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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: StanX Long who wrote (62374)	3/27/2002 4:12:52 AM
From: StanX Long	Read Replies (1) \| Respond to of 70976

A Suit Says WorldCom Deals Obscured Millions in Bad Debt March 27, 2002 By BARNABY J. FEDER nytimes.com A lawsuit quietly moving forward against the telecommunications giant WorldCom (news/quote) accuses the company of using concealed transactions and sham contracts to avoid reporting an uncollectible debt of $165 million. WorldCom says the suit, brought by shareholders of a company, now bankrupt, in which WorldCom was an investor, has no merit. But a San Francisco judge ruled that the accusations were detailed enough for the case to proceed. The two sides are now disputing whether WorldCom's chief executive, Bernard J. Ebbers, and chief financial officer, Scott D. Sullivan, must submit to pretrial questions and cross-examination, according to the plaintiffs' lawyer. The suit is unfolding at an awkward time for WorldCom, which has disclosed that the Securities and Exchange Commission is investigating its accounting practices. The suit grows out of WorldCom's relations with Cherry Communications and World Access (news/quote), two small long-distance companies that went bankrupt after extensive dealings with WorldCom and each other. According to a suit filed last June in San Francisco Superior Court, Cherry and World Access were pawns in an intricate and deceptive plan that began in 1997 as an effort by WorldCom to avoid writing off as uncollectible a $165 million debt that Cherry owed WorldCom. The suit contends that WorldCom helped engineer a bankruptcy filing by Cherry and arranged for Cherry's subsequent merger into World Access in 1998. According to the suit, WorldCom then took part in transactions that misleadingly inflated the value of World Access, a publicly traded long-distance company based in Atlanta. The goal, the suit says, was to help World Access use its high-priced stock to buy numerous small companies that had sprung up to offer phone services in Europe as telecommunications there were being deregulated. WorldCom and World Access executives viewed the strategy as an efficient way to build an enterprise that WorldCom itself would eventually buy, the suit says. Topics Alerts WorldCom Incorporated Executives and Management Suits and Litigation Bankruptcies Create Your Own \| Manage Alerts Take a Tour Sign Up for Newsletters Get Stock Quotes Look Up Symbols Portfolio \| Company Research U.S. Markets \| Int. Markets Mutual Funds \| Bank Rates Commodities & Currencies A WorldCom spokesman, Bradford Burns, said, "We believe the claims are without merit and will certainly be contesting them vigorously." He declined to comment further on the suit.