A federal judge on Wednesday approved agreements raising the total settlement amount from the Worldcom fiasco to $6.1 billion, part of which will have to be paid by the company's directors.
According to reports, the settlement approved by U.S. District Judge Denise Cote called on former Worldcom directors to pay a total of up to $55 million in the settlement agreement, and former chief executive Bernard J. Ebbers will cover up to $45 million through the sale of some of his personal assets.
Other defendants in the case will be paying far larger sums. J.P. Morgan Chase will pay $2 billion of the settlement, with Deutsche Bank paying $325 million and the Arthur Anderson accounting firm covering $65 million. In a previously approved settlement, Citigroup will pay $2.58 billion of the settlement, the second largest securities settlement in U.S. history behind the Enron case.
Alan G. Hevesi, whose agency was lead plaintiff on behalf of the state retirement fund, was reportedly the driving force behind the requirement that former directors for the company and Mr. Ebbers make payments personally.
The settlement provides for payments of $6.1 billion among approximately 830,000 people and institutions that held stocks or bonds in the telecommunications company around the time of its collapse in 2002. Investigators had accused the company, which now operates under the name MCI, of committing fraud amounting to approximately $11 billion by adjusting its financial statements to give investors a false impression of the company's performance.
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