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Scrushy refuses to answer questions in US district court

Lawyers for Richard M. Scrushy, the ousted chief executive of the HealthSouth Corp, tried on Friday to assign blame for the multibillion-dollar accounting scandal engulfing the company to William T. Owens, the company's former chief financial officer.

But Owens repeatedly refused to answer questions from Scrushy's lawyers, invoking his Fifth Amendment right more than 50 times in a hearing in US District Court here on whether to continue a temporary freeze on Scrushy's assets.

The Securities and Exchange Commission, which had sought the freeze, agreed on Friday to allow Scrushy access to US$17 million to pay his taxes.

The SEC has accused Scrushy and HealthSouth of fraudulently inflating earnings by more than US$1.4 billion since 1999 to meet Wall Street expectations.

Prosecutors have since raised the amount to US$2.5 billion.

Owens became HealthSouth's chief financial officer in February 2000. He was briefly promoted to chief executive last year when Scrushy stepped aside to run the company's surgical center division, which was to be spun off. The spinoff was abandoned, and Owens was made chief financial officer again in January of this year.

After citing Owens' decision to plead guilty to federal charges of fraud, one of Scrushy's lawyers, Thomas Sjoblom, asked Owens about the circumstances of his demotion. "Isn't it a fact that the reason you were demoted is you tried to oust Scrushy from the position of chairmanship?" he asked. Sjoblom also asked if Owens' salary was reduced to US$1 million from US$1.8 million. But Owens refused to answer each question.
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