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Ebbers wasn't dumb enough
World Com's Bernard Ebbers tried to play dumb in court, but the jury didn't buy his defense.
March 15, 2005: 4:21 PM EST
By Rob Cox, Breakingviews

LONDON (Breakingviews) - The sight of former WorldCom boss Bernie Ebbers trying to hail a taxi outside a New York courtroom amid a phalanx of screaming reporters managed to invoke more sympathy than his entire six-week defense.

That suggests just how miserably his "yokel" argument failed to convince the jury of his innocence. (See, "Ebbers faces life in prison.")

There are good reasons for this. First and foremost, it was not very believable.

Ebbers may not have been a math whiz, but it is implausible to consider any self-made billionaire -- even a paper one -- reached the glittering heights of financial success without knowing how to read a profit and loss statement.

Second, there was a motive. As a big WorldCom shareholder, he stood to lose much from a transparent accounting of the group's results.

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Moreover, he had also personally borrowed against his WorldCom stock to invest in, among other things, real estate and timber (yet he was still not able to understand finance?). He had every reason to -- if not cook the books -- at least give the orders to have them broiled and turn the other cheek.

Finally, even if the jurors believed Ebbers to be a yokel, is that really a valid defense?

Certainly under the tightened-up rules of the Sarbanes-Oxley act, which requires executives to certify their company results, this wouldn't pass muster. If the WorldCom debacle was the result of a rogue employee, the argument might have had some validity.

But a multi-year swindle on the scale of WorldCom required compliance at many levels of the organization. Nothing in Ebbers' management career suggested he was so divorced from the company he ran.

The same may also be said of Ken Lay, Enron's former boss. He may convince jurors that he, too, is a yokel. But if the Ebbers verdict is any indication, that may not keep the two from sharing a cell.

Breakingviews is Europe's leading financial commentary and analysis service. Its team of financial journalists comments on the most important financial stories of the day, as they break.  Top of page


Bernard Ebbers
WorldCom Incorporated
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