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Who is to blame?
WorldCom's chief executive, John Sidgmore, blamed the company's
former chief financial officer, Scott Sullivan, and the former controller, David
Myers. The two were fired for claiming $3.8bn in regular expenses as capital
investment in 2001. The pair were arrested in New York, handcuffed and
paraded in front of TV cameras as part of the Bush's administration
crackdown on corporate crime. Charged with securities fraud, conspiracy and
other charges, they face 65 years in prison. WorldCom's founder and former
chief executive, Bernie Ebbers, says he was unaware of the accounting
problems, and has not been charged.
WorldCom has new accountants, KPMG, who have been asked to scour
the books back to 1999. It will be virtually impossible to get an accurate
picture until a comprehensive audit for the past several years is done, a
process expected to last months. The company is also under investigation by
the department of justice and the securities and exchange commission, the
US financial regulator. WorldCom, which has been charged with fraud for
allegedly hiding $1.2bn in losses, is now under bankruptcy protection.
WorldCom said it may have to write off $50bn when it restates ifs
finances. One of the largest write-offs in corporate history, that would
amount to the 2001 gross domestic products of Hungary and the Czech
Republic. Only Time Warner's $54bn write-off was bigger.
Link: http://www.theguardian.com/business/2002/aug/09/corporatefraud.worldcom2