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The significance of the role of lawyers may not be as great at WorldCom as in some other companies. It’s probably one reason why we’re as successful as we’ve been.” That was P. Bruce Borghardt in a 1997 interview with Legal Times (a sibling publication of Corporate Counsel). At the time he was the general counsel for corporate development at WorldCom, Inc., which was in the midst of a merger with MCI Communications Corp. Today, Borghardt is gone, WorldCom is bankrupt, and striking lapses by its legal department have been laid bare in two reports released in June. One investigation was conducted by William McLucas of Wilmer, Cutler & Pickering for the company’s board of directors. The other was prepared by Kirkpatrick & Lockhart’s Dick Thornburgh, a court-appointed examiner in WorldCom’s bankruptcy case. Together the two reports describe a splintered law department that failed as a safeguard against apparent wrongdoing by board members and senior managers, most notably ex — CEO Bernard Ebbers. General counsel Michael Salsbury, who had a 24-year relationship with the telecom giant, resigned on June 10 after the reports were made public. In a statement issued by MCI — as the company now calls itself — Salsbury said that he didn’t want the McLucas report’s “characterization of certain incidents unrelated to the accounting fraud to become an obstacle to the company’s emergence” from bankruptcy. While the McLucas report doesn’t accuse Salsbury of any misconduct, the Thornburgh study faults Salsbury for his role in WorldCom’s purchase of Intermedia Communications Inc. The acquisition “wasted company assets amounting to at least several billion dollars,” the Thornburgh study states. Salsbury, 54, could not be reached for comment. Borghardt gets tougher treatment in the reports, which suggest that he was aware as early as September 2000 that Ebbers and the WorldCom board were pushing the corporate-governance envelope. In particular, the reports cite Borghardt’s actions in connection with a company loan to Ebbers, as well as a stock sale by the CEO. Responding to the investigations, Borghardt says, “There were certainly factual inaccuracies in the reports, and I disagree with some of their conclusions, based on those inaccuracies and other reasons.” Borghardt no longer works for WorldCom, but declined to discuss the timing or circumstances of his departure from the company. Fragmented On Purpose Ex — CEO Ebbers is explicitly blamed in the McLucas report for the “fragmentation” of the legal department, described as “an agglomeration” of lawyers from companies acquired by WorldCom. Salsbury, who worked at the premerger MCI, headed the largest group, a Washington, D.C. — based team of 250 lawyers. Dubbed the Law and Public Policy Department, it handled regulatory work and litigation. Borghardt, based in St. Louis, oversaw WorldCom’s corporate legal matters. He reported directly to Ebbers until 2002, according to both teams of investigators. The McLucas study says that “in light of what [Borghardt] described as Ebbers’s strong feelings about controlling discussions within the company, [Borghardt] did not regularly consult Salsbury or provide him copies of corporate-related documents.” According to both reports, none of the company’s senior in-house lawyers was located in its Jackson, Mississippi, corporate headquarters, which housed Ebbers, then — chief financial officer Scott Sullivan, and other senior managers. “Ebbers did not include the company’s lawyers in his inner circle and appears to have dealt with them only when he felt it necessary,” the McLucas report says. “There was no coherent reporting structure or hierarchy, and they had limited support from senior management.”

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