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WorldCom reveals multibillion dollar fraud

WorldCom Inc. spiraled toward bankruptcy after the telecommunications giant reported that it disguised $3.8 billion (¥456 billion) in expenses. It appears to be one of the largest cases of accounting fraud ever.

WorldCom, the nation's No. 2 long-distance carrier, said June 25 that more than $3 billion (¥360 billion) in expenses in 2001 and $797 million (¥95 billion) in the first quarter of 2002 were wrongly listed on company books as capital expenses, and thus not reflected in its earnings results.

That means the company may have actually lost millions of dollars when it reported profits

The company said it will restate earnings for all of 2001 and the first quarter of 2002.

"Our senior management team is shocked by these discoveries," said CEO John Sidgmore.

WorldCom also announced that its chief financial officer, Scott Sullivan, has been fired. The company added that it would also lay off 17,000 workers, starting June 28.

The news could be the final blow to WorldCom, which is reeling from a low stock price, a crumbling telecommunications market and an ongoing Securities and Exchange Commission investigation, observers said.

Shukan ST: July 5, 2002

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News WorldCom reveals multibillion dollar fraud WorldCom Inc. spiraled toward bankruptcy after the telecommunications giant reported that it disguised $3.8 billion (¥456 billion) in expenses. It appears to be one of the largest cases of accounting fraud ever. WorldCom, the nation's No. 2 long-distance carrier, said June 25 that more than $3 billion (¥360 billion) in expenses in 2001 and $797 million (¥95 billion) in the first quarter of 2002 were wrongly listed on company books as capital expenses, and thus not reflected in its earnings results. That means the company may have actually lost millions of dollars when it reported profits The company said it will restate earnings for all of 2001 and the first quarter of 2002. "Our senior management team is shocked by these discoveries," said CEO John Sidgmore. WorldCom also announced that its chief financial officer, Scott Sullivan, has been fired. The company added that it would also lay off 17,000 workers, starting June 28. The news could be the final blow to WorldCom, which is reeling from a low stock price, a crumbling telecommunications market and an ongoing Securities and Exchange Commission investigation, observers said. Shukan ST: July 5, 2002 (C) All rights reserved