WORLDCOM RESTATES $2B MORE IN PHANTOM EARNINGSApr 1, 2003 | New York Post
If WorldCom's $9 billion in inflated profits wasn't bad enough, the bankrupt phone giant now says it found another $2 billion of phantom profits.
The damage from its cooked books scandal will now total $11 billion, according to Bloomberg.
Quoting unidentified sources, the report said WorldCom intends to restate earnings yet again back to 1999 to reflect the irregularities.
WorldCom, on record as the largest bankruptcy in U.S history, plans to wipe $79.8 billion off the recorded value of its assets, a record for any U.S. company.
Federal investigators are trying to build a criminal case against WorldCom founder and former chairman Bernie Ebbers. Four of his top executives have pleaded guilty to criminal activities over the accounting scams.
Ebbers has denied wrongdoing.
Despite its troubles, WorldCom and its new CEO Michael Capellas are trying to reorganize the WorldCom mess and take the company out of bankruptcy sometime this year.
Its most valuable asset, MCI, is still operating with cash flows. Separately, WorldCom executives were said to have improperly shifted $3.3 billion of expenses onto the books of MCI in 2001, according to the Wall Street Journal.
A January 2002 e-mail sent to Ebbers by MCI's then-Chief Operating Officer Wayne Huyard asking for details of expenses on his unit's books was ignored, the Journal reported. Parent-company executives including Ebbers owned more shares in the data unit than they did in MCI.
Two probes are underway on how managment shifted expenses from one unit to another. One is being done in-house, and another is being done by former U.S. Attorney Richard Thornburgh for the bankruptcy court case.
WorldCom in June said it would restate results for 2001 and the first quarter of 2002 because it improperly recorded as capital investments $3.85 billion of costs for using rivals' networks. The company in August boosted the estimated restatement to $7.18 billion, with some errors dating back to 1999. It said in November the tally might exceed $9 billion.