Last week the other half of that double act also left. His departure even more ignominious. Scott Sullivan, the CFO who became executive vice president of the company on Ebbers’ departure, was fired after the discovery of a $3.8bn (£2.62bn) accounting fraud.
With the financial world still reeling from the collapse of Enron, and the conviction of its former auditor Andersen for obstruction of justice, world financial markets have been sent into further turmoil by the fresh fraud allegations at another global giant.
Within hours of the WorldCom scandal exploding, Andersen issued a bullish statement pointing its finger directly at Sullivan. ‘The WorldCom CFO did not tell Andersen about the line cost transfers nor did he consult with Andersen about the accounting treatment,’ the firm said.
And John Sidgmore, WorldCom president and CEO to whom Sullivan reported, was no more supportive. ‘Our senior management team is shocked by these discoveries,’ he said after the company issued a statement explaining it had ‘terminated’ Sullivan’s contract.
Sullivan had been a director of WorldCom since 1996 and had served as chief financial officer, treasurer and secretary of the company since December 1994.
An award-winning FD, he was said to be the cool head to Ebbers’ entrepreneurial maverick. ‘His style was quietly spoken and calm,’ according to one analysis this week. And in explaining how each of WorldCom’s many deals would help create a leaner, meaner company, ‘Wall Street believed him’.
But he was no wallflower.
There have been tales of how he boasted of being offered jobs by six of the big eight accounting firms despite graduating from a somewhat minor business school.
And he claimed to have thought of the audacious $37bn bid for MCI – the deal that made WorldCom – while he was on a plane.
But now the future for the company – and Sullivan – looks bleak. The Securities and Exchange Commission has charged WorldCom with fraud. ‘In a scheme directed and approved by its senior management, WorldCom disguised its true operating performance by using undisclosed and improper accounting,’ its lawsuit alleges.
At the same time it is also understood the US Department of Justice, which successfully convicted Andersen of obstruction of justice earlier this month, is considering filing a civil suit against the company in a federal court.
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