WorldCom Files Suit Against Former Controller, Wants Him to Repay $800,000

WorldCom

The Clinton-based company filed suit Monday in Hinds County Circuit Court against David F. Myers of Madison. Myers resigned from WorldCom on June 25 when the telecom revealed it had disguised nearly $4 billion in expenses to make the company appear more profitable.

When Myers accepted the $795,000 cash-retention bonus in May 2000, he agreed to remain with WorldCom through July 2002. By leaving early, the lawsuit says, Myers violated terms of the agreement and must repay the money.

Myers, who did not answer the phone at his Madison home Tuesday, has emerged as a key figure in the accounting scandal that has placed WorldCom on the brink of bankruptcy and shaken corporate America.

Documents released Monday in Washington contained notes from a June 17 meeting involving Myers and Cynthia Cooper, an internal auditor. At the time, Myers acknowledged the company was violating accounting standards but indicated that WorldCom might collapse if it reported its financial condition honestly.

In a second meeting, Myers told Cooper that WorldCom "should probably not have" classified some business expenses to make it appear the company was more profitable, according to Cooper's notes. But since WorldCom had started the practice, during its second fiscal quarter in 2001, Myers told Cooper "it was difficult to stop."

WorldCom, which owns the carrier MCI and is second only to AT&T in the long-distance market, disclosed last month that more than $3 billion of expenses in 2001 and $797 million in the first quarter of 2002 were wrongly listed on company books as capital expenses, thus boosting reported earnings.

The lawsuit filed against Myers says the bonus was more than four times his annual salary.

But the company seemed to think he was worth it.

In a May 8, 2000, memorandum from former chief executive Bernie Ebbers to Myers, Ebbers attributes much of the company's success to "the highly talented executive team comprised of you and your peers."

Ebbers says the cash bonus is a "reflection of your value to the company."

Earlier this month, WorldCom filed a federal lawsuit against former chief financial officer Scott Sullivan, who was fired the same day that Myers resigned.

The telecom is demanding that Sullivan repay the $10 million bonus he received last year. The suit was filed in U.S. District Court in Jackson.

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