Bernard John Ebbers (August 27, 1941 – February 2, 2020) was a Canadian businessman and the co-founder and CEO of WorldCom. Under his management, WorldCom grew rapidly but collapsed in 2002 amid revelations of accounting irregularities, making it at the time one of the largest accounting scandals in the United States. Ebbers blamed his subordinates but was convicted of fraud and conspiracy. In December 2019, Ebbers was released from Federal Medical Center, Fort Worth, due to declining health, having served 13 years of his 25-year sentence, and he died just over a month later.
In 2013, Portfolio.com and CNBC named Ebbers as the 5th-worst CEO in American history. In 2009, Time named him the 10th most corrupt CEO of all time.
Dubbed the "Telecom Cowboy," Ebbers often wore boots and blue jeans instead of the typical corporate uniform of a suit and tie. He also lived on a farm and loved to drive a tractor.
Early life and education
Ebbers was born in Edmonton, Alberta, the second of five children of Kathleen and John Ebbers, a traveling salesman. His family were devout Christians.
When Ebbers was young, the family moved to California and later lived for a while on a mission post on a Navajo Nation Indian reservation in New Mexico before moving back to Canada when Ebbers was a teenager.
After high school, Ebbers briefly attended the University of Alberta and Calvin College before enrolling at Mississippi College on a basketball scholarship. Between schools, he worked as a milkman and bouncer. An injury before his senior season prevented him from playing his final year and he was instead assigned to coach the junior varsity team. In 1967, he received a Bachelor's degree in physical education, with an academic minor in secondary education, from Mississippi College.
Career
Ebbers began his business career operating a chain of motels in Mississippi.
In 1983, in a coffee shop in Hattiesburg, Mississippi, he and 3 other investors formed Long Distance Discount Services, Inc. and in 1985, he was named chief executive officer. The company acquired over 60 telecommunications firms and in 1995, it changed its name to WorldCom.
In 1996, WorldCom acquired MFS Communications (originally Metropolitan Fiber Systems) and in September 1998, it acquired MCI Communications. In July 2000, it abandoned its planned $115 billion acquisition of Sprint Corporation after U.S. and European Union antitrust regulators raised objections.
Between September 2000 and April 2002, the board of directors of Worldcom authorized several loans and loan guarantees to Ebbers so that he would not have to sell his Worldcom shares to meet margin calls as the share price plummeted during the bursting of the dot-com bubble. By April 2002, Ebbers had lost substantial support on the board due to these loans. Additionally, a number of directors believed Ebbers had not charted a way forward after the Sprint merger collapsed. On April 26, Worldcom's board voted unanimously to demand that Ebbers resign, which he formally did on April 30, 2002. As part of his departure, his loans were consolidated into a single $408.2 million promissory note. In 2003, Ebbers defaulted on the note and Worldcom foreclosed on many of his assets.
Awards and accolades
Mississippi Business Hall of Fame (May 1995) Member of Wired 25 (November 1998) 25 most powerful people in networking by Network World (January 4, 1999) Time Digital 50 (1999) Honorary Doctor of Laws, Mississippi College (1992) Honorary doctorate, Tougaloo College (1998)
Fraud
On June 25, 2002, WorldCom admitted to nearly $3.9 billion in accounting misstatements and on July 22, 2002, it filed for bankruptcy.
The figure eventually grew to $11 billion. This initiated a series of investigations and legal proceedings, which focused on Ebbers, WorldCom's former CEO.
Ebbers blamed the accounting scandal on his subordinates.
Congressional hearing
In response to a subpoena, Ebbers appeared before the U.S. House Committee on Financial Services on July 8, 2002. At these hearings, Ebbers stated "I do not believe I have anything to hide, I believe that no one will conclude that I engaged in any criminal or fraudulent conduct."
After making this statement, Ebbers asserted his right against self-incrimination per the Fifth Amendment to the United States Constitution. Ebbers's statement constituted testimony that could not undergo cross-examination and Ebbers was threatened with Contempt of Congress charges, although no charges were filed.