WorldCom Misstatement May Exceed $7 Billion
WorldCom Inc. may be forced to disclose that its accounting errors exceed the $7 billion it has acknowledged, a federally appointed investigator said Monday.
“We believe our investigation will reveal that there were improper and unsupported adjustments that go beyond the more than $7 billion in adjustments already restated,” former Atty. Gen. Richard L. Thornburgh wrote in a report on the financial mismanagement that led to WorldCom’s collapse.
Thornburgh’s 122-page report suggested that former WorldCom Chief Executive Bernard J. Ebbers guided events that led the nation’s No. 2 long-distance telephone company to restate its earnings and file the largest bankruptcy case in U.S. history in July. Ebbers, who was forced to resign in April, told Congress in July that he had done nothing wrong when he ran the company.
Ebbers “appears to have dominated” the course of the company’s growth, agenda and decisions by the company’s board of directors, said Thornburgh, who was named by the Justice Department to investigate the improper accounting that led to WorldCom’s collapse.
“While Mr. Ebbers received more than $77 million in cash and benefits from the company, shareholders lost in excess of $140 billion in value,” Thornburgh wrote in the report to a U.S. bankruptcy judge.
Ebbers, 61, built WorldCom by making 75 acquisitions since 1985. He hasn’t been charged with any crimes, though lawyers following the case have said he is a target of investigators.
Ebbers didn’t return phone messages left at his office. Ebbers’ attorney, Reid Weingarten, said he hasn’t read the Thornburgh report and declined to comment.
In a statement released at the same time Thornburgh’s report was filed with the Bankruptcy Court, WorldCom said it is taking steps to restore confidence in the company, including doubling its internal audit staff and appointing independent directors to its board.