Sullivan rose by the numbers at WorldCom

Monday, August 5, 2002

For years, WorldCom Inc. senior management was known as "The Bernie and Scott Show." As chief financial officer, Scott Sullivan could -- and often did -- complete his boss' sentences. Bernie Ebbers laid out the vision and Sullivan provided the numbers.

On Thursday, Sullivan made a handcuffed stroll before the cameras and into custody in tasseled loafers and a dark business suit, setting the stage for more questions about how much Ebbers knew about the accounting methods Sullivan allegedly used to inflate WorldCom's profits.

"They often seemed to be two men with one brain," said Patrick McGurn, vice president at Rockville, Md.-based Institutional Shareholder Services, which represents big investors.

An attorney for Sullivan, Andrew Graham, was out of the office late last week and couldn't be reached for comment.

Sullivan's roots lie in Upstate New York. He was one of the "cool guys" at Bethlehem Central High School -- a member of a high school fraternity, Sigma Kappa Delta. From there he headed to State University of New York at Oswego.

"He didn't seem like an ambitious guy. Oswego is definitely a party school," according to a high school friend. "He did not strike me as the kind that was going to grow up a successful businessman."

Still, Sullivan graduated summa cum laude and was recruited by six of the eight large accounting firms. He spent several years at KPMG LLP before moving to Florida to take a job at a long-distance phone company.

His partnership with Ebbers began in 1992 when WorldCom bought ATC Long Distance, where Sullivan was vice president and treasurer. Only an assistant treasurer with WorldCom at first, Sullivan made impressions inside and outside the company.

'Three big pluses'

Initiating coverage of the industry, Richard Klugman, an analyst at Jeffries Jefferies & Co., remembers flying to Mississippi to meet with company executives and encountering the young accountant. "I was immediately impressed," said Klugman, who has followed WorldCom since 1993. "Scott's three big pluses -- I am embarrassed to say this in hindsight -- were that he had a strong grasp of the details, he had a very smart strategic view of the business ... and he could take both of those and communicate that to the Street."

After two years Sullivan was promoted to chief financial officer, where he became a master of acquisitions from an office next to Ebbers'.

In many ways Sullivan was an odd fit with the folksy Ebbers, a country boy from Canada by way of Mississippi.

They both lacked Ivy League educations and were athletes: Sullivan was a wrestling standout in high school and Ebbers got a basketball scholarship to Mississippi College. But Sullivan never adopted Ebbers' casual style of cowboy boots and jeans. While Ebbers lived in Clinton, Miss., and often was seen around town, Sullivan kept a home in Florida, where his father also lives, and traveled to the company's Mississippi headquarters during the week.

Their differences inspired a certain confidence, however: Sullivan was viewed as the level-headed bookkeeper capable of keeping Ebbers' exuberance in check.

Sullivan's tight hold on the company's financial information sometimes spurred complaints, according to some current and former executives. "Very few people had insight into (how) the financials pulled together, the way it was structured. It really came together at Sullivan's level," said a former accountant who worked in WorldCom's Washington and Atlanta offices.

"Sullivan was the center spoke in the wheel," said another executive, who worked out of WorldCom's Clinton offices. At the end of the month, sales executives were told whether their results were above, below or on target. "You only saw yours. You didn't get everybody else's."

'How can you top this?'

With the help of acquisitions, WorldCom was on its way to becoming the second-largest telephone carrier and supplier of half of the country's Internet capacity.

Sullivan told his college alumni magazine: "Every time there is another move, another merger, I ask myself, 'How can you top this?' and every time, there has been something new to come along to offer that challenge."

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