Picture emerges of silence that crippled WorldCom TELECOMS USA 2ND EDITION

Unlike Enron, whose executives dazzled directors and auditors with complex transactions and financial wizardry, WorldCom's fraud was relatively straightforward. The company released reserves it had previously taken - mostly in connection with large mergers - in order to make its costs seem lowe...

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Bibliographic Details
Published inThe Financial times (London ed.)
Main Author JONATHAN MOULES and PETER THAL LARSEN
Format Newspaper Article
LanguageEnglish
Published London (UK) The Financial Times Limited 10.06.2003
Subjects
Directors
Employees
Fraud
Scandals
NEW YORK
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Summary:Unlike Enron, whose executives dazzled directors and auditors with complex transactions and financial wizardry, WorldCom's fraud was relatively straightforward. The company released reserves it had previously taken - mostly in connection with large mergers - in order to make its costs seem lower than they were. The board of directors never had any idea of the fraud. Then again, as the report by Richard Thornburgh makes clear, directors did not even question some of WorldCom's largest transactions. A complex deal with EDS, which included the Dollars 1.65bn sale of SHL to EDS and a 10-year IT outsourcing agreement, was approved after just 20 minutes' consideration and without any written materials. The 2000 acquisition of Intermedia Communications for Dollars 6bn, described as an "ego deal" for Mr [Ebbers], was approved after 60- 90 minutes of due diligence and a 35-minute board meeting for which some directors received less than two hours notice. One remaining question is whether there is enough evidence to link Mr Ebbers to the fraud.
ISSN:0307-1766