Bad news for Ebbers
May 18, 2003
The bad news continues for a former executive of Mississippi's once shining telecommunication star, WorldCom. The news came late last week that Bernie Ebbers, former WorldCom chief executive, has defaulted on $408 million in loans from the company, including a $25 million payment due April 30.
The fact is there is no more WorldCom. The company officially changed its name to MCI last month and moved its headquarters from Clinton to Ashburn, Va.
But the company formerly known as WorldCom loaned Ebbers the money to prevent him from selling stock to cover massive investment losses the former CEO suffered in 2000 and 2001. Ebbers resigned from WorldCom in April 2002 and less than two months later the company revealed a $3.4 billion accounting fraud. The total is now $9 billion, the largest in U.S. history. The company is in Chapter 11 bankruptcy.
Ebbers financial woes will likely continue for awhile. Upon resignation, he agreed to a repayment schedule that called for $25 million payments in both 2003 and 2004. The payments gradually get larger with $183 million due in 2007. But, now Ebbers claims his former company has taken assets from him, so the situation has deteriorated into a legal argument that some court somewhere will have to resolve.
In the meantime, thousands of Mississippians who had nothing but faith in the company and its former management are still holding the bag. The problem is that the bag is empty.