Ex-HealthSouth Boss Takes Fifth
Ousted HealthSouth chief Richard Scrushy is invoking his constitutional privilege and refusing to answer lawmakers' questions in their investigation of the $2.5 billion accounting scandal engulfing the major medical services company.
Scrushy sat somberly in the front row Thursday as members of House Energy and Commerce Committee's investigative panel denounced his conduct and what they called a massive fraud at HealthSouth that nearly brought it down.
Rep. Jim Greenwood, R-Pa., the panel's chairman, called Scrushy "the last man standing" after a wave of admissions and guilty pleas by former HealthSouth officials.
The flamboyant Scrushy faces a government civil suit accusing him and the company of fraud. He recently proclaimed his innocence in an interview on CBS News' "60 Minutes," saying he signed off on the fraudulent accounting figures because he trusted the five chief financial officers of the company he helped found in 1984.
Greenwood said he was deeply troubled that Scrushy granted a "no-holds-barred" interview while refusing to answer questions from Congress.
"Why is Mr. Scrushy unwilling to answer here today, under oath, some of the exact same questions asked of him by a reporter?" Greenwood demanded.
Fifteen former HealthSouth employees have reached plea deals with the Justice Department, including all five of the Birmingham, Ala.-based company's former CFOs. Scrushy hasn't been charged with any criminal wrongdoing; his lawyers have said they expect him to be indicted.
Scrushy told CBS News Correspondent Mike Wallace his top financial officers committed the fraud without his knowledge: "You have to rely, you have to trust people. You have to believe. You have to delegate. I mean, you hire them. You pay them good salaries. You expect them to do the right thing. And I signed off on the, on the information based on what was provided to me. And what I was told."
Since April, the committee has been investigating the accounting mess at HealthSouth Corp., which operates nearly 1,700 facilities for outpatient surgery, diagnostic and imaging and rehabilitation services in every state and abroad.
Other current and former HealthSouth officials also were called to testify.
Scrushy — the Jack of Hearts in a "Wall Street's Most Wanted" deck of cards now on sale — has fronted a country band that performed on television, flew some 150 friends and relatives to Jamaica for his third wedding in 1997 (Martha Stewart was on the guest list), and regularly hobnobbed with sports stars.
In May, a federal judge in Birmingham lifted a freeze requested by the Securities and Exchange Commission on Scrushy's estimated $150 million in assets. The judge also halted the SEC's civil case until the Justice Department completes its criminal investigation.
In the latest twist, Scrushy's attorneys filed a formal complaint with Justice this week charging that the lead FBI agent in the HealthSouth investigation has a "special, personal relationship" with a government witness and may have broken the law by supplying sensitive confidential information to her.
Separately, in response to memos the committee released Tuesday showing that Scrushy and associates tried to manage the public perception of an outside law firm's investigation of insider-trading allegations, former HealthSouth attorney Lanny Davis provided an Oct. 21, 2002, e-mail he sent to Scrushy and others.
The probe by lawyers at Fulbright & Jaworski found no evidence of wrongdoing by Scrushy.
"In my opinion, after discussion with most of you Sunday night, just releasing the first section on methodology and just last paragraph clearing (Scrushy) will lack context and credibility," Davis wrote.
"I also believe once everyone hears the full factual chronology in the Fulbright report, all will conclude that it needs to be available to shareholders and the public, and that it provides a critical basis for accountability and remediation by the board — something shareholders are demanding and the press is waiting for. Not releasing it also will look like a pullback on our prior commitment to transparency — with little credible explanation."