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WorldCom Strips Executive Of Operational Duties

Oct 2, 2002 |

WorldCom demoted Ron Beaumont, its former chief operations officer, to president of strategy and business development on Tuesday, as questions continued to mount about what he might have known about the company's $7bn fraud.

Mr Beaumont, who once had a prominent position in former chief executive Bernie Ebbers' infamous "inner circle", had already been stripped of his COO role last month, when he was named president of global business solutions.

The move coincides with the return of Jonathan Crane to the company. Mr Crane, a former MCI sales executive, was understood to have been fired by Mr Beaumont a month ago. WorldCom said Mr Crane would be named president of sales and services.

Mr Beaumont came under fire recently when it was revealed that he was given $650,000 in personal loans by Mr Ebbers.

WorldCom said the loans were a personal arrangement between the two, and that Mr Beaumont was paying interest on the loans to Mr Ebbers.

Speculation about Mr Beaumont's future at the company has swirled since WorldCom's admission of its $7bn accounting fraud earlier this summer.

The bulk of the fraud, which was allegedly engineered by former chief financial officer Scott Sullivan, involved the transfer of the company's capital expenses to investments.

Although WorldCom's chief executive John Sidgmore has vigorously defended his colleague in the past, industry insiders have questioned how Mr Beaumont could not have noticed the discrepancies between what the company was spending on capital expenditures, and what it reported spending in its financial results.

The earlier loss of the highly regarded sales executive contributed to the management shake-up and the decision to remove Mr Beaumont's normal operating responsibilities, according to a person familiar with the changes.

Other Ebbers allies have already left the company, including Scott Sullivan, the chief financial officer, and Diana Day, the powerful head of customer service who had been one of Mr Ebbers' first hires. WorldCom is also looking to replace Mr Sidgmore as CEO.

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