WorldCom: Top execs warned of skulduggery two years ago

NEWS At least two financial whistle-blowers raised alarms about WorldCom's accounting practices up to two years before the telecoms giant admitted fraud of $3.9bn. Billy Tauzin, the US congressman investigating the case, told US media a UK WorldCom employee notified the company's auditor Andersen of $33.6m in reclassified expenses in April 2000. In addition, a US-based employee also voiced his concerns regarding the company's accounting practices in 2000, notifying CFO Scott Sullivan and then financial controller David Myers - who quit his post when Sullivan was sacked last month. According to a report in the Financial Times, Tauzin is reported as saying that the congressional investigation has uncovered "a strange pattern of people inside the corporation discovering [fraud], trying to do something about it, and ultimately failing until recently". Until now, all the attention has focussed on information from WorldCom's head of internal audit Cynthia Cooper, who expressed her own concerns to Sullivan, other senior financial executives and the external auditor KPMG. Meanwhile, major WorldCom bondholders are trying to negotiate emergency funding for the stricken company as it stumbles towards bankruptcy. The investors are hoping to present a finance package which will give them a better negotiating position against other creditors in the impending battle for assets. WorldCom CEO John Sidgmore claims the company needs as much as $3bn in fresh investment to keep operating. The company was also hit by a $2.65bn lawsuit from a group of bank lenders late last week.