Ex-WorldCom executives agree to large payout

06.01.2005
Von Denise Pappalardo

Although MCI Inc. emerged from bankruptcy in April, it is still haunted by the ghosts that brought the company to its knees.

According to published reports, 10 ex-WorldCom directors have agreed to pay US$18 million out of their own pockets to settle a suit with the New York State Common Retirement Fund.

The personal payment is part of a $54 million deal the lawyers for the former executives struck with the state. According to reports, the deal still has to be approved by the judge on the case, which is why details are not yet public.

Typically, when a director is sued by shareholders or investors, the company and the company?s insurance often pay the penalties. But in WorldCom"s case, it was found that the boards showed poor judgment and even neglect in not recognizing fraudulent activities that eventually drove WorldCom into bankruptcy.

The board members that have agreed to a settlement include Clifford Alexander, secretary of the Army during the Carter administration, and James Allen, former CEO of Brooks Fiber, one of the over 70 companies WorldCom acquired in the 1990s.

The estate of John Sidgmore, former executive and director at WorldCom, is also contributing toward the settlement.

It still remains to be seen what will happen to WorldCom?s former CEO, Bernard Ebbers. His criminal trial is set to begin Jan. 18.