WASHINGTON (CNN) - A House panel voted Thursday to subpoena four people to testify about the accounting scandal at WorldCom, including former CEO Bernard Ebbers and ex-CFO Scott Sullivan.
The House Financial Services Committee also said it would subpoena WorldCom's current CEO, John Sidgmore, and Salomon Smith Barney telecommunications analyst Jack Grubman, who cut his rating on the company a day before it announced it had misstated $3.8 billion in expenses, which inflated its pretax earnings.
Confidence in Corporate America hit new lows the next day, as President Bush, Congress and other federal regulators vowed Wednesday to investigate WorldCom, while industry analysts said the firm would face a struggle to avoid filing for bankruptcy -- and preached gloom for the whole telecom sector.
| 
| |
|
|
|
|
|
 CNN's Casey Wian reports from Clinton, Miss., on WorldCom's layoffs, which could happen as soon as tomorrow.
|
|
Play video
|
|
|
|
|
|
The Securities and Exchange Commission, which called the size of WorldCom's accounting impropriety unprecedented, late Wednesday filed a civil lawsuit against WorldCom, charging the company with fraud.
Ebbers helped to turn WorldCom into a major force in the telecom industry, but the company stumbled last year, along with others in the telecom sector.
By the time Ebbers resigned in April 2002, federal regulators were investigating the company's accounting, it was about $30 billion in debt, credit agencies had slashed its credit rating and investors were furious the company lent $366 million to Ebbers at interest rates between 2.2 percent and 7 percent.
To read the SEC's complaint, click here
Investors also were unhappy about the $1.5 million annual pension Ebbers will receive for the rest of his life, a package Sidgmore, his successor, described as typical for the industry.
As recently as June 14, Sidgmore reassured investors several times after Ebbers' resignation that concerns about WorldCom's financial position were overblown. On Wednesday, he said the company would avoid bankruptcy and the massive restatement of expenses would have no impact on its cash flow in 2001 and the first quarter of 2002.
Former CFO Sullivan was fired when the company made its bombshell announcement Tuesday.
WorldCom said Tuesday it would lay off 17,000 employees Friday and sell assets as the company tries to cut costs in order to survive.
|
