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CNN Live Event/Special

Former CEO May Return to Healthsouth

Aired May 29, 2003 - 19:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


ANDERSON COOPER, HOST, LIVE FROM THE HEADLINES: Well, there's speculation a controversial executive may be angling to return to its old company. Healthsouth founder Richard Scrushy was ousted two months ago amid fraud charges. Now Scrushy's chief lawyer is talking about a bid to buy the health-care services provider using Scrushy as an adviser.
That prospect alarms -- even terrifies -- many of Scrushy's former employees. Joining us to try to sort all of this out, Andy Serwer -- "Fortune" magazine editor-at-large.

I've been following this story for weeks in the "Wall Street Journal." -- just fascinating. Explain a little bit -- who is this guy and what is he alleged to have done wrong with this company?

ANDY SERWER, EDITOR-AT-LARGE, "FORTUNE" MAGAZINE: Well, you know, of all these corporate scandals and all these disgraced CEOs, Richard Scrushy, the founder and CEO of Healthsouth, to me is best one. He's the most colorful. He's the best to talk about. I mean he's really amazing. He was sort of like the emperor of Alabama -- or he fancied himself.

Healthsouth is an outpatient rehab chain that is nationwide. Over 1,700 of them based in Birmingham, Alabama. In other words, you get surgery, Anderson, and you go to one of these clinics to rehabilitate. This company -- he founded it 19 years ago from basically nothing, and he built this thing up into a huge empire that was the glory of Wall Street, and he collected a lot of money.

The feds have accused him of perpetrating a $2.5 billion fraud upon the company. Eleven executives have already pled guilty. The noose is tightening around Scrushy. So far he hasn't been indicted yet. But it looks like he will. And now we hear that he may be planning a comeback. It's really unbelievable.

COOPER: And you travel in very exalted circles, I understand. You actually have hung out with this guy. What is he like?

SERWER: Well, one time I interviewed him, and another time I hung out with him at the Rock n' Roll Hall of Fame in Cleveland when his band performed.

COOPER: How that came out I'll never know.

SERWER: It's interesting stuff. This is his band, a picture of him playing guitar there -- his band proxy. And he had another band called Dallas County Line before that. Always loved music, always loved entertainment, rock stars, athletes. Bo Jackson was involved.

COOPER: So what is he alleged to have done with all this money?

SERWER: Well, he did an amazing amount of constructing of homes for one thing for himself. He built three houses, one in Lake Martin, Alabama, another in suburban Birmingham, another in Palm Beach. I mean, the one in Lake Martin, Alabama, for instance -- there is Scrushy right there -- it can only be described as an Italian villa in rural Alabama.

COOPER: The little detail that has fascinated me about this story is that he hired the kid from "The Wonder Years" to be his corporate communications executive.

SERWER: I like to think of it as he just hired him to be his friend. We couldn't really figure this out. Wayne Herve (sic), who played the big brother.

COOPER: The guy on the left.

The big brother in "The Wonder Years." There he is right there. That guy. He hired him to be his communications director. And they just palled around together. Him and his wife -- and Scrushy's wife -- would go and, you know, plan weekends together.

COOPER: And watch Nick at Nite a lot.

SERWER: Yes. Exactly.

COOPER: There's been pretty much a backlash in this community. There was a statue of him that was defaced, I think.

Yes. This guy built monuments to himself. Look at this. This is a statue he built of himself, and someone decorated it, didn't they, Anderson? That's "thief," if you can't read it.

COOPER: He built a statue to himself.

SERWER: Well, upstairs in his offices, he had a display case -- a display room, 50 display cases filled with pictures of him with rock stars and country stars, you know, magazine covers. Fifty cases filled with this stuff. There was a museum about the history of the company. I mean, just way over the top.

COOPER: This isn't ending anytime soon. This is going to go on and on.

SERWER: Well, it's going to go on and on because the feds are still trying to figure out how to indict this guy. He's got, obviously, huge, high-powered legal talent trying to help him out right now. And these things take a long time. It's very complicated stuff. He's denying that he knew anything about what happened at this company even though it was his own making.

COOPER: Fascinating. Andy Serwer, thanks. Interesting stuff.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com







Aired May 29, 2003 - 19:30   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANDERSON COOPER, HOST, LIVE FROM THE HEADLINES: Well, there's speculation a controversial executive may be angling to return to its old company. Healthsouth founder Richard Scrushy was ousted two months ago amid fraud charges. Now Scrushy's chief lawyer is talking about a bid to buy the health-care services provider using Scrushy as an adviser.
That prospect alarms -- even terrifies -- many of Scrushy's former employees. Joining us to try to sort all of this out, Andy Serwer -- "Fortune" magazine editor-at-large.

I've been following this story for weeks in the "Wall Street Journal." -- just fascinating. Explain a little bit -- who is this guy and what is he alleged to have done wrong with this company?

ANDY SERWER, EDITOR-AT-LARGE, "FORTUNE" MAGAZINE: Well, you know, of all these corporate scandals and all these disgraced CEOs, Richard Scrushy, the founder and CEO of Healthsouth, to me is best one. He's the most colorful. He's the best to talk about. I mean he's really amazing. He was sort of like the emperor of Alabama -- or he fancied himself.

Healthsouth is an outpatient rehab chain that is nationwide. Over 1,700 of them based in Birmingham, Alabama. In other words, you get surgery, Anderson, and you go to one of these clinics to rehabilitate. This company -- he founded it 19 years ago from basically nothing, and he built this thing up into a huge empire that was the glory of Wall Street, and he collected a lot of money.

The feds have accused him of perpetrating a $2.5 billion fraud upon the company. Eleven executives have already pled guilty. The noose is tightening around Scrushy. So far he hasn't been indicted yet. But it looks like he will. And now we hear that he may be planning a comeback. It's really unbelievable.

COOPER: And you travel in very exalted circles, I understand. You actually have hung out with this guy. What is he like?

SERWER: Well, one time I interviewed him, and another time I hung out with him at the Rock n' Roll Hall of Fame in Cleveland when his band performed.

COOPER: How that came out I'll never know.

SERWER: It's interesting stuff. This is his band, a picture of him playing guitar there -- his band proxy. And he had another band called Dallas County Line before that. Always loved music, always loved entertainment, rock stars, athletes. Bo Jackson was involved.

COOPER: So what is he alleged to have done with all this money?

SERWER: Well, he did an amazing amount of constructing of homes for one thing for himself. He built three houses, one in Lake Martin, Alabama, another in suburban Birmingham, another in Palm Beach. I mean, the one in Lake Martin, Alabama, for instance -- there is Scrushy right there -- it can only be described as an Italian villa in rural Alabama.

COOPER: The little detail that has fascinated me about this story is that he hired the kid from "The Wonder Years" to be his corporate communications executive.

SERWER: I like to think of it as he just hired him to be his friend. We couldn't really figure this out. Wayne Herve (sic), who played the big brother.

COOPER: The guy on the left.

The big brother in "The Wonder Years." There he is right there. That guy. He hired him to be his communications director. And they just palled around together. Him and his wife -- and Scrushy's wife -- would go and, you know, plan weekends together.

COOPER: And watch Nick at Nite a lot.

SERWER: Yes. Exactly.

COOPER: There's been pretty much a backlash in this community. There was a statue of him that was defaced, I think.

Yes. This guy built monuments to himself. Look at this. This is a statue he built of himself, and someone decorated it, didn't they, Anderson? That's "thief," if you can't read it.

COOPER: He built a statue to himself.

SERWER: Well, upstairs in his offices, he had a display case -- a display room, 50 display cases filled with pictures of him with rock stars and country stars, you know, magazine covers. Fifty cases filled with this stuff. There was a museum about the history of the company. I mean, just way over the top.

COOPER: This isn't ending anytime soon. This is going to go on and on.

SERWER: Well, it's going to go on and on because the feds are still trying to figure out how to indict this guy. He's got, obviously, huge, high-powered legal talent trying to help him out right now. And these things take a long time. It's very complicated stuff. He's denying that he knew anything about what happened at this company even though it was his own making.

COOPER: Fascinating. Andy Serwer, thanks. Interesting stuff.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com