For the second time in two weeks, Americans stung by layoffs and tumbling investments saw leaders of large corporations sporting handcuffs along with their tailored suits.
Two former WorldCom Inc executives who earned millions from the now-bankrupt telecommunications giant were arrested as part of the latest crackdown on shady accounting practices in the nation's boardrooms.
Sullivan, 40, of Boca Raton, Florida and Myers, 44, of Madison, Mississippi, were later released on personal recognizance bonds -- set at US$10 million for Sullivan and US$2 million for Myers. Both men had their passports seized and were given a series of travel restrictions.
PHOTO: REUTERS
If convicted, the men could face a prison term of up to five years and a US$250,000 fine on the one conspiracy count and 10 years and a US$1 million fine on each of the fraud and false filings counts.
Last week, federal authorities in New York arrested the founder of Adelphia Communications along with two of his sons and two other former executives on charges they looted the now-bankrupt cable giant and used it as their "personal piggy bank."
"With each arrest, indictment and prosecution, we send this clear, unmistakable message: Corrupt corporate executives are no better than common thieves," Attorney General John Ashcroft said.
PHOTO: REUTERS
Lawyers said the plunge in the stock market and the lengthening list of alleged corporate bandits has soured the public on corporate America since federal prosecutors went after accounting firm Arthur Andersen LLP this spring.
Andersen was accused of shredding documents and hiding evidence about Enron Corp, another company accused of fraud. Enron and Global Crossing, which also collapsed amid corporate accounting scandals, remain under investigation.
"You get a better headline by dragging somebody into custody in handcuffs than by indicting a faceless company," said Charles Rothfeld, a Washington corporate lawyer who helped defend Andersen against federal obstruction of justice charges.
Outside court, Sullivan's attorney, Irv Nathan, called him "an honest and honorable man" and accused the Justice Department of making him a scapegoat. "We deeply regret the rush to judgment and the political overtones involved," Nathan said.
Myers' lawyers said he would plead innocent if indicted.
WorldCom, which owns MCI, the nation's second-largest long-distance company, filed for bankruptcy protection July 21 after disclosing the accounting abuses. It was the biggest such filing in US history.
White House spokesman Ari Fleischer said President George W. Bush "is determined that people who break America's laws and engage in corporate practices that are corrupt will be investigated, and will be held liable, will be held accountable and will likely end up in the pokey, where they belong."
Bush's own transactions as a one-time director of Harken Energy Corp have drawn renewed scrutiny, and the Securities and Exchange Commission is investigating Vice President Dick Cheney's tenure as CEO of Halliburton.
Sullivan and Myers could get up to 65 years in prison if convicted on charges of securities fraud, conspiracy and filing false statements with the SEC. But federal guidelines call for a sentence of 10 years or less.
Sullivan is accused of directing Myers to falsify the company's balance sheet by about US$3.8 billion. That enabled WorldCom to continue reporting profits when it was actually losing money.
The charges against Sullivan and Myers could pressure them to tell investigators what they know about their one-time boss, former chief executive Bernard Ebbers, who also is under investigation.
Ebbers' lawyers said in a statement that he had no knowledge of the accounting decisions in question, and believed Sullivan and Myers to be "competent, ethical and loyal employees, devoted to the welfare of WorldCom."
The statement added, "Today's actions may be good theater for the media and useful to politicians, but they don't prove that Sullivan and Myers ever acted with criminal intent, an essential element we doubt the government will ever be able to prove in this case."
Justice Department officials declined to say Thursday whether they were still considering taking the more drastic step of charging WorldCom as a corporation. A conviction could drive the company out of business.
Executives who cheat investors "will meet the judgment they fear and the punishment they deserve," Ashcroft said. "When financial transactions are fraudulent and balance sheets are falsified, the invisible hand that guides our market is replaced by a greased palm."
As Sullivan and Myers, both dressed in dark suits, were led out of the FBI headquarters in New York en route to the courthouse, two passers-by clapped at the sight of the two men wearing handcuffs.
EUROPEAN TARGETS: The planned Munich center would support TSMC’s European customers to design high-performance, energy-efficient chips, an executive said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday said that it plans to launch a new research-and-development (R&D) center in Munich, Germany, next quarter to assist customers with chip design. TSMC Europe president Paul de Bot made the announcement during a technology symposium in Amsterdam on Tuesday, the chipmaker said. The new Munich center would be the firm’s first chip designing center in Europe, it said. The chipmaker has set up a major R&D center at its base of operations in Hsinchu and plans to create a new one in the US to provide services for major US customers,
The Ministry of Transportation and Communications yesterday said that it would redesign the written portion of the driver’s license exam to make it more rigorous. “We hope that the exam can assess drivers’ understanding of traffic rules, particularly those who take the driver’s license test for the first time. In the past, drivers only needed to cram a book of test questions to pass the written exam,” Minister of Transportation and Communications Chen Shih-kai (陳世凱) told a news conference at the Taoyuan Motor Vehicle Office. “In the future, they would not be able to pass the test unless they study traffic regulations
GAINING STEAM: The scheme initially failed to gather much attention, with only 188 cards issued in its first year, but gained popularity amid the COVID-19 pandemic Applications for the Employment Gold Card have increased in the past few years, with the card having been issued to a total of 13,191 people from 101 countries since its introduction in 2018, the National Development Council (NDC) said yesterday. Those who have received the card have included celebrities, such as former NBA star Dwight Howard and Australian-South Korean cheerleader Dahye Lee, the NDC said. The four-in-one Employment Gold Card combines a work permit, resident visa, Alien Resident Certificate (ARC) and re-entry permit. It was first introduced in February 2018 through the Act Governing Recruitment and Employment of Foreign Professionals (外國專業人才延攬及雇用法),
‘A SURVIVAL QUESTION’: US officials have been urging the opposition KMT and TPP not to block defense spending, especially the special defense budget, an official said The US plans to ramp up weapons sales to Taiwan to a level exceeding US President Donald Trump’s first term as part of an effort to deter China as it intensifies military pressure on the nation, two US officials said on condition of anonymity. If US arms sales do accelerate, it could ease worries about the extent of Trump’s commitment to Taiwan. It would also add new friction to the tense US-China relationship. The officials said they expect US approvals for weapons sales to Taiwan over the next four years to surpass those in Trump’s first term, with one of them saying
RSS