People who worked with Richard C. Breeden in his effort to help save MCI Inc. from bankruptcy describe him as a "bulldog" likely to bring tenacity, integrity and independence to his oversight of KPMG LLP's tax fraud deal with the Justice Department.
The former Securities and Exchange Commission chairman was named yesterday to monitor the accounting firm's agreement to defer criminal prosecution and pay $456 million in fines because it helped wealthy people evade billions of dollars in taxes.
Current and former MCI officials, lawyers who have worked closely with Breeden and outside analysts said he would bring an invaluable quality to KPMG: the trust of government regulators.
They said KPMG is getting a detail-oriented man who will demand the widest possible authority to ensure that the firm keeps its commitments to the government and that there is no more wrongdoing.
"He was a hard-ass who wanted to do absolutely the right thing," said Dennis R. Beresford, an MCI board member and University of Georgia accounting professor.
"I use the term 'hard-ass' in a favorable way. He took the job very seriously, wasn't overly influenced by what the company wanted [and] was acting in the way he thought his public responsibilities required," he added.
"He'll bring credibility to the process. The people at the SEC and the Justice Department will know that Richard will not compromise on doing things the right way," said former MCI general counsel Michael H. Salsbury, who is now a partner at the Chadbourne & Parke LLP law firm in the District.
"He's a bulldog," Salsbury added. "He is no wallflower, trust me."
KPMG's agreement with the Justice Department requires it to give up its private client tax practice next year, to tighten its ethics and compliance efforts, and to cooperate with the government's investigation, which yesterday led to the indictment of eight former KPMG officials and a lawyer.
It spares the company, for now, from being indicted itself.
The agreement gives Breeden wide authority to obtain documents from the accounting firm, to interview any KPMG official he wishes, and to take part in "any meeting concerning any matter within or relating to his or her jurisdiction."
Breeden played a similar role, and demanded similarly sweeping authority, at MCI, where he has overseen the telecommunications company formerly known as WorldCom Inc. since its massive accounting fraud came to light in 2002.
KPMG's agreement requires the firm to pay Breeden, who is estimated to bill $800 an hour for his time and who will serve as monitor for three years. Breeden, who runs his own Connecticut-based consulting firm, did not return calls yesterday.
Prosecutors knew of Breeden's meticulous approach to previous assignments at MCI and Hollinger International Inc., a key reason they pushed him for the KPMG post, according to a senior Justice Department official. Working on behalf of Hollinger's board, Breeden has sued former company executives accused of looting the newspaper publisher.
People inside and outside MCI said the management sometimes chafed at Breeden's authority.
"They all thought that he was very tough," said former FCC chairman Reed E. Hundt, who was not involved in the MCI case but who has tracked it closely. "If he was tough, the bottom line is that the company was saved."
"If you are a company, you are in jeopardy, and you want to persuade the government . . . that you have turned over a new leaf and that you are going to conduct yourself the way you are supposed to, Richard Breeden is one of a very small universe of people who can meet that need," said Charles E. Davidow, a Wilmer Cutler Pickering Hale and Dorr partner who helped investigate WorldCom's accounting fraud.
Staff writer Carrie Johnson contributed to this report.