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MCI charges: Oklahoma gets it right

Sep 08, 20033 mins

Score one for the state of Oklahoma, which has demonstrated a clearer grasp of the issues surrounding MCI’s malfeasance than the federal government. On Aug. 27, the state announced it is filing criminal charges against WorldCom’s former CEO Bernie Ebbers, ex-CFO Scott Sullivan and four other past officers.

Maximum penalties include 10 years in jail for each individual charged. I’m hoping justice will be served, and Ebbers and Co. will do some hard time – and not in one of those minimum-security resort prisons.

Of course, lawyers for the gang of “alleged” crooks insist the crew has done nothing wrong. Fortunately, their case is looking weaker and weaker, as proof of the company’s criminal financial activity continues to grow (more on that in a minute).

If there’s one thing I’d like to make perfectly clear, it’s that I believe in individual responsibility. There’s no such thing as the “entity” of MCI (or any other company). There are only individual executives, employees and shareholders. And let’s not forget customers and competitors, who can be helped or damaged by actions of the aforementioned individuals.

Punishing “MCI” as a corporate entity doesn’t make a whole lot of sense if the individual executives who caused the damage are let off scot-free. Step 1 has to be punishing the bad guys – in particular, the folks at the helm during the period in which MCI engaged in its criminal activities. That’s the piece the feds flubbed – they haven’t even gotten around to indicting Ebbers, if you can believe it.

Good for Drew Edmondson, Oklahoma’s attorney general, who reportedly said, “I cannot understand the federal government bailing out felons.” Amen, brother.

What about the growing body of evidence of MCI’s additional criminal behavior? Several states are filing additional charges against the company, including West Virginia (civil charges for tax fraud); Oregon (civil charges regarding misleading information); Alabama (possibly filing civil charges for tax fraud as well as criminal charges); New Mexico (civil charge attempting to recoup bond losses). And let’s not forget MCI’s competitors, including AT&T and Verizon, which are suing for toll evasion.

To the extent that these charges are substantive, they should be scrutinized by the courts. (The tax fraud is a doozy.) If MCI is found guilty, appropriate action should be taken – I hope in the form of large fines that go on the company’s post-bankruptcy books and that would have to be paid off the hard way.

But for the folks at the helm of the former WorldCom, the message needs to be crystal clear: “Go to jail. Go directly to jail. Do not pass Go. Do not collect $200.” Kudos to Oklahoma for making that point.