TMCnet News
Verizon to pay double penalty: For not creating 160 jobs two years in a row, the company will pay $560,000.(Tulsa World (OK) (KRT) Via Thomson Dialog NewsEdge) Mar. 18--Verizon Communications Inc. will pay $560,000 in fines to Oklahoma by March 31 for its failure to fulfill an agreement to create 160 jobs in each of the last two years, company and state officials said Friday. Verizon spokeswoman Stefanie Scott and officials with the Oklahoma Department of Commerce said the penalties are justified because Verizon employed 1,763 people in the state Dec. 31, about the same as a year earlier and down about 200 employees from two years ago. Most Oklahoma employees of Verizon, a New York-based telecommunications company, work at the Cherokee Industrial Park in Tulsa. Commerce Department spokeswoman Leslie Blair noted that the $560,000 fine is double the $280,000 Verizon paid last March for its failure to create 160 jobs in 2004. "We've not received the payment yet" for 2005, Blair said. "It's due before March 31, but the payment we received last year was on time, and we anticipate it will be on time this year." The financial penalties for failure to create jobs in the state were worked out two years ago in an agreement between Oklahoma Attorney General Drew Edmondson and MCI Inc., the Ashburn, Va.-based telecommunications company that Verizon acquired in January. Edmondson filed 15 criminal charges against WorldCom, MCI's predecessor company, and six of its executives in August 2003. Oklahoma was the first state to pursue criminal charges against WorldCom, which collapsed and filed for bankruptcy protection in July 2002. The $11 billion accounting scandal that led to the collapse cost investors an estimated $180 billion. If the company had been found guilty of violating state securities laws, state officials said, a judge could have ordered it to pay $64 million, the amount lost by the state's pension funds, which had invested in the company's stock, as a result of WorldCom's fraudulent accounting. State and federal prosecutors accused the company and former CEO Bernard Ebbers of falsifying information on which investors relied, making the company appear stronger than it was. In March 2004, Oklahoma County Judge James Paddleford dismissed the criminal charges against the company at Edmondson's request. "If we took this case to trial and won," Edmondson said at the time, "the company likely would go out of business and we would be stuck at the end of the bankruptcy line. This economic development agreement is restitution in a different form." When he filed the criminal charges, Edmondson said a felony conviction in Oklahoma would not put the company out of business, but it would have to disclose the conviction as part of any stock or financial transactions. At the time, Edmondson said the charges were filed because "we feel this company and these individuals need to be punished." In exchange for dismissal of state felony fraud charges against MCI and several executives, MCI pledged to create 1,600 jobs at an average annual salary of $35,000 each over 10 years. MCI agreed to waive $15.4 million in state Quality Jobs incentives, officials said. If the company failed to live up to its obligation to create 160 jobs a year, it agreed to pay penalties of 5 percent of the $35,000 salary on each job it did not create. For the 160 jobs it failed to create in 2004, the company paid 5 percent, or $1,750, of the $35,000 salary per job. The fine was $280,000, which it paid last March. Because the company also failed to create 160 jobs in 2005, the fine it is paying this year is the same $280,000 plus another $280,000 for not meeting 2004's obligation, the Commerce Department's Blair said. "This year, they have to pay $560,000 because they still didn't create 160 jobs" in 2004, Blair said. "It's cumulative," she said. Scott said Verizon actually paid the state $117,000 in 2005 because the Oklahoma Tax Commission owed MCI $162,675. That money offset what Verizon owed. As for jobs in Tulsa, Verizon employees here, speaking on condition that they not be identified, said layoffs are in the works. Scott said that 10 to 15 Verizon employees in Tulsa were laid off March 10. Today, it's a different story. Ebbers, whose decade-long series of acquisitions transformed a small Clinton, Miss., telephone company into one of the largest telecommunications outfits in the world, was convicted a year ago of securities fraud, conspiracy, and filing false documents with regulators. Last July in New York, U.S. District Judge Barbara Jones sentenced Ebbers to 25 years in federal prison in Mississippi. Now 64, Ebbers is out on bond while he appeals his conviction. ------------ D.R. Stewart 581-8451 [email protected] |