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THE WORLDCOM SCANDAL

Some Lawmakers Take Big WorldCom Hit

Government: Many members of Congress held the stock last year and saw its value plummet.

June 28, 2002|GLEN JUSTICE | BLOOMBERG NEWS

WASHINGTON — Rep. Tom Osborne looked bullish on WorldCom Inc. and all of its telecommunications businesses last year.

The Nebraska Republican held shares worth at least $500,000 in the company's WorldCom Group, which sells data services--his single largest stock holding, according to disclosure statements. He also owned at least $15,000 in the company's MCI Group, which sells long-distance service.

Osborne sold his stock last week, spokeswoman Kelly Sokol said. He didn't want to talk about it. "He doesn't want to get into his personal financial record," she said.

Like tens of thousands of disillusioned investors, many U.S. lawmakers and their families held WorldCom stock last year, financial disclosures show.

Lawmakers are subject to market fluctuations as they consider legislation or conduct investigations involving companies in which they own shares.

"One would hope that one does not impact the other," said Richard Shapiro, a partner in Ernst & Young's tax group who has counseled investors who went into public service. "When you are in a position of public trust, one's holdings should not impact the decision-making process. But human nature being what it is, that's not always the case."

Rep. John Isakson, a Georgia Republican, held $15,000 to $50,000 in WorldCom stock at the end of 2000 that fell to $1,001 to $15,000 last year, according to disclosures. Lawmakers report their assets within a range rather than an exact dollar amount. Earlier this year, Isakson said, he sold "what was left," though he didn't give details.

Isakson said he expected Congress to hold hearings on WorldCom and was encouraging executives to condemn abuses reported. Though he opposes government intervention, he backs reforms that eliminate interlocking boards of directors and initiate third-party review of company audits.

"I appreciate risk and reward. I've won and I've lost. That's fine when the game is fair," he said. "Years ago the stock market was an inside game. Now it's an inside game with outsiders' money. And that's wrong."

Sen. Thad Cochran, a Republican from WorldCom's home state of Mississippi, held $1,001 to $15,000 each in WorldCom Group and MCI Group. Senate Majority Leader Trent Lott, also of Mississippi, reported $1,001 to $15,000 in WorldCom stock in his wife's account. Neither Cochran nor Lott could be reached.

Members of the House Energy and Commerce Committee, which handles telecommunications issues, held WorldCom stock in 2001. Among them were Michigan Rep. John Dingell, the ranking Democrat, and Rep. Lois Capps, a Democrat from Santa Barbara. Each held $1,001 to $15,000 in shares, according to disclosures.

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