Wednesday, January 12, 2005

The Credibility Battle at Ebbers Trial

A front page article in the Wall Street Journal (Jan. 12) describes the relationship between Bernie Ebbers, former WorldCom CEO whose criminal fraud trial begins later in January, and Scott Sullivan, the company's former CFO who has agreed to a plea bargain and will be the government's key witness.  As noted earlier (Jan. 6 post), Ebbers will argue at trial that he was unaware of the financial chicanery at the company and accuse Sullivan of orchestrating the fraudulent accounting without Ebbers' knowledge--the "honest-but-ignorant CEO" defense.  Sullivan's importance to the government's case cannot be overstated because Ebbers did not use e-mail--the primary source of evidence of corporate misconduct these days--and rarely communicated with subordinates in writing.  In the credibility battle to come at trial, the article notes, "In an effort to discredit Mr. Sullivan as a witness, Mr. Ebbers's lawyers are seeking the judge's permission to disclose potentially damaging information about Mr. Sullivan's personal conduct, according to people familiar with the case. U.S. District Court Judge Barbara S. Jones hasn't yet ruled on the request." No indications yet what that conduct involves, but the effort to discredit (and bolster) Sullivan will be the centerpiece of what will likely be a long trial. (ph)

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