- The Washington Times - Tuesday, February 1, 2005

NEW YORK (AP) — The former controller of WorldCom Inc. testified yesterday he has no direct knowledge that ex-CEO Bernard Ebbers knew about the accounting tricks used at the company to hide out-of-control expenses.

David Myers has told jurors that Scott Sullivan, the former chief financial officer of WorldCom, told him Mr. Ebbers was aware that accountants were covering up expenses by moving them off of WorldCom income statements.

On cross-examination yesterday, Ebbers attorney Reid Weingarten asked Mr. Myers: “You had no conversations with Mr. Ebbers along those lines, fair enough?”

“That’s fair,” Mr. Myers answered.

Mr. Weingarten also asked Mr. Myers repeatedly whether he had taken his deep misgivings about accounting tricks, ordered by Mr. Sullivan, to Mr. Ebbers. Mr. Myers repeatedly said he had not.

Prosecutor David Anders, in questioning Mr. Myers, reminded the witness he had testified earlier that Mr. Ebbers apologized to him once in 2000, without being specific, for what accountants had been forced to do.

Mr. Myers is one of five former WorldCom executives who have pleaded guilty in the $11 billion accounting scandal and agreed to cooperate with prosecutors, who say Mr. Ebbers orchestrated the massive fraud.

The defense asserts that Mr. Ebbers left accounting matters to Mr. Sullivan, and that Mr. Sullivan masterminded the fraud. Mr. Sullivan is expected to testify against Mr. Ebbers later in the trial.

Mr. Weingarten attempted to use his cross-examination of Mr. Myers to hack away at the credibility of Mr. Sullivan, the government’s star witness, by portraying him as a liar who hid the fraud from WorldCom’s board.

“In your presence, Scott Sullivan repeatedly lied to board members, correct?” Mr. Weingarten asked.

“That would be correct,” Mr. Myers answered.

Mr. Ebbers, 63, is charged with fraud, conspiracy and filing false statements with the Securities and Exchange Commission. The charges carry up to 85 years in prison.

In other court action yesterday:

• An FBI agent , sending a pre-emptive strike at Richard Scrushy’s defense, denied altering secret recordings that prosecutors say link the ousted HealthSouth chief executive officer to a massive fraud at the rehabilitation services giant.

Agent Gerry Kelly and an evidence technician acknowledged problems with evidence logs and the recordings, which former HealthSouth Corp. chief financial officer Bill Owens made on the eve of an FBI raid that eventually resulted in Mr. Scrushy’s indictment.

But Mr. Kelly denied altering any recordings — as the defense suggested in pretrial documents — and he said he recorded everything he heard while operating a digital recorder that picked up sound from the transmitter.

• A former director of Tyco International Ltd. testified yesterday that the company’s former CEO, L. Dennis Kozlowski, did not violate company policy when he paid a $20 million fee to a board member.

Prosecutors say the fee, paid to Director Frank Walsh for helping arrange Tyco’s 2001 purchase of CIT Group Inc., was not authorized by the board, and amounted to theft, one of 13 larceny counts against Mr. Kozlowski and co-defendant ex-finance chief Mark Swartz.

The two men are facing the charges in a New York State Court a second time after a mistrial in April.

“There is nothing that says specifically that Mr. Kozlowski can’t pay an investment banking fee to a director,” government witness John Fort, a former Tyco chief executive, said on cross- examination.

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