Ex-WorldCom Chiefs Were WarnedSep 4, 2002 | BBC
Two of WorldCom's top executives were warned in March that "questions" had been raised about its accounts, according to investigators looking into the fraud which led to the giant's downfall.
An email sent on 18 March informed former chief executive Bernard Ebbers and former chief financial officer Scott Sullivan of concerns about accounting issues related to the preparation of WorldCom's annual report, the US House Financial Services Committee said.
During the same month, Salomon Smith Barney's former telecoms analyst, Jack Grubman, warned Mr Sullivan that his firm was dropping WorldCom from a list of recommended shares before the information was released to investors.
In an email sent on 12 March, Mr Grubman insisted that he had not been the one responsible for removing the firm from the list.
"This is our strategist, not us. Which is why I hate ever having a name on that list," Mr Grubman said in the email.
In the know
Mr Grubman's warning was forwarded by Mr Sullivan to his boss, Mr Ebbers, the investigators said.
A third email which was sent in May revealed that Mr Sullivan had tried to brush off an inquiry from the credit rating agency Moody's Investors Service.
"Overall, what all this has in common is it shows how Mr Ebbers, Mr Sullivan and Mr Grubman dealt with questions about WorldCom: They obfuscated every time," Financial Services Committee spokeswoman Peggy Peterson said.
"Ebbers was not a detached, unknowing chief executive."
Mr Sullivan, who is free on $10m bail, stands accused of being the head man in a conspiracy to hide WorldCom's expenses.
Last week, he was indicted by a grand jury. He faces up to 65 years in prison if he is convicted on charges of securities fraud, conspiracy and filing false statements with the SEC.
WorldCom made US history as the country's largest corporate bankruptcy on 21 July this year after admitting that it had falsely inflated its profits by $3.9bn.
Shares in Salomon Smith Barney's parent company, Citigroup, were hit on Tuesday after Prudential Securities analyst Mike Mayo recommended that investors sell the stock.
Mr Mayo warned that Citigroup is facing a massive legal and regulatory risk due to its involvement, via Salomon, with WorldCom and because of its involvement with the failed energy giant Enron.