Bernard Ebbers, telecoms billionaire fraudster, dies at 78
Prior to the turn of the millennium, Bernard Ebbers’ life could appear to some to embody the American Dream itself.
Without any accounting or business qualifications, Ebbers became a successful businessman and in 1983 joined a group of people in investing in a telecoms company called Long Distance Discount Services (LDDS).
Two years later, Ebbers was CEO of LDDS and was well-positioned to capitalise on the breakup of AT&T’s monopoly on US telecoms.
Rapid growth followed and, by 1995, LDDS changed its name to LDDS WorldCom and was soon the second largest US long-distance provider.
Through a strategy of aggressive acquisitions, Ebbers had grown WorldCom into a telecoms colossus, but below the surface the numbers did not add up. By 2002, the company was in $30 billion of debt as a result of 75 acquisitions. Ebbers resigned.
Soon afterwards it came to light that WorldCom had misreported $3.9 billion in expenses, and the company quickly filed what was then the largest bankruptcy in US history.
By 2005, Ebbers was on trial on multiple financial offences, including fraud.
At the trial, Ebbers took to the stand to profess his ignorance of the company’s cooked books. “I know what I don’t know,” he said. “To this day, I don’t know technology, and I don’t know finance or accounting.”
But his claimed ignorance was not enough. Ebbers received a 25-year prison sentence, which he served until December 2019 when he was released due to deteriorating health.
He died on Sunday, aged 78.
On the day after his death, the telecoms industry will remember Ebbers, in part, as a cautionary tale against the allure of short-term earnings from a time when the telecoms industry was at its peak.
Now, with 5G about to facilitate Industry 4.0 and the myriad of related startups vying for position, the telecoms industry is once again on the brink of explosive growth.
The question for industry players now is how to harness that growth for the long term and secure their future in this volatile ecosystem.
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