By Caty Weaver
IN THE NEWS -July 6, 2002: WorldCom
This is Steve Ember with the VOA Special English program IN THE NEWS.
Several major American companies have admitted recently to dishonest reporting of
their financial condition. The latest wrongdoing happened at the huge
communications company WorldCom. It has admitted to mis -representing
thousands of millions of dollars of company costs. It reported the costs as profits
instead.
WorldCom also says there may be problems with its reporting of reserve accounts.
Reserve accounts are special money supplies that companies set up so they will be able to pay future costs.
WorldCom made the statement in a new financial report to the United States Securities and Exchange
Commission. One of the duties of the S-E-C is to supervise financial reporting by companies whose shares are
traded on the stock market. The federal agency has charged WorldCom with wrongdoing.
The leader of WorldCom is Chief Executive Officer John Sidgmore. He says he is not sure if the company will
have to declare bankruptcy. Failing companies often declare bankruptcy to seek government protection from their
debts. WorldCom has about four-thousand-million dollars worth of debts.
Mister Sidgmore says WorldCom has two-thousand-million dollars of money right now. He says the company
also has other property of considerable financial value.
WorldCom is the world’s largest provider of Internet service. Mister Sidgmore says WorldCom operations
provide Internet service in more than one hundred countries. The company also serves several large government
agencies, including the Department of Defense. WorldCom’s telephone service, M-C-I, is the second biggest in
the United States. Mister Sidgmore says that the survival of his company is in the interest of national security.
Mister Sidgmore has tried to distance himself from WorldCom’s false financial reporting. He dismissed the
Chief Financial Officer, Scott Sullivan, who had listed the expenses as profits. Mister Sidgmore also has
repeatedly noted that he did not become WorldCom’s leader until April. He replaced Bernard Ebbers who
resigned. The false financial reports are for Two-Thousand -One and the first three months of this year.
Officials want to learn what Mister Ebbers may have known about the actions of the Chief Financial Officer.
Reports say Mister Ebbers and Mister Sullivan worked very closely together. Mister Sullivan continues to say
that he believes the actions he took with WorldCom finances were completely legal.
President Bush has strongly criticized WorldCom. He has warned that company officials will be held responsible
for failing their companies through dishonesty and wrongdoing. WorldCom officials are to answer questions
before a Congressional committee on Monday.
This VOA Special English program In The News was written by Caty Weaver. This is Steve Ember.
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