WorldCom Inc, the bankrupt telephone company accused of fraud for hiding expenses, said it found an additional US$3.3 billion in misreported financial results since 1999, bringing the total to US$7.18 billion.
WorldCom also may have to write off as much as US$50.6 billion to reflect the declining value of assets when it restates results since 2000, the company said in a statement. The misreported earnings before interest, taxes, depreciation and amortization are on top of an earlier US$3.85 billion that the Clinton, Mississippi-based company improperly recorded since last year.
The alleged wrongdoing that contributed to the largest US bankruptcy was more pervasive than previously reported and may involve former CEO Bernard Ebbers, lawyers said. Former WorldCom executives Scott Sullivan and David Myers were charged last week with fraud.
"The level of fraud and accounting manipulation begs the question how much latitude management should actually be granted when preparing books," said John Litschke, an analyst at Loomis Sayles & Co in San Francisco, which manages US$600 million in global equities.
Most of the US$3.3 billion in misstated results were related to accounting for reserves, WorldCom spokesman Brad Burns said.
Reserves are set up to fund possible future liabilities and may be reversed when management believes they're no longer needed. That can help boost profit.
"We knew the problem was a lot bigger than WorldCom first admitted," Ken Johnson, a spokesman for the House Energy and Commerce Committee, said before the company released its statement. "The extent of the fraud is staggering" and it's likely Ebbers was complicit, he said. The committee is conducting an investigation of WorldCom's accounting.
WorldCom said on July 1 that it was investigating "certain material reversals of reserve accounts" for 1999 and 2000. The company had US$685 million in pretax expenses in 2000 to cover itself for customer bankruptcies, litigation and "contractual settlements," Securities and Exchange Commission filings show.
The company said yesterday that it was reducing earnings before interest, taxes, depreciation and amortization by US$217 million in 1999, US$2.86 billion in 2000, US$161 million for last year and US$88 million in the first quarter of this year. The company sought Chapter 11 protection from creditors last month.
WorldCom may uncover additional improperly reported earnings before interest, taxes, depreciation and amortization and pretax profit, according to the statement.
"We will be forthright and open about any subsequent findings," Burns said. CEO John Sidgmore wasn't available to comment, he said.
One investor said the new findings came as little surprise.
"Investors have already given up on WorldCom," said Yasuo Taniguchi, who manages ?51 billion (US$420 million) at Daiwa Asset Management Co in Tokyo.
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
LANDSLIDES POSSIBLE: The agency advised the public to avoid visiting mountainous regions due to more expected aftershocks and rainfall from a series of weather fronts A series of earthquakes over the past few days were likely aftershocks of the April 3 earthquake in Hualien County, with further aftershocks to be expected for up to a year, the Central Weather Administration (CWA) said yesterday. Based on the nation’s experience after the quake on Sept. 21, 1999, more aftershocks are possible over the next six months to a year, the agency said. A total of 103 earthquakes of magnitude 4 on the local magnitude scale or higher hit Hualien County from 5:08pm on Monday to 10:27am yesterday, with 27 of them exceeding magnitude 5. They included two, of magnitude
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
Taiwan’s first drag queen to compete on the internationally acclaimed RuPaul’s Drag Race, Nymphia Wind (妮妃雅), was on Friday crowned the “Next Drag Superstar.” Dressed in a sparkling banana dress, Nymphia Wind swept onto the stage for the final, and stole the show. “Taiwan this is for you,” she said right after show host RuPaul announced her as the winner. “To those who feel like they don’t belong, just remember to live fearlessly and to live their truth,” she said on stage. One of the frontrunners for the past 15 episodes, the 28-year-old breezed through to the final after weeks of showcasing her unique