Friday, September 2, 2005

Government Will Not Prosecute MCI

MCI can breath a sigh of relief with the announcement by U.S. Attorney David Kelley of the Southern District of New York that the company will not be prosecuted for the accounting fraud that led to its collapse into bankruptcy in 2002.  The U.S. Attorney's Office noted that all of the employees with any involvement in the fraud have been terminated, and the convictions of former CEO Bernie Ebbers and CFO Scott Sullivan, among others, means the main perpetrators have been prosecuted and will serve time in jail.  The announcement is not surprising in light of the fact that most companies forced into bankruptcy by fraudulent accounting have not been charged criminally (e.g. Enron, Adelphia Communications) because there is so little to gain from a prosecution.  The government's decision does, however, make things easier for the proposed Verizon takeover of MCI, with the vote on the transaction scheduled for Oct. 6.  This will be one less item the companies have to discuss in the voluminous merger documents. An AP story (here) discusses the government's announcement. (ph)

Prosecutions, WorldCom | Permalink

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