Fresh charges hit WorldCom

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The US Securities and Exchanges Commission (SEC) has expanded the charges levelled against disgraced telco WorldCom, making new allegations of fraud and saying the company now admits it overstated income by US$9 billion, rather than the US$7 billion it originally admitted to.

Also included in the complaints against the company is an allegation that it mislead investors as far back as 1999, not 2001 as was originally thought.

WorldCom took “extraordinary and illegal” steps to dress up its finances and should never have provided US$1 billion in loans to former CEO Bernie Ebbers, the investigator appointed by a US bankruptcy court to probe the company's books found.

Former US attorney general Richard Thornburgh blasted the company for allowing Ebbers to leverage his shareholdings in WorldCom with the loans.

Thornburgh blamed WorldCom's board, audit committee and independent auditors as well as the company's system of internal controls for the accounting meltdown that eventually saw the company file for Chapter 11 bankruptcy protection.

In response, WorldCom claims it has doubled its internal audit staff, created two new operational chief financial officer positions and taken on a new corporate controller.

"WorldCom's management and board are determined to ensure that what happened here in the past cannot recur," said WorldCom president and chief executive John Sidgmore.

Meanwhile, the SEC hosed down US media reports of a settlement deal with WorldCom. "Despite today's press reports to the contrary, the commission has no intention of seeking the dismissal of its fraud charge or any of its other claims against WorldCom," said Peter Bresenan, SEC deputy chief litigation counsel.

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