Internal auditors as heroes? President Bush as tough on business? The WorldCom’s turned upside down.
1. Cynthia Cooper, Glyn Smith (WorldCom)
It’s hard to believe anybody can come out looking good in the WorldCom fiasco. But apparently, Cooper and Smith (one and two in WorldCom’s internal audit department) uncovered the bookkeeping shenanigans at the telco. Reportedly, CFO Scott Sullivan asked the pair to delay their investigation into WorldCom’s accounting treatment of line costs. The two said no, and eventually unearthed expenses masquerading as capital investments. Their persistence led to WorldCom CEO’s stunning announcement that the telephone company would be lowering its previously stated earnings for 2001 by $3 billion.
Once, I had a $22 long-distance bill.
2. John Sidgmore (WorldCom)
A poet once wrote: “It’s hard to believe anybody can come out looking good in the WorldCom fiasco.” Wise words, but Sidgmore, who’s been the WorldCom CEO for all of two months, has inherited a royal mess at the company. And so far, he’s proven his mettle.
Granted, Sidgmore has worked at the teetering telco for a fair amount of time. Thus, it may turn out that he was in someway involved with the accounting treatment that sent the company’s share price into penny stock land.
But Sidgmore won high marks this week for his appearance before the House Financial Services Committee. For starters, he actually answered questions — unlike Bernard Ebbers and Scott Sullivan. What’s more, the CEO came across as rational, calm, and thoughtful — traits that are not exactly in oversupply on Capital Hill these days. When asked to decry the actions of former boss Ebbers, Sidgmore declined, stating that Ebbers hasn’t been convicted of anything yet.
Sidgmore also endured the endless browbeating of our elected officials, who acted as if they didn’t know the difference between write-downs and Hugh Downs.
Of course, it’s possible that Sidgmore will ultimately be revealed as a villain in the passion play known as WorldCom. But on Tuesday, he stood tall.
3. President Bush
The President took a lot of flak for his speech on Wall Street on Monday. And perhaps the chief executive didn’t do everything he could to rein in corporate abuses. But a number of his proposals — even if borrowed — made sense, and the President seemed genuinely committed to restoring confidence in the capital markets. As Christian Bartholomew, a securities lawyer noted, “The President is putting his political capital behind all of the issues, which means corporate accounting problems have become mainstream.”
If you don’t think Bush’s plan could inflict some pain on wrong-doers and lawbreakers, consider the muted reaction of the 1,000 or so executives who attended the speech, most of whom acted as if they had root canal surgery scheduled for the next day. That speaks volumes.
1. Health-care Insurance Providers