WorldCom CEO Apologizes, Pledges Cooperation With Government Inquiry

Sidgmore said he did not know whether WorldCom's founder, Bernard J. Ebbers, had any prior knowledge of the $4 billion hole in the company's books.

"We don't know whether he was involved and we don't know whether he wasn't involved, and that's the truth," Sidgmore said at a news conference at the National Press Club where he was peppered with questions about the firm's current woes and future plans.

Sidgmore expressed optimism at every turn, yet also apologized for "past transgressions" at the firm, and pledged cooperation as the government begins to investigate.

"We want the bad guys exposed. We want the bad guys punished. And we want to move on with our lives at WorldCom," he said.

Sidgmore said that despite the huge telecommunications firm's deteriorating situation, he hoped to avoid bankruptcy. He said WorldCom has about $2 billion in available cash.

He also said that despite wide publicity given the company's difficulties, it had not yet suffered the loss of a major customer.

WorldCom disclosed last month it had improperly accounted for nearly $4 billion in expenses, thus inflating its earnings. The disclosure sent the company's stock plummeting, prompted the SEC to file fraud charges and triggered an avalanche of anger from politicians--President Bush included.

The company already has laid off 17,000 of its 80,000 workers, and Sidgmore said additional layoffs were possible.

WorldCom, which owns MCI, is second only to AT&T in the long-distance market.

Sidgmore spoke as technology analysts said that despite WorldCom's considerable Internet holdings, the global network should not suffer any catastrophic difficulties if the firm ceases to exist. They said there could be significant slowdowns in Internet traffic, however.

Arthur Andersen was the firm's auditing firm at the time the irregularities occurred, and Sidgmore referred to the company several times.

"They swear up and down that they didn't know anything about this," he said. "We internally are a little bit concerned that they didn't know anything about it, because if it was going to be obvious to anyone it should've been obvious to them.

"It just tells you how difficult it may have been to find these transactions," he said.

Arthur Andersen, once one of the nation's largest accounting firms, has been reduced to a shadow of its former corporate self as the result of its role in last winter's Enron debacle. The firm was recently convicted of one count of obstruction of justice for destroying Enron-related documents.

Sidgmore began his news conference by taking note of an "understandable outpouring of outrage and anger," but he firmly insisted that the management team he heads had worked from the outset to make the facts public.

"It was this company that audited our auditors. It was this company that turned ourselves in. ... It is this management team that will take this company forward and restore public confidence," he said.

That remained to be seen.

The company's stock is to be delisted on NASDAQ on Friday. And Harvey Pitt, the chairman of the Securities and Exchange Commission, has derided as "wholly inadequate and incomplete" a sworn statement in which the company explained how it had masked the $4 billion.

Whatever the impact on the firm itself, WorldCom's problems have robbed thousands if not millions of investors of retirement funds, and changed the political landscape in Congress.

Bush has repeatedly expressed outrage at the firm's behavior in recent days. And Senate Majority Leader Tom Daschle has announced that legislation to crack down on corporate irresponsibility will be the first order of business when lawmakers return to the Capitol next week.

"We completely agree with the president on this and I am committed to operating WorldCom with the highest possible standards of ethics and integrity," Sidgmore said.

Despite Pitts' criticism, WorldCom defended its report as an accurate accounting of what happened.

"We were very surprised by [Pitt's comments," company spokesman Brad Burns said Tuesday. "Based on the SEC order and conversations with SEC staff, we believe they were clear on what we would be able to provide at this time. Our response was entirely in line and is in fact a summary of what we know at this point."

Defense Secretary Donald H. Rumsfeld, said he doesn't believe WorldCom's shaky financial situation poses a risk for the Pentagon, which uses some of the company's communications systems.

The General Services Administration, which oversees federal contracts, said Monday that it was reviewing all of WorldCom's government contracts.

In the latest development as WorldCom's travails grew, the state comptroller in New York asked a federal court Tuesday to allow him to lead a shareholder lawsuit against the company, some of its executives and Arthur Andersen.

The state's pension fund has lost some $300 million on its investment in WorldCom stock.

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