WorldCom disclosure creates worldwide mess
Published 12:00 am Wednesday, June 26, 2002
Just when accountants thought it was safe to
pull their heads out of the sand and jittery investors thought it was safe to invest their money again, another salvo soared over their heads.
Late Tuesday, communications giant WorldCom announced it had wrongly claimed nearly $3.8 billion in capital expenses.
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That means while the company claimed a profit, it was actually losing millions of dollars.
And the mistake appears to be no honest mix-up, but rather a deliberate attempt to circumvent the truth.
The announcement rocked the U.S. stock markets and gave investors another case of the shakes.
The disclosure may mark the beginning of the end for the once-powerful WorldCom. Financial experts say the company will soon be forced to file for bankruptcy.
The discovery was the latest in what has become an increasing array of financial fiascos.
Suddenly names once known only to investors and people in the industry have become almost household words.
First it was Enron. The Houston firm imploded last year after the disclosure that the company was riddled with debt and using inflated profit figures.
After Enron, the companies began falling like dominos. Communications company Adelphia has filed for bankruptcy. ImClone’s president was arrested and charged with insider trading.
And now WorldCom, the titan of communication and one of Mississippi’s biggest companies, is on its knees and threatening to fall over.
Eventually, with lots of hard work and perhaps some federal justice help, perhaps investors will slowly regain their faith in the markets and the accounting industry.