The state of Oklahoma has agreed to settle its criminal fraud case against the telecommunications giant MCI in exchange for new jobs and cooperation in its prosecution of former executives of the company, the state's top legal officer said Friday.
Under terms of the agreement, MCI would create 1,600 new jobs in Oklahoma over the next 10 years and has pledged to assist the state in its prosecution of former executives of the company formerly known as WorldCom, state Attorney General Drew Edmondson announced.
"Since WorldCom's collapse a new company has emerged from the rubble. It was never our intention to put the company out of business and MCI has taken significant steps to clean its own house," Edmondson said.
"MCI has purged itself of bad actors, appointed new executives and an entirely new board of directors it has developed an extensive training program on business ethics and accounting rules and appointed an outside auditor."
The company had faced a March 29 preliminary hearing in district court on charges contained in an indictment issued last year. It faced 15 violations of securities laws, each count carrying up to $10,000 in fines.
Prosecutors accused the company of falsifying information on which investors relied, making the company look stronger than it really was.
They said the scandal led to heavy losses by Oklahomans, including $64 million lost by state pension funds.
The new jobs to be created by MCI are to have an average salary of $35,000 a year.
Edmondson has announced he will refile securities charges against ex-WorldCom chief executive Bernard Ebbers, who was hit with federal charges earlier this month that he directed an $11 billion accounting fraud, the biggest in U.S. corporate history. Ebbers' lawyer entered a plea of innocent to the federal charges.
Oklahoma's charges against Ebbers are expected to be refiled by the end of the month. They were temporarily dropped late last year after a judge denied Edmondson's request to delay a preliminary hearing for Ebbers.
A May 17 preliminary hearing is set in Oklahoma for former WorldCom chief financial officer Scott Sullivan, who has pleaded guilty to federal charges in New York and agreed to testify against his former boss.
Ebbers and Sullivan were among six former employees of WorldCom who were accused of 15 violations of Oklahoma securities laws.
WorldCom filed for bankruptcy protection in July 2002, about three months after Ebbers resigned amid questions about the company's finances. WorldCom changed its name to MCI last April. MCI operates the nation's second largest long-distance company after AT&T Corp.
