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CNN Live Today

WorldCom Employees Testify on Capitol Hill

Aired July 08, 2002 - 13:01   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.
KYRA PHILLIPS, CNN ANCHOR: In the high-flying '90s, he was a Wall Street darling. Now, Bernard Ebbers is out of a job. He is mired in debt, and Congress is closing in. At this hour, the former CEO is scheduled to testify about what went on at WorldCom, where billions of dollars in liabilities were made to look like assets.

CNN's Louise Schiavone is standing by with more now from Capitol Hill. What do you know, Louise?

LOUISE SCHIAVONE, CNN CORRESPONDENT: Hello, Kyra. Well, this hearing of the House Financial Services Committee is being called to order. The members of that committee will ask WorldCom executives what happened. How did it happen that $4 billion in expenses were kept off of the WorldCom balance sheets, falsely inflating profits?

Subpoenas were issued to many; Bernard Ebbers, the former CEO, one of them. Also the former chief financial officer, Scott Sullivan, also received a subpoena. They are both expected to testify today -- expected to appear, but not to testify today. They are expected to invoke their Fifth Amendment privilege against self-incrimination.

Also testifying today in that first panel before the House Financial Services Committee, Jack Grubman, who is a telecom analyst at Salomon Smith Barney. He is a long-time adviser to WorldCom, and in fact, helped them engineer the takeover of MCI. He downgraded the WorldCom stock just one day before the accounting error announcement. He reportedly earns $20 million a year.

Also testifying today, John Sidgmore, he will appear, and he will take questions. John Sidgmore is now the CEO -- the president and CEO of WorldCom. He succeeded Bernard Ebbers on April 30. Before that, he was vice chairman and COO. WorldCom is the fourth telecommunications company he has led. The others include MSF, UUNET and CSC Intelicom.

Also of interest today, David Myers, who is the former WorldCom controller. He was supposed to have been here today. A subpoena was issued but never delivered. They couldn't find him evidently. So he is not expected to be there.

Also present today, Bert Roberts, chairman of WorldCom, Melvin Dick, the Arthur Andersen auditor who handled the account -- Kyra.

PHILLIPS: All right. Louise Schiavone, thank you so much. TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com