Heads roll as crisis adds to US unease
vnunet.com, 26 Jun 2002
Networks and telecoms giant WorldCom has become the latest large US firm to be hit by an accounting scandal, after a shortfall of almost $4bn.
WorldCom said it had sacked Scott Sullivan as chief financial officer and accepted the resignation of David Myers as senior vice president and controller.
The group intends to restate its financials for 2001 and the first quarter of 2002. The company has asked accountants KPMG to review the accounts.
Last month, KPMG replaced its previous auditors, Andersen, which compiled the group's 2001 results and were heavily involved in the Enron collapse.
WorldCom is already under investigation by the US Securities and Exchange Commission.
"Our senior management team is shocked by these discoveries," said chief executive John Sidgmore. "I have made a commitment to driving fundamental change at WorldCom, and this matter will not deter the new management team from fulfilling our plans."
Sidgemore confirmed that WorldCom will start downsizing its workforce by 17,000 this Friday, which he said would save the company $900m a year.
Analysts said that the accounting revelation could affect the company's bid to raise $5bn in funding and may even result in bankruptcy.
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