WorldCom Accounting Scandal Tallies $7 Billion

WorldCom Inc. disclosed Thursday that it has improperly recorded an additional $3.3 billion in earnings stretching back to 1999, marking a $7.2 billion accounting scandal.

The Clinton, Miss.-based company first jolted the national economy in late June after it disclosed misreporting $3.85 billion in earnings before interest, taxes, depreciation and amortization over five quarters. WorldCom masked losses by booking expenses as capital expenditures.

WorldCom also announced Thursday it expects to write down $50.6 billion in goodwill and other intangible assets stemming from acquisitions once the company restates its financials for 2000, 2001 and 2002.

Last month WorldCom filed the largest bankruptcy petition in U.S. history. The company owns MCI, the No. 2 long distance operator, and UUNET, the world’s largest Internet backbone provider.

Former WorldCom chief financial officer Scott D. Sullivan and former controller David F. Myers were charged last week with securities fraud, conspiracy to commit securities fraud and submitting false filings with the Securities and Exchange Commission. Authorities allege the financial officers forged an elaborate accounting scheme in order to meet Wall Street’s earnings expectations.

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