Byline: SI'N BARRY
SHARES on the London Stock Exchange plummeted yesterday following the news that US telecoms giant, Worldcom, had uncovered a pounds 2.5bn accounting fraud.
An investigation by the US company's WorldCom's board of directors has uncovered nearly $3.8bn (pounds 2.5bn) in improperly booked expenses, revealing what appears to be one of the largest cases ever of accounting fraud.
WorldCom's chief financial officer, Scott Sullivan, has been sacked and trading in Worldcom shares have been suspended.
The news that one of the US's biggest companies was in such dire straits sent shock waves through the London Stock Exchange, knocking almost 200 points of the FTSE 100 index and although prices rallied later in the day it was still a day of painful losses for some of the City's biggest players. Worldcom's admission that more than $3bn (pounds 1.9bn) of expenses in 2001 and $797m (pounds 530m) for the first quarter of 2002 were wrongly listed on company books as capital expenditures, came as a further blow to confidence in the already flaky equities markets. And the involvement of disgraced accountancy practice Arthur Anderson as the company's auditors only added to the feeling that Worldcom was in the words of one city analyst ``another Enron''.
The discovery of the misrepresentation of Worldcom's accounts means the company will have to restate its earnings for all of 2001 and the first quarter of 2002. …