WorldCom gets watchdog

NEWS An independent examiner will be appointed to the WorldCom inquiry to further investigate the $3.8bn fraud, it emerged yesterday. The federal court overseeing the enquiry agreed on Monday to appoint an independent assessor at the request of the Justice Department. The examiner, due to be named next week, will have 90 days to dig for new irregularities and disclose any findings to the Securities and Exchange Commission (SEC) and Justice Department. The news comes less than 24 hours after WorldCom filed for Chapter 11 bankruptcy protection.
In the US, bankruptcy experts have hailed the unusual move as proof that the government suspects continued mismanagement within the company. In the Enron scandal, officials took five months to appoint an independent examiner. In a statement released on Monday, attorney general John Ashcroft said: "This action will provide transparency to the process and enhance accountability." But despite the heightened investigation, WorldCom CEO John Sidgmore has said he is confident the company will be back on track within 12 months. Speaking at a press conference on Monday morning, Sidgmore said restructuring could take as little as nine months but would definitely be completed within a year. Outlining restructuring plans, Sidgmore said WorldCom plans to keep UUNet, the subsidiary that sells internet services to large corporations, as well as its consumer and long distance units, but will sell other assets. He also announced that WorldCom had secured a $2bn loan to allow it to continue operating while it undergoes Chapter 11 restructuring. The company was left with just $200m in cash at the close of business on Friday. Former CEO Bernie Ebbers has not fared so well. He faces personal bankruptcy after borrowing $408m from WorldCom to buy woodland in Canada. For related news, see:
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