Verizon merger talks raised in trial

NEW YORK -- The former finance chief of WorldCom Inc. testified Thursday that the company called off 2001 merger talks with Verizon after he and CEO Bernard Ebbers worried Verizon officials would discover WorldCom's cooked books.

Scott Sullivan testified there were concerns that Verizon Communications Inc. would uncover the fraud during a process called due diligence, in which companies considering a merger examine each others books.

"I said to Bernie, if we get to the next step with Verizon where we start to exchange nonpublic information, the details of our financial statements, I have concerns ... because of the adjustments we have made," Sullivan testified.

"He said, you're right," Sullivan continued, referring to Ebbers. "This probably isn't a good time to be talking to Verizon anyhow because our stock price isn't where it needs to be."

WorldCom and Sprint Corp. had a potential merger voided by the Justice Department in 2000, but the talks with Verizon came in 2001, when WorldCom's $11 billion accounting fraud was well under way.