WorldCom Inc. may be forced to disclose that its accounting errors exceed the $7 billion it has acknowledged, a federally appointed investigator said.
“We believe our investigation will reveal that there were improper and unsupported adjustments that go beyond the more than $7 billion in adjustments already restated,” former U.S. Attorney General Richard Thornburgh wrote in a report released yesterday on the financial mismanagement that led to WorldCom’s collapse.
Thornburgh’s 122-page report suggested that WorldCom’s former chief executive, Bernard Ebbers, guided events that led the nation’s second-largest long-distance telephone company to restate earnings and into bankruptcy. Ebbers, 61, forced to resign in April, told Congress in July that he had done nothing wrong when he ran the company.
Ebbers “appears to have dominated” the course of the company’s growth, agenda and decisions by the company’s board of directors, Thornburgh said.
“While Mr. Ebbers received more than $77 million in cash and benefits from the company, shareholders lost in excess of $140 billion in value,” Thornburgh said in a report to a U.S. bankruptcy judge. Thornburgh was named by the Justice Department to investigate the alleged accounting fraud that led to WorldCom’s collapse.
Ebbers hasn’t been charged with any crime, though lawyers following the case have said he is a certain target of investigators. The company filed the largest-ever bankruptcy case in July.
Ebbers’ attorney, Reid Weingarten, said he hasn’t read the Thornburgh report and declined to comment. Ebbers, who told a congressional panel in July that he didn’t engage in “criminal or fraudulent conduct” at WorldCom, didn’t return phone messages left at his office.
WorldCom, in a statement released at the same time Thornburgh’s report was filed with the bankruptcy court, said it is taking steps to restore confidence in the company, including doubling its internal audit staff and appointing independent directors to its board.