Contact Us

PW Case Review Form
*    Denotes required field.

   * First Name 

   * Last Name 

   * Email 


   * Please describe your case:

What injury have you suffered?

For verification purposes, please answer the below question:

No Yes, I agree to the Parker Waichman LLP disclaimers. Click here to review.

Yes, I would like to receive the Parker Waichman LLP monthly newsletter, InjuryAlert.

please do not fill out the field below.

Report Slams Culture At WorldCom

Nov 5, 2002 | USA Today

WorldCom's fraud will likely go beyond the $7.2 billion it has already disclosed, says a scathing report released Monday by a court-appointed examiner.

Dick Thornburgh, a former U.S. attorney general, described a "culture of greed" that helped bring WorldCom, owner of MCI, to Chapter 11.

The report, the most comprehensive look yet at the events behind WorldCom's fall, alleges new details of ties between WorldCom and Salomon Smith Barney and its former telecom analyst, Jack Grubman. Salomon and parent, Citigroup, face numerous efforts to clean up conflicts of interest that have hurt investors. Thornburgh also describes a company sloppily built through acquisitions that helped boost its share price but left it riddled with problems. And he describes a culture in which former CEO Bernie Ebbers was largely unchecked by a board of directors that benefited from the rise of WorldCom's stock.

His findings, while preliminary, could aid prosecutors and regulators in one of the largest corporate scandals ever. They also could complicate WorldCom's attempt to emerge from the largest-ever bankruptcy reorganization. The company serves millions of residential and business customers.

Thornburgh alleges that WorldCom may have improperly inflated revenue by more than $4.6 billion from 1999 to early 2002 only $423 million of which has been restated so far. Other findings by him have been disclosed, but they underscore the pervasiveness of mismanagement at WorldCom, which is facing numerous probes and civil charges of fraud. His probe will continue. "When ... actual earnings faltered, their top management resorted to a smorgasbord of manipulation to falsely inflate earnings," Thornburgh said in an interview. Findings include:

Conflicts. He noted "unusually close and potentially problematic" ties to Salomon, the investment bank that reaped $107 million from its work with WorldCom from 1997 to 2002. Grubman, who recently resigned amid criticism, alerted WorldCom to questions he would ask in conference calls between Wall Street analysts and the company. The report questioned Salomon's and others' "wildly enthusiastic" reports about WorldCom when "the stock was plummeting." Salomon declined comment.

Generous deals. Thornburgh alleges Ebbers may have received some of the $408 million in personal loans from WorldCom before loan agreements were finalized. The report questioned whether his use of the money, including $1.8 million for a house, was properly disclosed. His attorney, David Kaufman, reiterated that Ebbers has done nothing improper.
WorldCom has made many changes, CEO John Sidgmore countered, including revamping its accounting and finance departments.

Related articles
Parker Waichman Accolades And Reviews Best Lawyers Find Us On Avvo