Friday, June 28, 2002
WorldCom execs subpoenaed
House panel wants answers about funds
The Associated Press
A House committee moved Thursday to subpoena top officials of discredited WorldCom Inc. as President Bush voiced concern about the potential economic impact of the accounting scandal.
Mr. Bush spoke of corporate leaders who have not upheld their responsibilities, while Treasury Secretary Paul O'Neill urged jail terms for executives who falsely certify company finances.
It was more tough talk from the administration amid a crisis of confidence in corporate America that could threaten a tenuous economic recovery.
On Capitol Hill, the House Financial Services Committee authorized subpoenas to compel testimony by three WorldCom officials and an influential Wall Street analyst who promoted the company's stock. The four, including former president and chief executive officer Bernard Ebbers and current chief John Sidgmore, will be summoned to appear at a July 8 hearing.
The Securities and Exchange Commission worked on its investigation of WorldCom after filing civil fraud charges against the company Wednesday. The action came a day after the telecommunications company disclosed having disguised almost $4 billion in expenses from the investing public.
The SEC also sought to prevent the destruction of documents by WorldCom and payouts to company executives while the agency investigates.
Its lawsuit in federal court in New York cited a scheme directed and approved by ... senior management in 2001 and the first quarter of this year to manipulate earnings to keep them in line with estimates by Wall Street analysts.
The administration also has left open the possibility of a criminal investigation by the Justice Department.
Meanwhile, in an attempt to save the paper trail behind WorldCom's implosion, Mississippi on Thursday expanded the federal order to preserve all company documentation to include former chief executive Mr. Ebbers and former accountant Arthur Andersen LLP.
Former chief financial officer Scott Sullivan was also named in the 10-day restraining order sought by Secretary of State Eric Clark and signed by a Hinds County judge.
Mr. Sullivan was fired this week after WorldCom's disclosure, which has propelled the former telecom giant toward bankruptcy.
The purpose of this is to prevent the destruction of any documentation, Mr. Clark said.
Mr. Clark's spokesman, David Blount, said the state action expanded Wednesday's order from the Securities and Exchange Commission, which ordered the preservation of documents only from current WorldCom employees and affiliates.
Mr. Clark said he did not know if any documents had already been destroyed at WorldCom.
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