It seems Robert Blakely is making a habit of rescuing scandal-ridden companies.
The CFO of MCI Inc. — formerly WorldCom Inc. — will soon have a new job: CFO of Fannie Mae, the Washington, D.C.-based mortgage finance giant, which is coming off its own $11 billion accounting scandal. And at an age when many CFOs might be thinking of retirement, the 64-year-old Blakely scoffs at the idea. “I enjoy these complex financial assignments,” he says. “It’s the environment I’ve lived in.”
Fannie Mae could prove complex indeed. Ordered by the Securities and Exchange Commission to restate financials dating back to 2001, Fannie Mae ousted both its CEO, Franklin Raines, and CFO Timothy Howard in the wake of the scandal. But Blakely says Fannie Mae’s new management team is off to a good start. This year alone, more than 30 percent of the employees are reportedly spending half their time working on the restatement. Moreover, Blakely says, “My highest priority is to get that restatement done and then to repair the principal financial controls at the company.”
Blakely also has no regrets about the outcome at MCI. Although he thought the firm could remain independent, he says, the deal between AT&T and SBC Global as well as deregulation of access charges “clearly set the stage for the merger.” Blakely will join Fannie Mae after Verizon’s $6.7 billion merger with MCI is complete.
How successful he will be at potentially the biggest restructuring in history remains to be seen. But Blakely promises to “roll up my sleeves and wade in with the troops.” Observers take comfort in a record that includes a massive restructuring at Tenneco Inc. “He’s clearly a turnaround guy,” says Kerry D. Moynihan of Christian & Timbers LLC. “He’s cleaned up Dodge; now’s he moving on to Abilene.” — Laura DeMars
General Motors Corp. CFO John Devine has been traded in for a new model. On January 1, Frederick Henderson, the 47-year-old former head of GM’s European operations, took the wheel from the 61-year-old Devine. Analysts say they are sorry to say goodbye to Devine, whose contract expired in December. “His experience and credibility with the Street is not easily replaced,” says equity analyst Efraim Levy of Standard & Poor’s.
Back in December 2000, GM’s unusual choice of Devine — a 32-year veteran of rival Ford Motor Co. — was seen as evidence that GM was serious about getting back to profitability. But GM’s financial slide picked up speed instead. The automaker was downgraded to junk status last May; six months later, a Securities and Exchange Commission inquiry forced GM to restate its 2001 financials; and the Chapter 11 filing of Delphi Corp., the company’s major parts supplier, raised the specter of a GM bankruptcy.
David Cole, chairman of the Center for Automotive Research, says GM’s woes come with a silver lining. “Absent a crisis, GM’s ability to deal with health-care issues and plant closings was zippo,” he says. Thanks to its plight, GM won health-care concessions that will save $3 billion a year before taxes. Still, only time will tell whether Devine’s tenure will be seen as the beginning of a turnaround or the beginning of the end. — Tim Reason