US judge appoints monitor in WorldCom case

A US federal judge has appointed former US Securities and Exchange Commission (SEC) chairman Richard Breeden corporate monitor in...

A US federal judge has appointed former US Securities and Exchange Commission (SEC) chairman Richard Breeden corporate monitor in the civil fraud case against WorldCom. The case should be ready for trial by the end of next March.

Breeden will oversee payments made by WorldCom to its executives and employees to prevent any unjust payouts, and will make sure that the company does not destroy or alter any documents that regulators and prosecutors might want as part of their investigation, said WorldCom spokeswoman Anita Sannes.

The SEC filed suit in New York on 26 June, the day after WorldCom disclosed that it had improperly booked nearly $4bn in expenses, inflating its results for 2001 and the first quarter of 2002.

The SEC's suit alleges that WorldCom "fraudulently portrayed itself as a profitable business by reporting earnings that it did not have". In its suit, the SEC asked for the appointment of a corporate monitor as well as monetary penalties against WorldCom.

Breeden is the founder of Richard Breeden, a consulting firm that helps turn around troubled companies. Breeden served as SEC chairman from late 1989 until mid-1993, according to the SEC Web site.

Meanwhile, the House Financial Services Committee is poised to hold hearings on WorldCom on Monday. WorldCom chief executive officer John Sidgmore and other executives are scheduled to appear in court.

WorldCom internal auditor Cynthia Cooper, who discovered the alleged fraud in May, will be heard separately, Sannes said.

According to a report in the online edition of The Wall Street Journal, Cooper encountered resistance from WorldCom chief financial officer Scott Sullivan after she confronted him with the discovery. Sullivan was fired last week.

The same report claimed that the US Department of Justice is seeking to curtail WorldCom's internal investigation and has also asked the House Financial Services Committee not to call Cooper or Max Bobbitt, chairman of the audit committee of WorldCom's board.

The DoJ wants to interview executives and other potential witnesses before anyone from WorldCom talks to them, according to the report.

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