2 WorldCom Executives, Faulted in Bankruptcy Inquiry Report, Resign
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Michael H. Salsbury, WorldCom’s general counsel, and Susan Mayer, the treasurer, resigned yesterday, a day after a bankruptcy court examiner’s report raised questions about their roles in the company’s collapse. The report, compiled by Dick Thornburgh, a former United States attorney general, was released late on Monday. It suggested that at the very least, the two executives had contributed to a breakdown in acceptable corporate behavior by failing to notice or to oppose questionable practices in the years when Bernard J. Ebbers, WorldCom’s former chairman and chief executive, led it into scandal and ruin. WorldCom praised Mr. Salsbury’s 24 years of work and his efforts to keep the company on track to emerge from bankruptcy. In a statement released last night by WorldCom, Mr. Salsbury said the company’s emergence from bankruptcy could happen only if the public had absolute confidence in the company. ”To allow the federal examiner report’s characterization of certain incidents unrelated to the accounting fraud to become an obstacle to the company’s emergence would be contrary to everything we have worked for in the past year,” he said. WorldCom issued no comment about Ms. Mayer’s resignation. She declined to comment. The resignations came on a day of mounting criticism of Michael D. Capellas, WorldCom’s new chief executive, and WorldCom’s new board. Mr. Thornburgh’s findings were released at the same time as a second report, based on a yearlong investigation conducted by William R. McLucas, a former director of the enforcement division of the Securities and Exchange Commission. The second report, which was initiated by the new board and delivered to the company on March 31, said little about Mr. Salsbury or Ms. Mayer’s departments. Based on that report, the company said on Monday evening that WorldCom no longer employed anyone involved in the wrongdoing that led to the company’s bankruptcy. The seeming conflict in those claims and Mr. Thornburgh’s report resulted in harsh complaints yesterday that WorldCom’s new management was misleading the public and investors about how thoroughly it had overhauled itself as it struggles to emerge from bankruptcy. ”I was floored by MCI’s statement,” said Patrick Comack, an industry analyst at Guzman & Company, referring to WorldCom by the name under which it is doing business. MCI, the second-largest long- distance company, has been WorldCom’s biggest unit since the two companies merged in 1999. Mr. Salsbury, 54, was general counsel of MCI at the time of the merger. From then on, he advised Mr. Ebbers on a wide range of legal and regulatory issues and regularly briefed the board. But the new board’s investigation painted a picture of Mr. Salsbury as a lawyer deliberately left in the dark by Mr. Ebbers on many issues. Mr. Ebbers relied instead far more on P. Bruce Borghardt, whose title was general counsel for corporate development, according to both reports. Mr. Borghardt, who had worked for Mr. Ebbers since 1993, frequently did not consult with Mr. Salsbury or share important documents with him, according to the board’s report. But Mr. Thornburgh’s report presented evidence that Mr. Salsbury was deeply involved in some of the questionable activities, like the $5.8 billion acquisition of Intermedia. Months of maneuvering to complete the financially disastrous deal ended with Mr. Salsbury presenting a single slide describing the final merger agreement to WorldCom’s board, which had been signed in advance of their approval. The Thornburgh inquiry cited several shortcomings in the performance of WorldCom’s treasury department as the company’s finances deteriorated in 2001 and 2002. Ms. Mayer, 53, began discussing the need to use part of a $2.65 billion credit line as early as Feb. 11, 2002, according to the report, and relayed that information to Scott D. Sullivan, Worldcom’s chief financial officer. By May 4, she had concluded that the company would have to use the credit line to pay coming bills, yet five days later Mr. Sullivan assured analysts that the company’s intention was not to draw down the credit. |