Attorneys: Former WorldCom CEO Knew Some Money Was Shifted

WASHINGTON – The finger pointing at scandal-plagued telecommunications giant WorldCom has begun.

Company attorneys have told a House investigative panel WorldCom founder and former CEO Bernard Ebbers was aware that hundreds of millions of dollars were shifted as part of nearly $4 billion in accounting irregularities.

The attorneys said that information came to them from Scott Sullivan, WorldCom's former chief financial officer, who invoked his Fifth Amendment right against self-incrimination at a congressional hearing Monday and refused to answer questions.

Ebbers also refused to testify on Monday, citing current investigations by the Justice Department and the Securities and Exchange Commission.

Ebbers' attorney insisted that he was unaware of the transactions in question.

The SEC has filed civil fraud charges against WorldCom, one of the latest major corporations to face allegations of executive wrongdoing and accounting dodges — driving down public confidence in business and the stock market.

Attorneys for WorldCom recently told investigators with the House Energy and Commerce Committee that "Bernie [Ebbers] was aware that hundreds of millions of dollars had been moved," committee spokesman Ken Johnson said Thursday.

"This is the first evidence that we've seen that the muddy little footprints may lead back to Bernie Ebbers' doorstep," Johnson said. "Clearly there's evidence that some people at WorldCom knew someone was cooking the books."

Ebbers, in an interview with attorneys conducting an internal investigation for WorldCom, denied Sullivan's assertion that he was aware of the transactions, Johnson noted.

Ebbers' Washington attorney, Reid Weingarten, said Thursday: "Bernie Ebbers did not know about the accounting decisions of Scott Sullivan to reassign billions of dollars."

Weingarten said that on the contrary, people at the company had assured him that Sullivan had said Ebbers had no knowledge of the transfers.

WorldCom's current CEO, John Sidgmore, has said he did not know whether Ebbers — who received $400 million in loans from the company — had that knowledge.

When he invoked his constitutional privilege at the hearing by the House Financial Services Committee, Ebbers said, "I do not believe I have anything to hide."

When all the facts are out, he said, "I believe that no one will conclude that I engaged in any criminal or fraudulent conduct."

Led by Reps. Billy Tauzin, R-La., and Jim Greenwood, R-Pa., the Energy and Commerce Committee has been investigating WorldCom's massive misstatement since the company disclosed last month that it disguised $3.9 billion of expenses as capital expenditures to appear more profitable.

Johnson said the committee received five boxes of documents from WorldCom on Thursday, the deadline set by the panel in its request for records — including those related to a WorldCom internal audit and minutes of the company's board and audit committee.

The Associated Press contributed to this report.