Pious Scammer Bernie Ebers (Part 2)

This is the Part 2 of the article. To read the Part 1, please follow the link.

In general, until the end Ebbers ran a huge company as a large motel. When in early 2002 WorldCom discussed urgent measures for getting the company out of a deep crisis at the board meeting, Bernie, as the chairman of the board seriously proposed to reduce the coffee portions in coffee machines for staff, to turn off lights in the toilets and to prohibit use of air conditioning.

bernie Ebbers 2.1

Between endless acquisitions Bernie led a life of righteous Baptist: taught the Word of God in Sunday school, trimmed his lawn on his own, and after the church service had lunch in a small family restaurant.

Company’s problems began in 2000. In autumn forecast for revenues was not pleasant: it got reduced by 40% of the planned. To pay off personal debts Ebbers put up for sale his yacht and began selling “WorldCom” shares. It was unthinkable. Fearing that shareholders would misinterpret the situation, WorldCom Board of Directors took an unprecedented decision to give the chairperson a loan of 375 million dollars for personal needs under the ridiculous interest — 2.2% per annum.

bernie Ebbers 2.2

Forgery and deliberate inflation of the true value of options were common company’s practice. But “accounting fouette” can be called the idea with the items of expenditure and income. Scott Sullivan, Chief Financial Officer transcribed the rent for the “bandwidth” (expenses) in long-term investments and assets of the balance sheet. In such an easy way they got 1.6 billion profits instead of losses of 1.2 billion.

Due to a combination of such methods 17 thousand workers were left redundant, and shareholders suffered 11 billion damage.

Scott Sullivan got only 5 years of imprisonment. He “sold” the chief completely. Ebbers, in the court’s opinion, deserved 25 year term.