Shares Plunge over US Scandal; WORLDCOM: Telecoms Giant Uncovers Pounds 2.5bn Accounting Fraud
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 …
Questia, a part of Gale, Cengage Learning. www.questia.com
Publication information: Article title: Shares Plunge over US Scandal; WORLDCOM: Telecoms Giant Uncovers Pounds 2.5bn Accounting Fraud. Contributors: Not available. Newspaper title: Western Mail (Cardiff, Wales). Publication date: June 27, 2002. Page number: 14. © 2009 MGN Ltd. COPYRIGHT 2002 Gale Group.
This material is protected by copyright and, with the exception of fair use, may not be further copied, distributed or transmitted in any form or by any means.