Former WorldCom Inc. chief Bernard Ebbers took the witness stand Monday and flatly denied he ever knew that accountants were cooking the books at the company.
Under questioning from his top lawyer, Ebbers explicitly refuted the testimony of former finance chief Scott Sullivan, who claimed earlier in the trial that Ebbers pressured him to falsify company financial statements.
“I wasn’t advised by Scott Sullivan of anything ever being wrong,” Ebbers said. “He’s never told me he made an entry that wasn’t right. If he had, we wouldn’t be here today.”
The matter-of-fact denial was perhaps the most dramatic moment in the five-week-old trial of Ebbers, who is accused by the government of orchestrating the $11 billion fraud that sank WorldCom in 2002.
Placing Ebbers on the witness stand to defend himself represented a huge gamble for the defense. Ebbers was questioned by his chief defense lawyer, Reid Weingarten, for about four hours.
Prosecutors began their cross-examination late in the day, asking Ebbers about old mergers and acquisitions and attempting to show that he had more than a passing familiarity with finances and accounting.
In one agitated 1999 memo to a WorldCom subordinate, for example, Ebbers demanded to know “all the details ASAP,” with the word “all” underlined and in bold, about a business arrangement with General Motors Corp.
Besides denying all of the conversations in which Sullivan claims he told Ebbers improper accounting was taking place, Ebbers also denied apologizing to David Myers, WorldCom’s former controller, in late 2000.
Myers had testified that Ebbers, in a hallway conversation, had said he was sorry for what accountants had been forced to do.
“I didn’t have anything to apologize for,” Ebbers said on the stand Monday. “I don’t have any recollection of that conversation.”
Ebbers resigned from WorldCom in April 2002. He testified Monday that he immediately bought 3 million shares of the company’s stock, hoping it would grow and help him pay off the $400 million he owed the company.
“I invested in the best company I knew,” he said.
Weeks later, WorldCom announced a huge restatement of its past financial numbers, as the enormous fraud came to light. Ebbers’ stock went to zero.
“I couldn’t believe it,” he said. “I never thought anything like that had gone on. I put those people in place. I trusted them. I just had no earthly idea that anything like that would have occurred.”
Ebbers admitted he was a demanding and sometimes temper-prone boss at WorldCom, but he repeatedly said he was unfamiliar with the details of finances and accounting, and left the numbers-crunching to Sullivan.
In three hours of testimony Monday morning, Ebbers was clear and plainspoken, addressing his lawyer as “sir” and occasionally displaying a laid-back, folksy Southern temperament.
In describing his diagnosis with the heart condition cardiomyopathy in 2000, Ebbers explained to the jury: “Your pumper isn’t pumping the way it should.”
And at one point, Ebbers interrupted Weingarten to say: “Let me ask you something — am I talking too loud? Deaf people have a tendency to talk too loud.”
Ebbers told jurors about bouncing between colleges earlier in his life because “my marks weren’t too good” and said he enjoyed both playing and coaching basketball for high school and small colleges.
He made a foray into the motel management business early in his career and said he was extremely cost-conscious, even irritating some customers by requiring them to pick up and drop off towels at the front desk.
In 1983, he joined with partners to enter the telecommunications field, starting a small long-distance service in Mississippi and gradually building it into the global giant WorldCom, which bought MCI in 1998.
But even as his company swelled, “I know what I don’t know,” Ebbers testified. “I don’t, to this day, know technology. I don’t know finance and accounting.”
Ebbers’ statement conflicts with testimony by Sullivan, who described Ebbers as a detail-oriented manager who was much more familiar with accounting than most CEOs he encountered.
The central issue in the trial so far remains whether jurors believe Sullivan told Ebbers that the only way to meet Wall Street estimates would be to falsify the books.
Sullivan has said he repeatedly told Ebbers that such actions were wrong, but has said Ebbers came back with the refrain, “We have to hit our numbers.”
Ebbers is charged with fraud, conspiracy and making seven false filings to the Securities and Exchange Commission. The charges carry up to 85 years in prison.