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Non-Tech : The Enron Scandal - Unmoderated -- Ignore unavailable to you. Want to Upgrade?

To: Glenn Petersen who wrote (2505)	11/5/2002 9:46:43 PM
From: Glenn Petersen	Respond to of 3602

WorldCom accounting woes widen SEC says telecom inflated profits by $9 billion By Jared Sandberg and Susan Pulliam THE WALL STREET JOURNAL msnbc.com Nov. 5 — WorldCom Inc. inflated profits by another $1.8 billion and the company’s accounting fraud stemmed further back than previously known, according to an amended complaint filed by the Securities and Exchange Commission. WORLDCOM, which has already admitted to improperly recording $7.2 billion in profits over the past two years, inflated its profits by approximately $9 billion, the SEC said. On Monday, a special bankruptcy-court examiner accused WorldCom of a “smorgasbord” of fraudulent accounting adjustments and disclosed that ousted Chief Executive Bernard Ebbers personally guaranteed or pledged WorldCom stock in order to receive $1 billion in loans — an amount considerably higher than previously believed. In a highly critical report that is the most sweeping to date of WorldCom’s massive accounting problems, former U.S. Attorney General Richard Thornburgh describes a company culture rife with conflicts of interest and lacking proper controls. Mr. Thornburgh, appointed in August by the bankruptcy court to examine wrongdoing, mismanagement and incompetence at WorldCom, found some of each. The “report indicates a trifecta,” he said in an interview Monday after releasing his 118-page preliminary document. Many details were excised from the report so that it doesn’t compromise continuing inquiries by the Justice Department and Securities and Exchange Commission, Mr. Thornburgh said. The report, which also criticized the company’s outside auditors and Salomon Smith Barney’s former telecommunications analyst Jack Grubman, hints that the extent of the improper accounting at WorldCom, this time relating to revenue, could be more extensive than the $7.2 billion restatement the company already has said it will make. Now, the report indicates, WorldCom also is under fire for accounting methods used in recording revenue, an entirely new avenue for investigators. Those investigators also are looking at what the report refers to as “fraudulent journal entries and adjustments” made by WorldCom executives.