WorldCom is the latest telecomms provider to come under the
scrutiny of the US Securities and Exchange Commission over
corporate accounting issues. The SEC had requested 24 documents
relating to WorldCom's third quarter of 2000, its accounting
policies for goodwill and implementation, and other matters.
Bernard Ebbers, WorldCom chief executive officer, said that that
the SEC contacted the company last Friday. The SEC request included
documents relating to loans made by WorldCom to officers or
directors, the integration of WorldCom's computer system with that
of MCI, the company's long-distance arm, and WorldCom's tracking
and review of analysts' earnings estimates.
Securities regulators also asked for material relating to federal
or state agency investigations of WorldCom, for organisational
charts and personnel records for former employees, and for disputed
customer bills and sales commissions.
WorldCom said that it had suspended employees at three branch
offices in February after allegations that some had booked up to
US$4 million in phony commissions.
Documents requested by the SEC date back as far as January 1999.
The SEC specifically inquired into the wholesale accounts
associated with a $685 million write-off taken in the third quarter
for accounts deemed uncollectable from bankruptcies and litigation,
according to the SEC letter posted on WorldCom's Web site.
WorldCom came under fire in January when it lent Ebbers money to
keep him from selling millions of dollars of WorldCom stock after
the rapidly falling share prices forced a margin call. Ebbers is
the only WorldCom officer with an outstanding loan from the
company, and it will not be necessary for him to sell his stock to
cover his margins, he said. "I bought my stock in the company, and
I regret that any shareholder lost money," he added.
WorldCom lost about half its market value in the space of six weeks
as accounting scandals surrounding the Global Crossing Holdings and
Enron bankruptcies engulfed Wall Street.