Arrests Won't Impact Mississippi Probe Of WorldCom

Secretary of State Eric Clark says the federal arrests of two former WorldCom executives will have no bearing on an ongoing state probe.

"We, of course, are working with federal officials,'' Clark said Thursday. "However, our office, the attorney general, the auditor's office and the treasurer's office are all working to determine whether state law was violated'' by former officials of the Clinton-based company.

Former chief financial officer Scott Sullivan, 40, and former controller David Myers, 44, surrendered Thursday to the FBI in New York on charges of falsifying books by $3.8 billion at the now-bankrupt long-distance and Internet services company. Their arrests are the latest blow to the company and corporate America, which has seen investors bail out of the stock market because of one accounting scandal after another.

Clark said state officials had been told in advance the arrests were being planned. Attorney General Mike Moore skipped a speaking engagement Thursday at the Neshoba County Fair to meet with federal authorities in New York investigating the WorldCom scandal.

"The issue of whether my office will bring civil action or the attorney general will bring criminal action will have to be determined based on state laws,'' Clark said. "We're still investigating.''

Clark has subpoenaed records of WorldCom's auditors to determine if any state securities laws have been broken. He said subpoenas were issued to Arthur Andersen LLP and KPMG LLP. Thursday's federal charges put pressure on Sullivan and Myers to tell investigators what they know about their former boss, former chief executive Bernard Ebbers, who also is being investigated by prosecutors.

A statement from Ebbers' attorneys Thursday said the former CEO "always believed Sullivan and Myers to be competent, ethical and loyal employees, devoted to the welfare of WorldCom.''

The statement added, "Today's actions may be good theater for the media and useful to politicians, but they don't prove that Sullivan and Myers ever acted with criminal intent, an essential element we doubt the government will ever be able to prove in this case.''