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By Joey Gardiner, 15 July 2002 17:20

NEWS The UK government could find itself embarrassingly embroiled in the WorldCom fraud scandal if the evidence of a UK 'whistleblower' turns out to be accurate. It emerged over the weekend that former WorldCom UK employee Geraldine Kelly realised almost four years ago that the firm's accounting practices were improper and tried to bring them to the attention of the authorities. Kelly, then a senior VP in the IT division of WorldCom, provided information to the City of London fraud squad, who then tipped off the Department of Trade and Industry (DTI). She claims that in early 1999 the DTI started an investigation which allegedly exonerated the US telco, despite the evidence of wrongdoing she provided. Reports of Kelly's part in the story first appeared in the Sunday Telegraph, but the full details will not become clear until next weekend when the Mail on Sunday is set to run an exclusive expose. Kelly, who has hired public relations guru Max Clifford, claims she has documentary evidence detailing the ways in which this fraud was perpetrated in the UK. In particular she is set to reveal papers showing copies of identical invoices, given respectively to a supplier and to the auditor. In the copy given to the auditor the expenditure is capitalised (i.e. a sum which can be written off as an investment), while in the other copy it is clearly marked as an expense - precisely the practice which led to WorldCom illegally inflating its profits in the $3.9bn fraud. The DTI refused to confirm whether it conducted an investigation into WorldCom or how this alleged probe managed to exonerate the firm. A DTI spokesman told silicon.com the department does not comment on current or past investigations. Kelly is the only UK WorldCom employee to have been asked to appear in front of the US congressional committee which is heading up the investigation into the rapidly collapsing telco.