NEW YORK – A stock analyst testified Wednesday that former WorldCom Inc. (search) chief Bernard Ebbers (search) addressed some of his concerns about the company's accounting procedures "in a reasonable amount of detail."
The testimony by Merrill Lynch & Co. (MER) analyst Adam Quinton appeared designed to boost the government's contention that Ebbers was quite familiar with WorldCom's accounting — and oversaw its massive accounting fraud.
• Click here to read the indictment against Bernard Ebbers
Quinton testified about an e-mail he sent in February 2002 to Scott Sullivan (search), WorldCom's chief financial officer, raising eight complex questions about the company's finances and accounting practices.
He said his concerns were mostly addressed in a conference call shortly thereafter, during which he said it was Ebbers who "ran through a list of items in a reasonable amount of detail."
Quinton took the witness stand on the first day of testimony in the federal trial of Ebbers, who is accused of orchestrating the $11 billion accounting fraud that drove WorldCom into bankruptcy in 2002.
Ebbers has pleaded not guilty, and his lawyer told jurors Tuesday that Ebbers preferred to be the vision and spirit behind the company and leave the number-crunching to Sullivan, his financial deputy.
Most of the testimony Wednesday morning amounted to a primer for jurors, with Quinton covering the basics of accounting and another witness walking them through how WorldCom grew and maintained its business.
The other witness was Douglas Webster, a vice president of MCI Inc., the renamed, post-bankruptcy version of WorldCom, who described the company's rise from a small long-distance provider into a global telecommunications giant.
Defense lawyers, on cross-examination, appeared to try to use Webster to damage the reputation of Sullivan, who has pleaded guilty and is expected to testify later in the trial against his former boss.
A defense lawyer asked Webster whether he was shocked, given Sullivan's sterling reputation as an accountant, to learn about WorldCom's shady accounting in 2002.
"I was shocked about the fact that the accounting situation had taken place," he answered. "I certainly was shocked about what was going on."
Ebbers is charged with fraud, conspiracy and making false filings with the Securities and Exchange Commission (search). Those crimes carry up to 85 years in prison.
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