Corporate America hit by biggest scandal in history

The Times (U.K.) ^ | 06/26/2002 | Chris Ayres

[Pokey78]

CORPORATE America suffered its biggest scandal to date last night when it was claimed that WorldCom, a telecommunications company founded by a devout Mississippi Christian, had lied about making about $3.85 billion (£2.6 billion) of profits over 15 months.

The size of the alleged profits overstatement at WorldCom is more than double the previous record, set by the pharmacy chain Rite Aid, and makes the accounting irregularities at Enron Corporation look like a rounding error. WorldCom, already crippled by nearly $30 billion of debt, is now expected to go bust.

Brad Burns, a WorldCom spokesman, could not be reached for comment by The Times last night. The alleged WorldCom fraud comes amid a crisis of confidence in US capitalism, after a series of accounting scandals at Tyco International, Kmart, Enron and Global Crossing.

The accounting problems at WorldCom, described as a “massive fraud” by sources last night, were discovered during an internal investigation at the firm. WorldCom has fired its chief financial officer, Scott Sullivan.

Last night’s revelation is likely to result in questioning of Bernie Ebbers, WorldCom’s cowboy-booted founder and former chief executive, who was ousted in May.

Until yesterday, Mr Ebbers, 60, was most famous for giving himself a $366 million personal loan from WorldCom’s bank account. The loan, to cover some of Mr Ebbers’s share trading debts, caused widespread outrage on Wall Street.

The former WorldCom chief was one of Wall Street’s most charismatic chief executives. He still drives a tractor on his brother’s cattle ranch and takes Sunday school classes at a Baptist church in Mississippi. According to The Wall Street Journal, “it isn’t beneath him to occasionally castrate a bull”.

WorldCom’s auditing firm during the period of the accounting problems was Andersen, which was also Enron’s auditor.

It is thought that WorldCom exaggerated its profits by billions of dollars using a simple accounting trick: it booked many of its day-to-day expenses as capital expenditure. That meant that corporate expenses did not show up on its profit-and-loss account, making the firm appear far more profitable than it was.

[dts32041]

Wonder what the first couple of sentences would have said it this gentleman was a devote islamist?

[Paul Atreides]

WHEW!!!!!!!!!

[DoughtyOne]

[TLBSHOW]

No bias here is there? :)

[antidisestablishment]

Funny, according to the Washington Times, Ebbers is a Canuck:

Mr. Ebbers, a Canadian who attended Mississippi College in Clinton on a basketball scholarship, built WorldCom from a small long-distance company into a telecommunications force through more than 60 acquisitions in the past 15 years.

[Centurion2000]

Come on 4000 DOW :)

[okie01]

"Until yesterday, Mr Ebbers, 60, was most famous for giving himself a $366 million personal loan from WorldCom’s bank account."

I'm willing to bet that Mr. Ebbers was a major financial supporter of the Clintons and the DNC.

Would I be wrong?

[Mike K]

Wonder what the first couple of sentences would have said it this gentleman was a devote islamist?

You nailed that one.

[Dog Gone]

Hey, he wore cowboy boots, was from Mississippi, and was a Christian. You can't pass up the opportunity to trash those stereotypes, I reckon.

[JusticeLives]

I guess there's nothing sacred left to debauche here in America. Looks like we can't trust anyone, not even our religious leaders. I guess we'll just have to get by on our own, now.

[Dog Gone]

They would have done the same if he was from New York, wore wing-tips, and was agnostic, I'm sure.

[StormEye]

"Until yesterday, Mr Ebbers, 60, was most famous for giving himself a $366 million personal loan from WorldCom’s bank account. The loan, to cover some of Mr Ebbers’s share trading debts, caused widespread outrage on Wall Street."

Nice bank he had there! How can open I account?
(When did businesses start allowing their CEOs to loot the company bank account?)

[Steve Eisenberg]

. . . a telecommunications company founded by a devout Mississippi Christian . . . "

This is in the lead sentence of the article! As already noted, they would hardly have said in the lead that an apparently disgraced executive was a Muslim. But it is just as inconceivable that such a corporate leader would have been described in the lead as a "devout New York Jew," "Calcutta Hindu," or "Bangkok Buddhist." They will only do this to a Christian. And I say that as a Jew.

[JusticeLives]

What a clever way to take down capitalism to set up the Third Way, which Clinton said he was implementing the last 7 years in office.

Hey! Hey! Hey!
Are U 4 the Third Way!
Hey! Hey! Hey!

[eternity]

I wonder. Who was in charge of the booking? Could it be Arthur Anderson?

[desertcry]

What would one expect from a company which is headquartered in clinton? clinton's legacy is bubbling up Big Time! Hey, if perjury is ok, what's a little accounting trick? The clintons have shown America the way to a new ethics of everything goes. The Law, what Law?

[BOBTHENAILER]

and makes the accounting irregularities at Enron Corporation look like a rounding error. WorldCom, already crippled by nearly $30 billion of debt, is now expected to go bust.

Bring on Lieberman, Waxman and Daschole. Where are the hearings. What did they know and when did they tell Martha Stewart.

[Texas_Jarhead]

"company founded by a devout Mississippi Christian, had lied about"

This is a nice trick. What does the founder's devotion to Christianity have to do with anything? Oh wait, I see. ... devout... Christian... lied...

Dollars to donuts had he been a Jew, Atheist, or other then there would have been no mention of that fact.