WASHINGTON-After settling with the federal government and admitting to more than $11 billion in accounting misdeeds, WorldCom Inc., parent to SkyTel Paging and recipient of a contract to build a private mobile-phone system in Baghdad, now must face the wrath of the states.
Oklahoma filed a criminal complaint including 15 felony charges against the company, Bernard Ebbers, its founder and former chief executive officer, and five other former employees.
“It looks like WorldCom is being patted on the back and rewarded,” said Oklahoma Attorney General Drew Edmondson. Edmondson is a former president of the National Association of Attorneys General and was active in the tobacco lawsuits in the 1990s.
Federal investigators who so far have not brought criminal charges against either Ebbers or WorldCom were unhappy with the Oklahoma action.
“Regarding the charges announced today in the State of Oklahoma, this office has not been contacted for evidence or access to witnesses in our active investigation into WorldCom and its accounting fraud. In the name of cooperation and coordination, we are disappointed that we were not told that charges were imminent,” said the U.S. Attorney for the Southern District of New York, which is leading the federal WorldCom investigation. “Competing interests can impede and delay the administration of justice. We are hopeful Oklahoma’s action will not interfere with the prosecution of the five individuals already charged, four of whom have pled guilty and are awaiting sentencing.”
WorldCom, which is now doing business as MCI, said that Oklahoma’s action will only hurt its customers and the 2,000 employees who live in that state.
Oregon filed a $24 million civil suit against the company and its underwriters saying that three state investment funds, including the Oregon Public Employees Retirement Fund, invested money in WorldCom bonds based on the fraudulent accounting records.
WorldCom has agreed to a $750 million settlement with the Securities and Exchange Commission that will allow some investors to recoup some losses.
Ebbers was forced out of the company he founded shortly before the accounting misdeeds were revealed by the company.
Neither the Oklahoma action nor the Oregon action is expected to delay WorldCom’s bankruptcy proceedings, which are scheduled to start Sept. 8. If WorldCom successfully emerges from bankruptcy, it will change its name to MCI Inc.
