Ebbers surrendered to the FBI in New York on March 3 last year, soon after being indicted by the US Department of Justice on charges related to the collapse of WorldCom in 2002. According to the DoJ, Ebbers presided over an effort to conceal from investors a decline in WorldCom’s operating and financial performance between September 2000 and June 2002.
Once accounting irregularities at the firm were disclosed in June 2002, WorldCom (now known as MCI Inc) was pushed into Chapter 11 bankruptcy protection. The fraud amounted to more than $11bn. It was the largest bankruptcy in US corporate history, as the company was saddled with some $41bn in liabilities. WorldCom emerged from bankruptcy in April 2004 as MCI, with just $5.7bn in debt.
For the past six weeks, the jury has been hearing the evidence against 63-year-old Ebbers. However, the defense has been arguing that Ebbers, a former Mississippi gym teacher, milkman, and nightclub bouncer, used guile and bravado to build a tiny reseller of long-distance phone services into a global telecommunications giant. But they say he restricted his duties to motivating his sales force and cutting costs.
The defense lawyers have argued throughout the trial that it was the financial deputies Ebbers acquired after more than 36 mergers who were in charge of the company’s complex technology and accounting activities. They especially point the finger at the former WorldCom CFO, Scott Sullivan. Sullivan has already pleaded guilty to his part in the fraud, and in an effort to reduce to his sentence, has testified that Ebbers was behind the book-fiddling.
The trial itself has produced little in the way of solid evidence, as Ebbers was known not to use email for the day-to-day running of his empire, being more of a hand-on boss. The prosecution has been unable to provide any witnesses or documents to corroborate Sullivan’s account that he altered the books with Ebbers’ full knowledge and authority.
However, Sullivan’s testimony on the stand against his former boss was considered so effective by the defense team that they took the unusual step of permitting Ebbers to testify, in order to convince the jury that Ebbers was not a sophisticated man that knew numbers, and that he would not have understood the complex fraud even if he knew about it.
However, prosecutors have portrayed Ebbers’ defense as a ruse. They claim he was intimately involved in every aspect of a company that at its peak was worth $150bn. They describe him as a tyrant who bullied staff to meet financial targets. Behind his good-old-boy demeanor, prosecutors say, was a schemer who knew the value of looking like a simpleton.
You have been fed the ‘Aw shucks, I’m not sophisticated’ defense, William F Johnson, an assistant US attorney, told the jury. It insults your intelligence that Ebbers could have built this company up from nothing in 10 years and still be clueless about its financial performance.
After an hour of instruction last Friday from US District Judge Barbara Jones, the jury retired to begin considering the evidence. They have already requested pieces of evidence and transcripts from the six-week trial.