Ebbers feared fortune would be 'wiped out'

Witness cites possible motive for alleged fraud

By Tim Richardson, 31st January 2005

Bernie Ebbers feared that his personal fortune would be "wiped out" unless something was done to improve the financial health of ailing telecoms outfit WorldCom. Former financial controller David Myers recalled a meeting in 2001 where the former WorldCom boss called on senior execs to turn the company around. The stock price was falling as expenses spiralled and revenues had dipped.

Testifying on Friday, Myers told the court that Ebbers had said that if things didn't improve "everything that I worked for since I joined WorldCom will basically be wiped out". Recalling the meeting, Myers continued: "He made a plea to everybody to do everything they could possibly do to work to reduce costs."

Reuters also reports that Myers recounted Ebbers telling him that "while this company was in extraordinary times, extraordinary things had to be done."

During the opening week of this case the prosecution has sought to prove three key planks of their case. First, that Ebbers had a sufficient grasp of financial matters that he had the know-how to commit a complex financial fraud. Last week Adam Quinton, an analyst at financial giant Merrill Lynch & Co, told the court that when Ebbers was quizzed on some fairly complex financial matters he was able to answer in a "in a reasonable amount of detail".

Second, that he was aware of what was going on. On Thursday, Myers testified that Ebbers had apologised to him in 2000 after the financial controller was ordered to doctor the company's expenses. Recalling a conversation he had with Ebbers, Myers said his boss told him: "I'm sorry you were asked to do what you were asked to do. It's something that you should not have been put in that position to do."

Lastly, Myers testimony on Friday shows that Ebbers had a financial motive to do what the prosecution alleges.

For his part, Ebbers denies being involved in one of the US's biggest corporate scandals. He says he was incapable of organising such a widespread and complex fraud and instead claims that Scott Sullivan, WorldCom's former CFO, was behind the scandal.

The trial is expected to last eight weeks. ®

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