Ebbers Sought Higher Merger Offer, Verizon CEO Testifies
Verizon Communications Inc. Chief Executive Ivan Seidenberg on Thursday told jurors in the fraud trial of Bernard J. Ebbers that his WorldCom Inc. counterpart wanted more than the $21 a share being offered during merger talks in 2001.
Seidenberg said Ebbers initially wanted at least $40. Ebbers lowered his demand in later sessions. Seidenberg said the two men met informally four times.
“Bernie absolutely talked about regulatory risk but always came back to price,” Seidenberg testified in federal court in New York. “Price was the dominant issue. Bernie wanted a number in the 30s.”
Prosecutors summoned Seidenberg to corroborate testimony given by former WorldCom finance chief Scott D. Sullivan last week. Sullivan told jurors that WorldCom abandoned merger talks with Verizon -- the nation’s largest local telephone firm -- because he and Ebbers feared they would have to disclose that they cooked the books.
Sullivan said he and his then-boss halted talks in August 2001 because they didn’t want to give Verizon confidential financial data that might reveal they hid expenses and boosted revenue to meet Wall Street expectations. WorldCom filed for bankruptcy protection in 2002; it emerged in April as MCI Inc.
On Monday, Verizon agreed to buy MCI, the second-largest long-distance telephone company, for $6.8 billion.
Seidenberg told jurors that he initiated informal talks with Ebbers in April 2001 but that it wasn’t until December 2001 that Ebbers suggested that the finance chiefs of the firms talk.
After that, Sullivan and Frederic Salerno, his counterpart at Verizon, began drafting a confidentiality agreement that would enable the companies to exchange nonpublic documents, Seidenberg said. The agreement was never signed. Seidenberg said Ebbers never told him why the deal fell through.
Sullivan has pleaded guilty to conspiracy and fraud charges and testified under a cooperation agreement in hopes of a lesser sentence. In his final day on the stand, Sullivan said Thursday that he was the one who decided which one-time revenue items to use in financial reports to meet analyst expectations. Prosecutors say that process was part of an $11-billion fraud.
Sullivan said that he oversaw accountants who falsified entries so earnings would meet projections and that he did so on orders from Ebbers to “hit the numbers.” Defense attorney Reid Weingarten has sought to undermine Sullivan’s credibility and blame him for the fraud.
Ebbers has denied wrongdoing and said he left financial matters to Sullivan, who kept him in the dark.
