Wednesday, March 2, 2005

Ebbers on the Hot Seat

Assistant U.S. Attorney David Anders continued the cross-examination of Bernie Ebbers by focusing on the loans Ebbers took -- which WorldCom guaranteed -- on his WorldCom stock, and the pain from the margin calls as the price of shares dropped.  The government has argued that Ebbers pressured former CFO Scott Sullivan to engage in accounting fraud to maintain the company's share price at a level sufficient to keep the loans from being called.  Anders also focused on Ebbers' involvement in the details of the company, and Ebbers admitted that he was "fairly detail-oriented . . . in the areas that I paid particular attention to." It will be interesting to see if the jury accepts the position that Ebbers paid attention to certain areas of the company (e.g. the water in the water-cooler) but not accounting entries that would affect the stock's price.  Articles from the Wall Street Journal (here) and AP (here) discuss the cross-examination.  The WSJ also has a poll regarding whether it was a good idea for Ebbers to testify.  The problem is that we will not know the effect of the testimony until the jury returns its verdict, and defense lawyers make the decision to call the defendant to testify without the benefit of hindsight or knowing how the person will react to cross-examination. (ph)

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