HealthSouth Sarbanes-Oxley Trial
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The trial of Bernie Ebbers may be hogging the limelight. There is another trial on, that has potentially much more resonance for American executives. Former CEO, Richard Scrushy of HealthSouth Corp. is on trial for fraud. However unlike Ebbers, the HealthSouth scandal finished after the introduction of the Sarbanes-Oxley Act of 2002. Therefore it is seen as a test of the new legislation, rather than the scandal which prompted its introduction. Just as in the Ebbers trial, the former CEO is contending that the fraud was nothing to do with him. Defence lawyers have tried to portray another executive, former CFO Bill Owens, as the mastermind. A prosecution witness has testified to the contrary though. Ken Livesay, former assistant controller said, "It was just inconveivable that something this massive was going on without his knowledge." Mr Livesay like Scott Sullivan in the Ebbers trial, has already pleaded guilty to charges against him. Mr Livesay portrayed a hard driving and intimidating leader, whom no one work cross. The trial centres on the millions Scrushy earned as CEO between 1996 and 2003. Earnings for the company were overstated. To do this millions of dollars of expenses were hidden in bogus accounts. Mr Livesay has admitted that he actually did the bookeeping for this operation. 15 executives have pleaded guilty. Included in the list of prosecution witnesses is Owens himself. Recorded conversations with Scrushy form part of his testimony. Although the fraud obviously had a lot of perpetrators, Scrushy's lawyers are saying that it was very high level accounting and that it would be easy to hide it from him. Scrushy is accused of conspiracy, fraud, money laundering, obstruction of justice, perjury, false accounting and violation of the Sarbanes-Oxley Act.
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