By Kate Hanaghan, 4 July 2002 16:30
NEWS WorldCom's CFO tried to postpone the work of auditors in a vain attempt to delay the discovery of the company's $4bn fraud scandal. Last week the company revealed it had overstated revenues for at least the last five quarters, making the company's finances appear far healthier than they actually were. It has now come to light that in the run-up to WorldCom's admission of misconduct its CFO, Scott Sullivan, tried to persuade the auditor, Andersen, to postpone a review of the company's books. The New York Times claims he made an attempt to put off the audit until later this year. This would in theory have given the company time to start recognising the additional expenses which were recorded as capital spending - calculated to be a whopping $3.8bn. But it has emerged Sullivan, in a last ditch attempt to save his neck, sent a memo to the board on 24 June to justify the financial state of the company. Sullivan was sacked last week. Today, Richard Breeden, former chairman of the Securities and Exchange Commission (SEC), was appointed "shredder-watcher" at the company. He joins many other officials investigating WorldCom's books. Breeden's specific brief is to ensure no important documents find their way into the shredder, as famously happened with Enron. The company will face a trial for fraud in March of next year. The case has been brought against WorldCom by the SEC.
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