Healthsouth fires its founder

Healthsouth fires its founder

Healthsouth, the scandal-ridden health services company, has fired its chief executive and chairman, Richard Scrushy.

Mr Scrushy is currently being investigated for alleged accounting fraud.

Two other senior managers at Healthsouth, including a former chief financial officer, have already pleaded guilty since the Securities and Exchange Commission said the company and Mr Scrushy inflated earnings by $1.4bn since 1999 and overstated assets by $800m.

HealthSouth provides diagnostic, outpatient surgery and rehabilitation services.

FBI

The Federal Bureau of Investigation said on Sunday it was looking at all the business interests of Mr Scrushy, who founded the company.

According to a a report in the New York Times on Monday, the FBI is investigating whether the Healthsouth boss may have established offshore bank accounts last year as a tax haven.

HealthSouth said it would not grant its founder severance payments or benefits while it also said it would replace Ernst & Young as its long-standing auditors.

Healthsouth is trying to restore investors' trust after it said previous financial statements could not be trusted.

The departure of Mr Scrushy comes after two former chief financial officers, Weston Smith and William Owens, pleaded guilty to criminal fraud charges and agreed to cooperate with the investigation into the co-founder of the Alabama-based company.