Word: enronization
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...filed fraud charges and is launching an investigation--as is the Justice Department, at least two congressional committees and the state of Mississippi, where WorldCom is based. All current and former employees, along with WorldCom's ex-accounting firm, Arthur Andersen, have been ordered to refrain from Enron-like paper shredding. Investigators are especially eager to hear from WorldCom founder Bernie Ebbers, who resigned as CEO in April, not long after it was revealed that he owed the company $366 million in low-interest loans. Ebbers had worked closely with Sullivan, whose office adjoined the CEO's. Ebbers could...
...Justice Department charged three former bankers in Britain with wire fraud in a $7.3 million scheme involving Enron-related partnerships...
...accounting irregularities at WorldCom are much more than a continuation of a trend. This scandal sharply raises the stakes. When Enron filed for bankruptcy in December, it employed 28,000, of whom 12,600 have been let go. WorldCom employs 80,000 and will eliminate a fifth of those jobs almost immediately. The Enron-stock meltdown wiped out $67 billion of shareholder wealth, less than half what WorldCom investors have lost...
...losers include pension funds and mutual-fund investors across the country. And, as at Enron, WorldCom's 401(k) plan was full of company stock, socking employees with greatly diminished savings just when they are likely to need them the most. Says John Alexander, 31, a former WorldCom benefits manager: "Everything they ever told us was, 'We're making money hand over fist.'" Alexander lost $180,000, a large chunk of his life's savings...
...developments at WorldCom suggest that accounting games may be more pervasive than we had thought. With Enron, the tricks involved complicated partnerships, off-the-books debt and exotic hedging techniques that made the firm's financial results difficult to assess even for pros. It seemed unlikely that anything so complex could be widespread. But with WorldCom, as House Financial Services Committee chairman Mike Oxley, an Ohio Republican, says, it looks like "good old-fashioned fraud." Oxley's committee subpoenaed Sidgmore, Sullivan, Ebbers and Jack Grubman, telecom analyst for the Salomon Smith Barney unit of Citigroup, to a July 8 hearing...