WorldCom CEO says company will not fail
By Ana Radelat
Gannett News Service
WASHINGTON — WorldCom President John Sidgmore began a campaign Tuesday to burnish the troubled company's image, saying its new management team is innocent of any wrongdoing and prepared to turn the telecommunications giant into a model of good corporate behavior.
"We want the bad guys exposed, we want the bad guys punished, and we want to move on," he said.
Sidgmore said WorldCom's bankers will determine if the company must file for bankruptcy protection but said they had not threatened to accelerate their repayment schedules. He also said WorldCom is negotiating new restructuring proposals after it defaulted on credit lines after revelations that it had misstated nearly $3.9 billion in expenses.
But the company that recently laid off 17,000 workers may have to shrink its work force again if the telecommunications market slumps again, Sidgmore said.
A former WorldCom vice chairman who once headed the Internet company UUNET that WorldCom now owns, Sidgmore said WorldCom had enough cash to meet its expenses but may have trouble meeting a $2 billion debt payment in January or February. He said the company planned further belt tightening and might sell assets in South America and Japan as well as some of its wireless holdings to improve its financial situation.
Because of its 20 million residential long-distance telephone customers and its control of half of the world's Internet traffic, Sidgmore said WorldCom's financial health is a matter of national security.
"America itself has a major stake in our survival," he said.
After the news conference, WorldCom shares closed at 10 cents on the Nasdaq stock market, up 4 cents from Monday. In mid 1999, after adjusting for a later split, shares had peaked at more than $60 each.
After meeting with top officials Tuesday at the Securities and Exchange Commission and the Federal Communications Commission, Sidgmore vowed that the company would comply with federal requests for more detailed financial information and would cooperate with investigations the SEC, Justice Department and Congress have launched.
SEC spokeswoman Christi Harlan said SEC Commissioner Harvey Pitt and Steven Cutler, the agency's director of enforcement, discussed the SEC's fraud suit against WorldCom with Sidgmore but allowed the company an indefinite amount of time to amend a Monday filing that Pitt denounced as "wholly inadequate and incomplete."
"Our whole goal is to make sure the investors are fully protected and the markets are informed," Harlan said.
Last week, WorldCom told federal regulators that it had misreported nearly $3.9 billion in expenses to boost revenues. On Monday, the company revealed that it may have also mishandled revenue accounts in 1999 and 2000. It has hired William McLucas, former chief of the enforcement division of the SEC, to conduct an audit but may not have the results of the investigation for several months.
Sidgmore, who took over the reins of WorldCom after founder Bernie Ebbers resigned in April, said "the deeds we uncovered were part of a past administration." He said the company's chieftains "have absolutely no idea" if Ebbers knew about the accounting problems, but that he and all members of its current management team were unaware of them until June 20.
After last week's revelations, Chief Financial Officer Scott Sullivan was fired and company comptroller David Myers resigned.
WorldCom's problems have breathed new life into legislation sponsored by Senate Banking Committee Chairman Paul Sarbanes, D-Md., that would reform the accounting industry. Sen. Patrick Leahy, D-Vt., who heads the Senate Judiciary Committee, wants to add a provision to Sarbanes' bill that would make it felony, punishable with 10 years in prison, to scheme to defraud shareholders in a publicly traded company.
The White House is considering whether to back the Democrats' legislation or provide an alternative.
Meanwhile, Sen. Charles Grassley of Iowa, top Republican on the Senate Finance Committee, on Tuesday criticized WorldCom's retention program that gave 558 executives bonuses worth about $237 million two years ago. Grassley asked Sidgmore and Pitt for a list of company executives who received bonuses of more than $100,000 since Jan. 1, 1999, and demanded a return of the money.
"I think that managers who knew, or should have known, about the accounting gimmicks and deceptions should have to return that money to help keep WorldCom viable," he said.
Sidgmore said he had not seen the request from Grassley, but that the company would comply with a federal judge's order to stop giving out bonuses of more than $100,000.
The House has scheduled hearings to investigate WorldCom's problems and lawmakers who once welcomed the company's political contributions now are hastily giving the money back or donating it to charity. Lawmakers ridding themselves of WorldCom money include Senate Majority Leader Tom Daschle, D-S.D,. who received $31,000 in the past six years from the company's political action committees, and Rep. Ronnie Shows, D-Miss. But Rep. Chip Pickering, R-Miss., who's battling Shows to represent a reconfigured Mississippi district that is home to WorldCom's headquarters, doesn't plan to return any of the nearly $83,000 in campaign contributions that he's received from the company's PAC's and employees.
