 

Brabbs is still employed by the Clinton, Miss.-based WorldCom, a spokeswoman said. Brabbs could not be reached in the U.K. for comment. 

Lawmakers subpoenaed former WorldCom officials to hearings July 8. Former CEO Bernie Ebbers, Sullivan and Myers declined to testify on the right not to self-incriminate. The documents were requested July 23 and have been trickling in since that time. 

Myers and Sullivan were charged by the Justice Department and the Securities and Exchange Commission in July with securities fraud regarding the more than $7 billion earnings restatement the now-bankrupt telecom made this year. Both are due to make a court appearance on Sept. 3, when prosecutors must return an indictment. 

Ebbers has not been charged. The WorldCom bankruptcy is the nation's largest ever.The accounting fraud was discovered in May by whistle-blower Cynthia Cooper, WorldCom's vice president of internal audit, the SEC complaint said. 

Myers' lawyer, N. Richard Janis, could not be reached for comment. Myers and Sullivan did not receive severance. WorldCom has hired William McLucas, former chief of the SEC's enforcement division, to conduct an international investigation. 

"WorldCom is continuing to cooperate will all investigative bodies and will continue to do so until there is full resolution," said a WorldCom spokeswoman.