Sullivan told lies to cover WorldCom fraud

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Scott Sullivan, WorldCom's former chief financial officer, admitted to jurors on Wednesday that he lied repeatedly to internal and external auditors, the directors, shareholders and others in an effort to conceal the $11bn accounting fraud that led to the telecoms company's collapse.

Mr Sullivan also acknowledged that there was never anyone else present on the occasions when he claims to have warned Bernie Ebbers, WorldCom's former chief executive, that its accounting was improper.

?Those conversations were always Bernie and I. There wasn't anyone else,? Mr Sullivan said in an admission that could harm the government's criminal case against Mr Ebbers for allegedly leading the fraud.

Mr Ebbers has denied any wrongdoing, and his lawyers have argued that Mr Sullivan carried out the fraud without their client's knowledge.

Mr Sullivan, who has already pleaded guilty, spent the last week on the witness stand testifying as the government's star witness against his former boss.

However, his comments on Wednesday came on the first day of a bruising cross examination by Mr Ebbers' lawyer, Reid Weingarten, designed to destroy his credibility.

Mr Sullivan was forced to admit, for example, that he lied to federal authorities about his cocaine use when he applied for a security clearance related to secret work WorldCom was doing for the government.

Mr Weingarten, however, focused primarily on the accounting fraud, which began in late 2000. He pressed Mr Sullivan to recount his efforts in June 2002 to thwart the board of directors and WorldCom's outside auditors, KPMG, when they began to suspect the fraud. Mr Sullivan recalled that he argued that the company's bookkeeping was appropriate, even though he knew it was not.

?Your testimony in this trial is directly inconsistent with what you told those 12 people,? Mr Weingarten said. ?Yes, it is,? Mr Sullivan, said. ?On that day, yes, I lied.?

The defence also used a video from a WorldCom investor meeting in November 2000 to illustrate Mr Sullivan's deceit.

During his presentation, Mr Sullivan predicted that the company's revenue would grow at a 12 to 15 per cent rate in the fourth quarter of the year even though he admitted on Wednesday that he knew its performance was faltering and that the projections were bogus.

Mr Weingarten also established the great pressure on Mr Sullivan after he was arrested to reach a deal with prosecutors to testify against Mr Ebbers.

?It was a very, very bad situation,? Mr Sullivan said, noting that he was facing more than 30 years in prison. Mr Sullivan told jurors that WorldCom directors seldom challenged his board presentations because many of them were asleep.

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