WorldCom and the bankruptcy court each issued a report claiming to have found evidence that Ebbers participated in the alleged fraud. Ebbers has denied the allegations, and his lawyer, Reid H. Weingarten, says he remains confident that investigators will conclude that Ebbers engaged in no criminal or fraudulent conduct.
The two reports cover much the same ground that prosecutors have. "You have to assume the government has even more evidence," says attorney Craig Gillen. Perhaps the most damaging document was an e-mail Ebbers sent to his chief operating officer regarding one-time revenue items. At the time, WorldCom execs were seeking such items to prop up sagging revenue growth.
Still, indicting Ebbers remains tough. Proving a CEO knew about financial fraud is hard -- and this ex-CEO is a formidable opponent. When the dust settles over Oracle (ORCL
)'s $5.1 billion hostile bid for rival PeopleSoft (PSFT
) the biggest winner may turn out to be SAP (SAP
). If the deal goes through, the German giant of the corporate application software market will have a fair shot at persuading former PeopleSoft customers to switch to its software rather than Oracle's. On June 12, SAP launched an advertising campaign aimed at winning over PeopleSoft customers and began offering financial incentives to switch to SAP applications. Workers should now find it much easier to file discrimination suits against their employers. On June 9, in a unanimous ruling, the U.S. Supreme Court held that employees filing such suits do not necessarily have to produce "direct evidence" of racial, religious, or gender bias. That requirement had forced plaintiffs in many jurisdictions to come up with hard-to-find smoking gun evidence of discrimination. The case, Desert Palace vs. Costa, involved a sexual harassment complaint brought by Catharina Costa, who was fired by the Las Vegas casino after a fight with another employee. Costa was awarded $364,000 for back pay and damages. The ruling is likely to encourage employment attorneys to file more lawsuits against companies. The Sam Waksal saga is coming to a close. On June 10, the founder and former CEO of ImClone Systems was sentenced to seven years and three months in federal prison for insider trading, obstruction of justice, and tax evasion. He also must pay $4.2 million in fines and back taxes. Waksal, 55, pleaded guilty in October to tipping off family members to sell their ImClone stock after learning that the Food & Drug Administration was about to reject the company's approval application for Erbitux, an experimental cancer drug. Waksal's lawyers had asked for leniency, but Judge William Pauley said that "the harm that you wrought is truly incalculable." The justice dept. on June 10 recommended that rules governing the airline-reservations system be relaxed. But that didn't prevent the feds from criticizing online ticketer Orbitz for what it deemed anticompetitive behavior. Orbitz is owned by the nation's top five carriers and has long been criticized for offering fares that rivals can't easily match. It was the second time antitrust enforcers have singled out Orbitz in less than a month. At a Senate hearing on May 21, incoming antitrust chief Hew Pate told lawmakers that he would scrutinize Orbitz' business practices. SARS has struck again. Motorola and Texas Instruments (TXN
) warned that second-quarter sales and earnings would fall short of estimates, thanks in part to the killer disease. Both companies are heavily dependent on sales of wireless phones in Asia, where fears of severe acute respiratory disease have kept shoppers away from stores. TI is the world's largest maker of mobile-phone chips, while Motorola is the No. 2 handset maker. Another factor: Chinese phone makers. Not only are they giving Motorola a run for its money, but they also need to sell off excess inventory before buying more chips from TI and its rivals. Indeed, cell-phone makers worldwide have flooded the market with handsets, prompting the glut. For its part, Motorola has been slow to introduce new products in China, even as local rivals and Finland's Nokia release new models. -- NBC (GE
) hired FX Networks' entertainment chief, Kevin Reilly, to oversee production.
-- General Dynamics (GD
) is buying info-tech company Veridian (VNX
) as part of its move away from tank and ship manufacturing.
-- Sales of Hillary Clinton's Living History memoir got off to a fast start, giving battered booksellers a lift. RealNetworks shares fell 5%, to 6.99, on June 11 as the company prepared to price a $100 million convertible-bond offering. The dip reflected fear of dilution as the Seattle software and Web-entertainment company said terms at which the interest-free debt would convert into stock haven't been set.