Ebbers Tells Jury He Knew Little of Accounting

Former WorldCom Inc. chief Bernard J. Ebbers took the stand in his own defense Monday and told jurors that he was never informed about the massive accounting fraud that plunged the telecom giant into its 2002 bankruptcy.

Throughout four hours of testimony, Ebbers cast himself as a financial neophyte who delegated all accounting responsibility to Scott D. Sullivan, WorldCom’s former finance chief and the government’s star witness.

“I wasn’t advised by Scott Sullivan on anything ever being wrong,” Ebbers testified in U.S. District Court in New York.

Sullivan had testified that he had repeatedly notified Ebbers about the bogus accounting, and that Ebbers gave his tacit consent in hopes of satisfying Wall Street profit estimates. Sullivan also recounted detailed one-on-one conversations in which he allegedly told Ebbers about “adjustments” in which expenses were reclassified as assets, and reserve accounts were raided to boost revenue.

Ebbers contended that those discussions never took place. Sullivan masterminded the fraud, Ebbers indicated, and implicated his former boss in hopes of winning a lighter prison sentence.

With their accounts in such direct contradiction, the verdict may come down to which of the two men came across as more believable.

In about 90 minutes of cross-examination at the end of the day, Assistant U.S. Atty. David Anders sought to show that Ebbers understood basic accounting and was deeply involved in the details of WorldCom’s business.

The prosecutor displayed documents in which Ebbers asked subordinates for various financial information, and also asked Ebbers to define several accounting terms.

Ebbers is charged with fraud and faces at least 30 years in prison if convicted.

Sullivan has pleaded guilty to fraud and faces up to 25 years. He testified against Ebbers in return for a government recommendation of a shorter sentence.

Ebbers’ decision to take the stand wasn’t announced until Friday. It was considered risky because there is little evidence against him other than Sullivan’s testimony, and there is always a chance that Ebbers could say something that rubs jurors the wrong way.

During cross-examination Monday afternoon, Ebbers at times seemed evasive.

At one point, Anders asked whether Ebbers was upset when an underling didn’t give him the information he had asked for about a potential contract.

“What do you mean by upset?” Ebbers asked.

“You don’t understand upset?” Anders shot back. “Angry. Displeased.”

Ebbers acknowledged that he was displeased.

Throughout the day, Ebbers painted himself as a self-effacing man from humble origins who got bad grades in college and later worked as a milkman, bouncer and high school basketball coach.

After cobbling together the financing for his first business venture -- the purchase of a motel in Mississippi -- Ebbers said he and his wife slept in a trailer parked out back.

Ebbers stressed that he had no financial training and relied on subordinates for technical and financial expertise.

“The closest thing I’ve ever had to an accounting course is a preliminary course in economics,” Ebbers said. “I know what I don’t know, and to this day I don’t know technology. I don’t know accounting or finance.”

In contrast, he portrayed Sullivan as having “an uncanny knowledge of the technical details of accounting.”

Underscoring his own reputed detachment from WorldCom’s financial affairs, Ebbers testified that he bought $5.3 million in WorldCom stock in May 2002 -- a few weeks after he was forced to resign from the company because of a federal investigation into accounting irregularities.

“I believed that WorldCom was a great company,” Ebbers said. “I invested in the best company I knew.”

The company declared bankruptcy in July 2002 and Ebbers’ shares eventually became worthless. The company emerged as MCI Inc. last year, and last month agreed to be acquired by Verizon Communications Inc.