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Scrushy Takes the Fifth at Capitol Hill Hearing

The former HealthSouth CEO refuses to answer questions from Congress days after speaking out on '60 Minutes.'

October 17, 2003|From Bloomberg News

Former HealthSouth Corp. Chief Executive Richard Scrushy on Thursday refused to answer questions from Congress about his role in a $2.5-billion accounting fraud at the company he founded, days after telling a television audience he wasn't to blame for any wrongdoing.

"The committee has not called any of my accusers to testify today," Scrushy told the House Energy and Commerce Committee. "I do not believe this is fair. I am, therefore by advice of counsel, forced to take the 5th Amendment today until I can get a venue where I can face my accusers."

Scrushy invoked his right against self-incrimination almost seven months after he was fired as CEO of the rehabilitation hospital company.

Scrushy's role is the centerpiece of the hearings and of a criminal case brought by U.S. prosecutors, who have accused him of ordering HealthSouth executives to fabricate profit figures to meet Wall Street earnings forecasts and to boost the value of the company's shares.

Rep. James C. Greenwood (R-Pa.), who heads the panel, said he was "deeply troubled" by Scrushy's failure to respond. Scrushy said on "60 Minutes" on Sunday, "I certainly didn't commit the fraud."

"He agreed to answer the questions put to him by a reporter but refuses to answer questions put to him by the representatives of the investing public who lost so much money in the almost total decimation of HealthSouth's stock," Greenwood said.

Birmingham, Ala.-based HealthSouth lost most of its market value after the U.S. inquiry was launched and the New York Stock Exchange delisted its stock. The shares Thursday rose 12 cents to $2.85 in over-the-counter trading. The stock traded as high as $30.56 in April 1998.

Fifteen former executives have been charged and are helping prosecutors make a case against Scrushy. The former CEO has not been charged.

James Goodreau, former chief of security at HealthSouth, told the committee he conducted investigations into employees and a director, Bob May. May is interim chief executive.

Theresa Sanders, former chief auditing officer, told the committee she sent a memo to Scrushy in January 1996 suggesting that the company improve internal auditing.

"He was very upset with me," Sanders said. "I was told I needed to pull the wagon, get with the program and go out and do what I was supposed to do."

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