Disconnected:' WorldCom's story well told
By By Buddy Bynum / editor
April 6, 2003
As a home-grown Mississippi company called WorldCom collapsed into a nether world of bankruptcy, employees made the best of a dismal situation. While word of cooked books and highly creative accounting tricks spread, WorldCom workers forwarded e-mails containing revised lyrics to a parody of Don McLean's song "American Pie":
For all practical purposes the company that rose from humble beginnings to become a feared and dominant player in the telecommunication field is dead. It filed the largest bankruptcy in U.S. history on July 21, 2002, a Chapter 11 filing that allowed the company to keep functioning while it reorganized debts. The company, if any, that emerges from bankruptcy will be vastly different.
WorldCom's appeal to giddy investors, its business practices and the eventual road to financial collapse is well-chronicled in a new book, "Disconnected: Deceit and Betrayal at WorldCom," by Lynne W. Jeter (John Wiley &Sons Inc., $24.95).
Jeter, a native Mississippian and Mississippi Business Journal reporter who now lives in North Carolina, has covered WorldCom since its earliest days.
While filled with business-related reporting and enlightening facts, this book in some ways reads like a novel. The plot is well constructed and the time line is clear. Jeter developed excellent sources among not only WorldCom executives and investors but also many rank-and-file employees, whose jobs disappeared as the extent of the company's accounting fraud grew.
In short, the book kept my interest from cover to cover, largely because Jeter captured the personalities of key WorldCom players and incorporated their personality portraits into the story line.
People like:
Bernie Ebbers a vocal and practicing Christian Sunday School teacher who was kicked off the board of deacons at the First Baptist Church in Brookhaven after his divorce. Rumors of affairs, unconfirmed, with co-workers would dog him and he would often hold court into the wee hours at a favorite restaurant/bar.
In one celebrated instance, Ebbers took a key sales executive to a lunch of barbecued ribs. They talked of sports and the weather. When they returned to WorldCom, Ebbers "a rugged-looking cowpoke with a neat, white beard and piercing blue eyes" slapped the employee on the back "with his turquoise-jewelry clad hand before swaggering down the hall."
The sales executive's offense was a capital one selling shares of WorldCom stock. Ebbers prohibited the practice among company employees, although he sold liberally to help finance his own multimillion-dollar purchases of things he liked a yacht building company, timberland, a working cattle ranch.
At a congressional hearing, Ebbers would take shelter behind the Fifth Amendment to the U.S. Constitution, the right against self-incrimination, refusing even to answer a question on whether he is a U.S. citizen.
Scott Sullivan WorldCom's chief financial officer, a bright, rising talent credited at least in part with developing the schemes that became what federal authorities said was a long-running conspiracy to artificially boost earnings reports by hiding operating expenses.
Sullivan would be fired and subsequently indicted and led away in handcuffs after the world's largest accounting scandal became public.
Even so, construction on his $15 million, 16,410 square foot Mediterranean Revival home would continue on a lakeside near the Polo Club of Boca Raton, Fla.
Jeter's writing is insightful, compelling and helps the reader peer into the minds of the people behind WorldCom and the corporate culture they created. It's a masterful work, as one reviewer said, of "what happens when executives of an innovative, successful company lack moral and personal integrity, and accountants fail to exercise due diligence in discharging their professional responsibilities."
