Massive Accounting Fraud Fells WorldCom

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NYSE traders watch the numbers fall following news of possible fraud at WorldCom

Is there anybody out there investors can trust? Wall Street was pondering that today as markets were hammered following last night's announcement that WorldCom had inflated profits by a staggering $3.8 billion over the past five quarters. The Dow skidded towards the 9,000 level, while the news pushed the NASDAQ (on which WorldCom trades) to near post-Sept. 11th levels.

The accounting slight-of-hand was accomplished by calling some ongoing costs, like network maintenance, capital expenditures — a move that let the company spread costs over several years, thus artificially improving cash flow and profits. Now the company is teetering on the edge of bankruptcy. It will cut 17,000 jobs, about 25 percent of the work force, by Friday, and CFO Scott Sullivan has been fired over the accounting debacle. Also drawn in, once again, are the beleagured auditors at Arthur Andersen, who were in charge of monitoring WorldCom's books.

Just two years ago the telecom was trading at $64 a share. Today, you could purchase a piece of WorldCom for 21 cents. Nobody was buying, though, as the stock didn't even open for trading.

Over the past five years, TIME chronicled the rise and fall of WorldCom and the man who built the company from a small Mississippi operation into the second-largest telecom in the U.S., Bernie Ebbers. Complete coverage from TIME, CNN and FORTUNE below:

TIME: The Rise And Fall Of Bernie Ebbers
A bar bouncer turned telecom billionaire, he's now out of a job and $366 million in debt. But he still has faith

TIME: Bernie's Deal
WorldCom makes a bold $30 billion stock offer for MCI in what could be the biggest takeover ever and establish the upstart as a rival to AT&T

CNN: WorldCom in Accounting Trouble

FORTUNE: Bamboozling: A Field Guide