The Hindu : WorldCom bogus accounting mounts to $7b

Online edition of India's National Newspaper
Saturday, Aug 10, 2002

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Business

WorldCom bogus accounting mounts to $7b

By Sridhar Krishnaswami

WASHINGTON AUG. 9. At a time when the financial markets are being hammered as a result of corporate fraud, the bankrupt telecommunications giant, WorldCom, has said that it has uncovered yet another $3.3 billion in bogus accounting, bringing the total bookkeeping fraud to over $7 billion.

On Thursday night, WorldCom said that the new discovery came to light for the years 1999 and 2000 with much of the details of the later tallied. The initial fraud that the company acknowledged in June was for the years 2001 and the first half of 2002. That was for a total of about $3.8 billion. This set the ball rolling as far as bankruptcy proceedings. WorldCom has further said that it was likely to write off nearly $51 billion in goodwill and other intangible assets. Neither the White House nor the Justice Department has had any immediate comment on the latest revelation of WorldCom; but a spokesperson for the Securities and Exchange Commission has said that its investigation is continuing.

For its part, the bankrupt telecommunications giant is saying that it is continuing with its internal investigation. But analysts are keeping their fingers crossed and hoping that the markets will not be further rattled as a result of the latest disclosure.

WorldCom is now having KPMG to audit its financial statements from 1999 to specifically look for accounting problems and has retained the services of a former SEC enforcement division head to conduct an independent investigation of accounting irregularities.

At one time Arthur Andersen handled the account of WorldCom which said that the telecommunications firm withheld information from auditors. Arthur Andersen, it has to be recalled, also handled the accounts of Enron and Global Crossing.

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