The company began to fall in 1999 with massive lay offs and the steady decline of its stock price. WorldCom Corporate Fraud, WorldCom Background, Industry, WorldCom ascension, The Scandal, WorldCom’s fall.

1. 1
WorldCom:
Corporate Fraud

2. 2
WorldCom Background
 Bernie Ebbers is the founder of
WorldCom.
 Huge telecommunications company.
 Largest in the us
 held responsible for waking up it’s
somewhat sluggish industry in the early
90’s

3. 3
Industry:
 Telecommunication giant
 provided
 1. internet services
 2. long distance and various other phone
services for a cheaper price than competitors.

4. 4
WorldCom ascension
 WorldCom-m took the telecom industry by storm when it
began a frenzy of acquisition in the 1990s.
 From 1995 until 2000 ,WorldCom purchased over sixty
other telecom firms in 1997 it bought MCI for $37 billion.
 WorldCom moved into internet and data communication
handling 50 percent of all united states internet traffic
and 50 percent of all e-mails worldwide.
 By 2001 WorldCom owned one third of all data cables in
the unite states in addition they were the second largest
long distance carrier in 1998 and 2002.

5. 5
The Scandal
 They classified over $3.8 billion in payments for
line costs as capital expenditures rather than
current expenses.
 Irregularities in the reserve accounts.
 SEC claims that the total for fraudulent
accounting comes to $9 billion dollars.

6. 6
WorldCom’s fall
 The company began to fall in 1999 with
massive lay offs and the steady decline of
its stock price.
 Stock prices for WorldCom were around
60 dollars and dropped to pennies in 2002
giving sleepless night to investors.
 Business sector mergers were
insuccessful.

7. Upper Management
 Chief financial officer Scott Sullivan and controller David
Myers arrested.
 Myer's pleads guilty to three counts of conspiracy
 Chief executive John W.Sidgmore steps aside from his
post.
 Buford Yates pleads guilty to two counts of securities
fraud and conspiracy
 Betty L.Vinson and M.Normand former finance officials
are charged with conspiracy Six other WorldCom
directors resign on December 18th

8. Government Involvement
 Despite conspiracy charges and uncovered
financial fraud the government still keeps
WorldCom's eligibility to file for bankruptcy
 The us. Gives $2 billion dollars in assets to tap
 $20 million dollars over the span of three years
given to new CEO
 WorldCom still allowed to oversee government
projects.

9. Impact
 Overall investor distrust with companies
undergoing similar problems.
 National feeling that the stock market is
not as safe as previously thought.
 SEC force to keep a closer look on auditor
and accountant dealing

10. Post-Fraud Happenings
 WorldCom was renamed MCI in 2004 when it
emerged from bankruptcy
 Company could spin off several business units
 Added additional board members to serve on a
special investigative panel to review accounting
practices
 WorldCom may write off $50.6 billion in
intangible assets
 WorldCom is trying to secure loans 17,000 jobs
cut to save $1billion
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11. Conclusion
 In a way this proves some of the negligence of
the government with so much financial fraud
going on at the time in huge multi billion dollar
corporations, investors would have suspected a
little better job at finding problems in the system
accounting practices like these not only install
distrust in financial institution but also in
government factions like the sec that were
created and funded for the sole purpose of
preventing things like this from happening.
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