Plenty of Ire at the WorldCom Hearing

Ex-CEO Ebbers declares his innocence in the accounting fiasco, then pleads the Fifth, prompting a cascade of indignation

By Rachel E. Osterman

Leave it up to the nation's lawmakers to know when a display of drama is called for. No sooner did a July 8 hearing convene on the $3.8 billion accounting discrepancy on telecom giant WorldCom's books, than the session evolved into a show of outrage, with each interrogator appearing to be angrier than the one before.

At the witness table: Bernard J. Ebbers, WorldCom's former CEO, and Scott D. Sullivan, former chief financial officer, as well as Arthur Andersen auditor Melvin Dick and Salomon Smith Barney's Jack Grubman, a telecom analyst who strongly promoted Worldcom.

All eyes and ears were on Ebbers and Sullivan as they entered the House Financial Services Committee hearing room. As expected, both cited their Fifth Amendment rights against self-incrimination and said they wouldn't answer questions.


  Sullivan left it at that. But before taking the Fifth, Ebbers told the committee that he was in no way guilty or criminally responsible for the company's $3.8 billion accounting snafu. "I have decided to follow my counsel's instruction, not because I have anything to hide," he said.

That didn't sit well with Representative Max Sandlin Jr. (D-Tex.), who called for Ebbers to be required to testify or else be held in contempt of Congress. By giving a "self-serving statement," Ebbers effectively forfeited his Fifth Amendment right, Sandlin charged.

Later, Republican Richard Baker of Louisiana joined Sandlin, urging Committee Chairman Michael Oxley (R-Ohio) to open up questioning for Ebbers. Oxley responded that he would keep Baker's opinion "under advisement." As more and more Democrats sided with Baker -- some calling for a committee vote -- Oxley held his ground. "The chair thought it would be best for getting information not to ask Ebbers questions that he's not going to answer," he said.


  Democratic committee members were clearly more eager than their Republican counterparts to use the WorldCom spotlight to call for stronger industry regulation. They showed up in greater numbers, asked tougher questions, gave longer opening statements, and sometimes insisted on extra time.

Representative John LaFalce of New York, the panel's ranking Democrat, showed his fellow lawmakers the way. He grew visibly annoyed at what he perceived to be Dick's and Grubman's failure to answer his questions. "Do you think that might be a good idea in the future?" LaFalce asked Dick sarcastically, about whether he might now approach management concerning accusations of poor record-keeping.

Representative Barney Frank (D-Mass.) also made sure to convey his annoyance with the witnesses. He repeatedly interrupted their answers to his questions, concluding, "I congratulate you on your ability to evade so calmly." Baker of Louisiana informed Grubman that he has a hard time believing that the analyst didn't know of WorldCom's unaccounted-for expenses.


  In contrast, Oxley seemed reluctant to ask questions of the witnesses. He asked not a one of Ebbers or Sullivan. Instead, he suggested that rather than the scandal prompting Congress to pass new legislation, it might result in prison time for those responsible for WorldCom's accounting irregularities.

There were lighter moments, however. One came from Frank. Responding to a flub of the name of Grubman's employer, the Massachusetts Democrat requested 10 seconds to clarify a reference to "the firm Salomon Smith & Frank." Declared the wry Frank: "I want to ensure that such a merger will not take place."

Osterman, who will be a senior at Dartmouth College in the fall, is a summer intern at Roll Call, the newspaper of Capitol Hill

Edited by Douglas Harbrecht

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