Extraordinary Circumstances: The Journey of a Corporate Whistleblower.

• Author: Marshall, Jeffrey
• Position: Bookshelf - Book review

Extraordinary Circumstances: The Journey of a Corporate Whistleblower. By Cynthia Cooper. John Wiley & Sons, 402 pages. $27.95.

By now, the outlines of Cynthia Cooper's story are well-known. In 2002, as head of the internal audit team at telecom giant WorldCom Inc., she blew the whistle on what became the largest corporate fraud in U.S. corporate history, eventually reaching $11 billion. As a direct result, the company's founder and CEO, Bernie Ebbers, is serving an extended prison sentence, and Scott Sullivan--the CFO who masterminded the fraud and forced underlings to restate entries to allow WorldCom to meet its earnings targets--was sentenced to a lengthy prison term.

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Cooper tells her story in tremendous, sometimes exhaustive detail. Long chapters recount events and conversations and highlight the anguish she and her auditors felt as the shape of the fraud became clearer. Later chapters explore the tangled web of investigations--including those by the FBI and the U.S. Securities and Exchange Commission--and Cooper's own doubts and fears over her legal situation, as well as the trials of Sullivan and Ebbers.

The villain of the piece is clearly Sullivan, who had been kissed by celebrity in the go-go years of the late 1990s as Mississippi-based WorldCom grew exponentially through acquisition. It was Sullivan who, Cooper writes, pressured Controller David Myers and a number of accounting managers to book a raft of costs under a mysterious category, "prepaid capacity," that the accountants and auditors scratched their heads over.

However, they were prepared to give Sullivan the benefit of the doubt--at least initially. But Cooper, in particular, grew increasingly puzzled over prepaid capacity (initially viewed as capitalized labor and leases) and came to see it as a scheme for moving large numbers from the income statement to the balance sheet, boosting WorldCom's profits.

Cooper does a wonderful job of limning some of the ironies behind WorldCom's rise and fall. She devotes pages to Ebbers, a former basketball player from Canada given to...