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.