The arms of the justice system reached out and touched Bernard J. Ebbers this week, but it was a cold and crushing embrace. The folksy former WorldCom chief executive, one of the telecommunication bubble’s enduring icons, was found guilty for his role in an $11 billion accounting fraud, which could put him away for as many as 85 years.
As with the empire he built on a pile of cooked books, and the record-breaking bankruptcy that ensued, the Ebbers verdicts were breathtaking in scope. Guilty, the jury foreman said, on every one of the nine counts against Ebbers, and when the reading was over it looked as if there was no air left in the man.
In one sense, the verdicts were part of a frenzied finale for WorldCom. Weeks earlier, the new management of the company, operating as Ashburn-based MCI, announced it had accepted a purchase offer from local-phone giant Verizon Communications. But on Wednesday, Qwest Communications International, a rival suitor, raised its bid for MCI by more than $500 million in an attempt to break up the merger with Verizon.
The day after Ebbers was convicted, investment bank J.P. Morgan Chase announced it would pay investors $2 billion to settle claims in connection with WorldCom’s fraud. It was the last of the big banks to settle, and payments to bondholders and shareholders now total approximately $6 billion. On Friday, a group of 11 former WorldCom directors agreed to pay $55.25 million to settle with plaintiffs in the shareholder suit, including $20.25 million of their own money as part of the deal.
In another sense, the Ebbers verdicts must have left other high-profile corporate executives on or awaiting trial wondering what the verdicts mean to them.
The trial of former HealthSouth chief executive Richard M. Scrushy is ongoing, while L. Dennis Kozlowski of Tyco International is being retried. Scheduled for next year are the former Enron men, chairman Kenneth L. Lay and chief executive Jeffrey K. Skilling.