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CNN Live At Daybreak

Mississippi Reeling from WorldCom Fraud

Aired June 28, 2002 - 06:09   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: On to the scandal on Wall Street. WorldCom begins laying off 17,000 employees today, while subpoenas go out to WorldCom's top management. Mississippi, a poor state, could count WorldCom among its most prized assets until now.

Sean Callebs is live outside of WorldCom's headquarters in Clinton, Mississippi -- good morning.

SEAN CALLEBS, CNN CORRESPONDENT: Good morning, Carol. Most of the thousands of layoffs that you just talked about will not be coming from the home office here in Clinton, Mississippi, but still, residents in this state are going to be mourning the loss.

This international telecom giant had always been a source of pride for people in Mississippi, but now the residents here, like millions across the globe, are wondering if alleged misdeeds will be the undoing of WorldCom.

(BEGIN VIDEOTAPE)

(voice-over): With corporate headquarters tucked away in a bedroom community, Jackson, Mississippi city leaders celebrated WorldCom's rise, but now say they feel heartbreak and disappointment for thousands of workers who are losing their jobs and thousands of investors losing money.

UNIDENTIFIED MALE: People who have had faith in this company and who have seen this company really as a rising star and as a means of economic security for them, and that now appears to be at serious risk.

CALLEBS: WorldCom's stock price plunged from a high of $64 a share a couple of years ago to the point now where it won't even buy a gum ball. It was 9 cents a share when the Nasdaq halted trading earlier in the week.

Layoffs, masking $3.8 billion in losses, the business writer for "The Clarion-Ledger" says many in Mississippi say they feel a sense of betrayal.

UNIDENTIFIED MALE: It was a real point of pride. A lot of people were able to -- when people insulted Mississippi and said Mississippi is backwards and doesn't have anything here, they were able to say, well, we have WorldCom. CALLEBS: Mississippi is especially proud of former WorldCom CEO Bernie Ebbers, a Canadian transplant who went to college here. It was his wheeling and dealing that turned WorldCom into a Fortune 500 company, the backbone of the Internet and a long distance service giant. Even though regulators are concerned now that it was propped up by a house of cards, some business leaders in this state still support Ebbers.

UNIDENTIFIED MALE: And he has not, to my knowledge, responded to any of these items or things that have been asked, and until he responds to that, my opinion of him is still very high.

(END VIDEOTAPE)

CALLEBS: Now, months ago, the floundering stock price had forced the board to oust Ebbers, but unlike the Enron scandal, remember where top executives who were able to sell huge amounts of cash and get rich, Ebbers left WorldCom owing the company more than $400 million in loans.

Live in Clinton, Mississippi, I am Sean Callebs -- Carol, back to you.

COSTELLO: Yes, and there is another scandal surrounding Xerox. We're going to have more information on that in just a bit, but thank you, Sean Callebs reporting live from Mississippi this morning.

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