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Former WorldCom Execs to Testify at Hearing

Preview / WEEK OF JULY 8-14

July 08, 2002|Associated Press

The key figures in WorldCom Inc.'s nearly $4-billion accounting scandal saga have remained out of the limelight after the company's disclosure two weeks ago that expenses were improperly accounted.

But they won't stay silent much longer.

Today, the House Financial Services Committee begins hearings to determine who knew what about the company's finances. Five people have been subpoenaed by the committee, and four others have been invited to testify. The company is under investigation by the federal government.

Subpoenaed to testify is company founder and former Chief Executive Bernard J. Ebbers, who was ousted in April after the company's stock had fallen 90% in 12 months. Though he hasn't talked to reporters, he told his church congregation he didn't "knowingly commit fraud."

Former Chief Financial Officer Scott D. Sullivan, who came to WorldCom in 1992 and was fired last month, also is scheduled to appear. In early 2001, as the company's fortunes began to decline, WorldCom officials say, Sullivan began accounting for day-to-day operating expenses as capital expenses.

Also to be called by the committee are CEO John W. Sidgmore, who replaced Ebbers, promising to restore faith in the company, and Jack Grubman, a financial analyst for Salomon Smith Barney in New York who drew fire for recommending WorldCom stock as it fell.

Invited to testify are WorldCom Chairman Bert Roberts and the company's former auditor, Arthur Andersen. WorldCom internal auditor Cynthia Cooper, who discovered the first accounting problem, and Max Bobbitt, head of the board of directors' audit committee, had been invited to testify but will not appear, reportedly because the Justice Department wants to question them first.

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