WorldCom given until Monday to come up with answers

 

US regulators have given WorldCom until Monday to provide details of how $3.85 billion of expenses were hidden from shareholders.

The Mississippi-based telecoms group has admitted that the money was wrongly listed as capital expenses in 2001 and 2002.

This means America's second-biggest long-distance telephone provider may have lost millions of pounds while declaring profits.

The Securities and Exchange Commission has filed civil fraud charges and given the company until Monday morning to file a detailed report on the "circumstances and specifics of these matters".

Meanwhile three WorldCom bosses have been ordered to testify at a US Congressional hearing to investigate how the telecom giant inflated its profits.

Sacked chief financial officer Mr Scott Sullivan and current chief executive Mr John Sidgmore have been subpoenaed by the House Financial Services Committee.

Former chief executive Mr Bernard Ebbers and influential Wall Street analyst Mr Jack Grubman, who promoted the company's stock, have also been ordered to face the July 8th hearing after the phone company was accused of fraud.

The news came as US President Mr George W Bush warned about the potential economic consequences of the latest accounting scandal to rock corporate America.

"I'm concerned about the economic impact of the fact that there are some corporate leaders who have not upheld their responsibility," he said.

Mr Bush had earlier promised a full investigation into the scandal while aides said he was "mad as hell" about the lack of corporate responsibility in America.

In Mississippi, Attorney General Mr Mike Moore said officials had established a task force "to find out who is responsible for cooking the WorldCom books".

The company as well as it's former accountant, Arthur Andersen, have all been ordered to preserve any company documents.

Andersen was convicted of obstructing justice for shredding documents in the case of Enron - the energy trader that went bankrupt after hiding losses through shady accounting.

The disclosure has left in doubt the future of 180 jobs at WorldCom's Irish operations, and the firm's ability to provide telecoms and data services to 6,000 customers.

PA