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February 28, 2005
Too stupid to commit fraud
Bernard Ebbers's defense appears to be that he was too stupid to do what he was accused of:Mr. Ebbers also said he was ignorant about accounting in general. "I know what I don't know," he said, referring to his lack of understanding of the technology WorldCom sold as well as its finances.He testified that he did poorly in college, where his "marks weren't too good," and that he bounced from one job to another, working as a milkman, basketball coach and warehouse manager, before he and a small group of investors started the predecessor of WorldCom in 1983.
This is certainly a plausible story, since WorldCom's revenues were on the order of 30 billion a year. I make a lot less than 30 million a year and I still need an accountant to do my taxes. It's easy to believe the Ebbers didn't understand any of the details of what his accountants had done.
Of course, the problem for this account is that Scott Sullivan, WorldCom's former CFO says that he told Ebbers that the accounting changes "weren't right". If my accountant tells me that, I'm going to get pretty nervous, even if I don't understand exactly what IRS regulation I'm supposedly breaking...
Posted by ekr at February 28, 2005 9:58 PM | Filed under: