HealthSouth ex-boss indicted

Healthsouth provides medical rehabilitation services

Richard Scrushy, the former head of US medical services firm HealthSouth, has been charged with criminal offences over his role in an alleged accounting scandal.

Mr Scrushy was on Tuesday charged with a total of 85 offences, including conspiracy to commit fraud, filing false financial statements and money laundering.

Prosecutors allege that Mr Scrushy and other HealthSouth executives added about $2.7bn in phantom profits to the firm's books in a scam that began in 1996.

Mr Scrushy, who plans to plead not guilty, faces up to 650 years in jail and $36m in fines if convicted.

He has previously denied all knowledge of the alleged scam.

New laws

Accounting problems first came to light at HealthSouth in March this year, when US financial watchdogs opened an investigation into the company.

The revelations brought the firm to the brink of bankruptcy after banks suspended its credit line.

Mr Scrushy, HealthSouth's founder, chief executive and chairman, resigned in March after the firm admitted that its published accounts were unreliable.

The HealthSouth affair carried echoes of the Enron and WorldCom scandals, which last year shook investor confidence in companies' financial statements and triggered a steep slump on the stock market.

On Tuesday, Mr Scrushy became the first chief executive to be charged with breaching the Sarbanes Oxley Act - a law introduced in the wake of the Enron and WorldCom frauds which obliges corporate bosses to vouch for the accuracy of their companies' results.

A total of 16 former people have so far been charged in connection with the HealthSouth investigation.