You'll recall Ebbers; he recalls littleRight-click here to download pictures. To help protect your privacy, Outlook prevented automatic download of this picture from the Internet.
By Al Lewis, Denver Post Business ColumnistRight-click here to download pictures. To help protect your privacy, Outlook prevented automatic download of this picture from the Internet.
Tuesday, March 8, 2005


If WorldCom chief executive Bernie Ebbers is convicted of fraud for his role in the company's $11 billion accounting scandal, he can blame his shoddy memory: "I don't know ... I don't recall ... I don't remember."

Jurors ended their second day of deliberations in Ebbers' trial Monday. Ebbers took the stand last week, leaving them with a staggering absurdity:

Can an obscenely paid CEO lord over the single largest accounting fraud in history and claim that he simply didn't know what was happening?

Ebbers made $11 million in 2000. He also borrowed more than $400 million from WorldCom over the years to buy cattle ranches and timberlands, and a yacht-building business in Georgia. Yet Ebbers claims to be a simpleton.

"I know what I don't know," Ebbers testified, "and I, to this day, don't know technology, don't know finance and accounting, but ... actually, I always thought I was a pretty good coach. ..."

Ebbers coached WorldCom through one merger after the next - including its takeover of MCI - until the Justice Department blocked WorldCom from acquiring Sprint in 2000.

Without another merger partner, WorldCom could no longer roll its dubious accounting into a new set of books - or pay its debts. The result was bankruptcy. And what's left of WorldCom, a revived MCI, is merger fodder for Verizon or Qwest.

"What was your reaction, Mr. Ebbers, to the news ... that there may be a serious accounting problem at WorldCom?" Ebbers' attorney asked last week.

Ebbers: "I was shocked."

Attorney: "Why?"

Ebbers: "I couldn't believe it."

Attorney: "Why not?"

Ebbers: "Never thought anything like that had gone on, never. I mean, I put those people in place. I trusted them. And I just had no earthly idea that anything like that would have occurred."

Chief financial officer Scott Sullivan admits he cooked the books, but he testified that Ebbers was in the kitchen, too. Former WorldCom controller David Myers said Ebbers once apologized for forcing company accountants to make questionable accounting entries. Both Sullivan and Myers have already pleaded guilty to criminal charges.

Ebbers denied their allegations and implied he didn't know them very well.

Ebbers' attorney: "Is it fair to say you supervised (Sullivan) as a CEO supervises a CFO?"

Ebbers: "I had never been a CEO before ... so I supervised him as best I could, as I knew a CEO should."

A prosecutor later asked: "You talked to Scott Sullivan multiple times a day?"

Ebbers: "Oh, no."

Prosecutor: "You didn't talk to Mr. Sullivan regularly?"

Ebbers: "It depends on what you mean by regularly."

Prosecutor: "But you did do some social things with him on occasion, right?"

Ebbers: "Rarely."

Prosecutor: "You invited him to your wedding in 1999, didn't you?"

Ebbers: "Yes, him and many others."

Perhaps Ebbers' most ironic testimony came when questioned about WorldCom's employee coffee expenses. Ebbers ended the free coffee when he learned it was costing $4 million a year.

"I don't consider, when you're playing with shareholders' money, $4 million to be a small number," Ebbers said. "If you look after the pennies, the dimes will take care of themselves."

Ebbers hadn't a clue about the dollars, though. Perhaps that was Sullivan's job.

Ebbers isn't the only fallen executive claiming ignorance. Enron chairman Ken Lay probably will offer a similar defense when he is tried in January. HealthSouth Corp. founder Richard Scrushy, now on trial, has already pleaded dumb.

"You have been fed the 'Aw shucks, I'm not sophisticated' defense," a prosecutor told Ebbers' jury.

It's frightening to consider that Ebbers and these other captains of industry may be telling the truth. They really didn't know. They were too busy chasing deals on Wall Street to bother building profitable businesses. They were only glorified salesman.

Considering what shareholders lost to these self-proclaimed ignoramuses, "aw shucks" sounds like a crime, too.

Al Lewis' column appears Sundays, Tuesdays and Fridays. Reach him at 303-820-1967 or alewis@denverpost.com.