Philadelphia, Oct. 8 (Reuters): The recent infighting and power struggles among WorldCom Inc. board members may be for naught since the telephone company’s creditors are expected to replace the board when the company emerges from bankruptcy, sources close to the company said.
The creditors’ committee “will strip it clean. Few, if any (current board members), will be there in the end,” one source said. “Why would you want any of the old regime there'”
Eight of WorldCom’s current 11 board members were at the helm when the No. 2 US long-distance telephone company improperly booked at least $ 7.68 billion in earnings and expenses, and provided $ 408 million in personal loans and lucrative pension benefits to former chief executive Bernie Ebbers.
“You need to bring folks on the board that give the public a sense of comfort on what’s coming on next,” said Charles Elson, chairman of the Center for Corporate Governance at the University of Delaware.
“You would pretty much replace the whole board, and the creditors would appoint a different calibre and breed of director—those who are truly independent and who bring financial and restructuring expertise,” Elson said.
WorldCom, the bankrupt telephone and data services company at the centre of regulatory and criminal investigations, said it recently added three new members to strengthen its board but it declined to speculate on future changes. A representative of the creditors’ committee did not immediately return calls seeking comment.
Five of the current members joined the board when WorldCom acquired their companies during its voracious acquisition spree. Others had outside business deals with Ebbers. Until this summer when WorldCom added fresh blood to the board, only two of its directors had experience beyond the telecommunications industry. “The board has to be more independent, more diverse and less buddy-buddy,” one source said.
Over the past six months, tension among WorldCom’s board members has escalated along with the company’s mounting financial and legal problems, sources said.
Four board members with long-term personal and business ties to Ebbers have clashed with chairman Bert Roberts and current CEO John Sidgmore, who took the helm in April Ebbers resigned, sources close to the company said.