US set to step up corporate arrests

THE 'perp walk' - when police parade the newly arrested in handcuffs past waiting Press cameras - will hot up in coming days as the US is expected to quicken the pace of executive arrests.

Among the 'perpetrators' expected to be charged with criminal conduct any day now are WorldCom chief financial officer Scott Sullivan and his former controller David Myers. The two are alleged to be at the heart of the financial wrongdoing that forced the company to restate nearly $4bn (£2.5bn) earnings and stumble into bankruptcy.

The Securities and Exchange Commission alleges that WorldCom committed fraud in accounting for operating expenses as capital costs for at least five quarters in 2001 and 2002. An internal audit of earlier years will not be completed for several more weeks.

The Justice Department may also be preparing to indict Bernard Ebbers, the former WorldCom chief executive although his attorney, Reid Weingarten, denies his client did anything wrong. Weingarten said last week that he was confident Ebbers would not be charged as long as prosecutors 'ignore the howling mob and concentrate on the evidence'.

The mob crying for justice for corporate miscreants includes the White House. President Bush was reportedly pleased when Adelphia founder and chief executive John Rigas was arrested last week, along with four others, including two sons. Rigas, in handcuffs, was hustled by a crush of reporters and led into a waiting car as if he were a common criminal.

Rigas' attorney tried to arrange for a quiet surrender. Instead, advance word of the arrest leaked to the Press, giving time for reporters to witness Rigas' downward spiral from chief executive to suspect charged with wire and mail fraud. Prosecutors allege that Rigas treated Adelphia as his own 'private piggy bank', by one account drawing out as much as $1m a month, more than six times his publicly stated annual income.

The Justice Department is under increasing pressure to bring arrests in the Enron case. It is the longest-running of the investigations into corporate wrongdoing, but the only arrests have been of three British bankers marginally related to the corporate shell game that hid debt and pumped up earnings.

That could change soon as the Justice Department net tightens around former executives including, possibly, former chief financial officer Andrew Fastow. Experts say Fastow is more likely to be charged than former Enron chief executive Kenneth Lay, who has maintained his ignorance of the complex financial dealings that eventually forced the company into bankruptcy.