Leading figures in the financial scandal that has brought WorldCom, the number two U.S. telecommunications firm, to near collapse, appeared Monday before a Congressional committee. Members of Congress were furious at the scale of the alleged $3.8 billion accounting fraud and demanded that wrong doers be sent to jail.
Four men at the center of the scandal sat uncomfortably in front of cameras for nearly 90 minutes as one committee member after another excoriated them as villains who have disgraced American capitalism. Then, with opening statements finished, the four rose as one, raised their right hands and promised to tell the truth. First to speak was Bernard Ebbers, the Canadian-born former basketball coach who nearly 20 years ago had founded WorldCom in Clinton, Mississippi.
"Although I would like, more than you know, to answer the questions that you and your colleagues have about WorldCom," Mr. Ebbers said at the hearing, "I have been advised by counsel not to answer questions based on my fifth amendment rights. After careful consideration, I have decided to follow my counsel's instruction, even though I do not believe I have anything to hide in these or any other proceedings."
Mr. Ebbers was forced to resign as WorldCom chief executive in April under pressure over the company's massive debts and huge personal loans he received from it.
Scott Sullivan, WorldCom's chief financial officer until last month, also refused to answer questions, invoking his constitutional right against self-incrimination.
However, Jack Grubman, the stock market analyst who for years aggressively promoted WorldCom shares, did answer questions. Mr. Grubman denied he had done anything improper and insisted he was not warned in advance of WorldCom's accounting fraud.
"My name is Jack Grubman," he began, "I am a telecom analyst at Solomon Smith Barney. I appreciate your invitation to appear before this committee today, and I do so voluntarily. Let me say that I am saddened by why we are here. I am saddened that people lost money. I am saddened that people lost jobs. I am saddened that a major company is enmeshed in a major scandal."
Both political parties are demanding strong action against corporate fraud. Congress is considering legislation that would increase government regulation of accounting practices. The head of the Securities and Exchange Commission, the main regulator, is under pressure to resign. President Bush has also proposing tougher penalties, including jail time, for corporate officials who lie on financial statements.
The WorldCom scandal is similar to what happened at Enron, the energy trading company riddled with accounting fraud that led to the collapse of the company at the end of last year and which was also audited by the Andersen accounting firm. Heavily indebted WorldCom is a major provider of internet services, handling some 50 percent of all U.S. based email messages.