WorldCom comes under SEC scrutiny

WorldCom is the latest telecomms provider to come under the scrutiny of the US Securities and Exchange Commission over corporate...

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.

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