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On Capitol Hill Today, Lawmakers Focusing on WorldCom Accounting Scandal

Aired July 08, 2002 - 10:20   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.
LEON HARRIS, CNN ANCHOR: On Capitol Hill today, lawmakers are focusing on the WorldCom accounting scandal that has sent shockwaves from Wall Street to Main Street. Congressional officials want to know what went wrong and who is to blame for it. They'll put those questions to company executives today, but it's just not known if they are going to get many answers.

Louise Schiavone joins us now from Capitol Hill. She is checking in with us right now with the latest on this WorldCom inquisition that's supposed to take place today.

Louise, give us an idea of what we can expect to see or hear today.

LOUISE SCHIAVONE, CNN CORRESPONDENT: Leon, WorldCom executives will be called before the House Financial Services Committee to explain bookkeeping irregularities that kept close to $4 billion worth of expenses off the WorldCom balance sheets. So once again, Leon, we will see the usual parade of button-downed witnesses walk into a hearing room, raise their hands, take a note. Some of them will invoke their Fifth Amendment privilege against self incrimination and not answer questions; others will speak.

Among those we expect not to take questions but to invoke the Fifth, Bernard Ebbers, the former CEO, and Scott Sullivan, the former chief financial officer. We do expect to hear from the current WorldCom CEO John Sidgmore, as well as Burt Roberts, who is the chairman of WorldCom, Melvin Dick, who is the former auditor for Arthur Andersen during this period of time, and also from analyst Jack Grubman. He's an analyst with Salomon Smith Barney, who was a little more bullish on WorldCom than a lot of people think that he should have been.

One interesting note, David Meyers, who is the former controller for WorldCom, is not expected to be showing up for this hearing because he was not served a subpoena. Evidently, the marshals couldn't find him to serve that subpoena, so he's not be there -- Leon.

HARRIS: Very interesting.

In the meantime, Congress is also getting a lot of pressure put upon it to actually come up with some remedies or some sort of anecdote or something, in law on paper to do something about this sort of scandal. What are you hearing about what's being done on that?

SCHIAVONE: Well, of course have you to understand the motivation for this. There are hundreds of thousands, perhaps millions of investors who have their money tied up with these companies that are just sinking. And the Congress is under a lot of pressure to invoke some penalties, so these sorts of things don't happen again, although they do seem to keep happening.

So the Senate today is going to award -- this week, anyway, is going to start debating a bill that would make the companies more accountable for the balance sheets, make executives more accountable for those papers that they sign. The House has passed similar legislation. The SEC has gone ahead with recommendations, regulations, making these companies far more accountable, more transparent, as it's said, to the public. So that's what is happening today on Capitol Hill.

HARRIS: Good deal. You will have a long day ahead of you. You will watch how things unfold on Capitol Hill. Louise Schiavone live for us.

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