Des Crashes Ursache....

financial strategy during the mid-to-late 1990's that
enabled WorldCom to rise from a second-tier
telecommunications company to a world giant through a
series of acquisitions that included the $30 billion
purchase of MCI in 1998.

Mr. Sullivan had been the executive closest to Bernard J.
Ebbers, the company's longtime chief executive, who
abruptly resigned in April, owing WorldCom more than $366
million for loans and loan guarantees the company had made
to him.

WorldCom's board said it had fired Mr. Sullivan after
discovering a strategy in which operating costs like basic
network maintenance had been booked as capital investments,
an accounting gimmick that enabled WorldCom to hide
expenses, inflate its cash flow and report profits instead
of losses. Until last month, WorldCom's auditor had been
Arthur Andersen, the accounting firm that also audited the
books of Enron and Global Crossing.

Arthur Andersen issued a statement last night saying that
WorldCom's chief financial officer had not told the firm
about the accounting techniques now being called into
question. "Our work for WorldCom complied with S.E.C. and
professional standards at all times," the statement said.

WorldCom replaced Arthur Andersen with KPMG last month and
said last night that it had asked KPMG to undertake a
comprehensive audit of the company's financial statements
for 2001 and 2002.

"Our senior management team is shocked by these
discoveries," said John W. Sidgmore, who became WorldCom's
chief executive after Mr. Ebbers left in April. "I want to
assure our customers and employees that the company remains
viable and committed to a long-term future."

But it remains to be seen how WorldCom's customers will
react to the disclosure of the massive accounting
irregularities. In addition to providing millions of
consumers with long-distance service through its MCI unit,
WorldCom sells sophisticated data communications services
to many of the world's largest companies.

WorldCom, which had a peak value of $115.3 billion in June
1999 when its shares reached a high of $62, is now worth
less than $1 billion. Its stock, which had already been
down more than 94 percent for the year before last night's
disclosure, plunged as low as 26 cents in after-hours
trading last night.

In addition to dismissing Mr. Sullivan, WorldCom's board
said it had accepted the resignation of David Myers as
senior vice president and financial controller. The company
said it had notified the Securities and Exchange
Commission, which had already been investigating the
company's accounting. WorldCom also said it was hiring
William R. McLucas, the former chief of the enforcement
division of the S.E.C., to conduct an independent
investigation.

Mr. Sullivan was unavailable for comment.

The S.E.C. said in a statement released early today that
the disclosures confirmed "accounting improprieties of
unprecedented magnitude."

The statement, by Christi Harlan, director of public
affairs, said the commission was ordering the company to
file, under oath, "a detailed report of the circumstances
and specifics of these matters."

The agency also said the events "further demonstrate the
need for comprehensive market regulatory reforms that the
administration, the Congress and the S.E.C. have been
advocating and implementing."

The company said last night that it had informed its main
bank lenders of the bookkeeping problems. It is currently
in tense negotiations with its banks, a group led by
Citigroup, Bank of America and J. P. Morgan Chase, about
restructuring lines of credit worth about $5 billion.

Last night's disclosure is expected to add to the problems
of telecommunications companies to arrange financing as the
industry's long slump continues.

"This is horrible for the industry," said Susan Kalla,
senior telecommunications analyst at Friedman, Billings &
Ramsey. "If we can't hang our hat on historical numbers,
why should we believe in the present figures?"

The size of Worldcom's restatement surprised even hardened
short-sellers - investors who profit when stocks fall and
generally view corporate America with skepticism. "I'm kind
of shaken by that," said James Chanos, a short-seller who
played a major role in unearthing Enron's overstated
profits and hidden debt. "I'm about as cynical as they
come. It's pretty amazing."

Particularly disturbing, Mr. Chanos said, is that WorldCom
had manipulated its cash flow statements, not just its
reported earnings. Investors used to believe that cash flow
was a more reliable indicator of a company's financial
health because the number could not be manipulated as
easily as earnings, but that assumption now appears to be
wrong. WorldCom now joins a list that includes Dynegy,
Adelphia Communications and Tyco International as companies
that have apparently used financial gimmicks to inflate
their cash flow.

"The one touchstone that investors had was that you
couldn't fudge cash flow numbers, but apparently you can,"
Mr. Chanos said. "Like any system, it can be gamed if
enough people are looking at something, an unscrupulous
management will find a way to game it."

WorldCom's news rattled investors in other companies. In
after-hours trading, technology and telecom stocks and
broad market indexes plunged after word of the accounting
problem, first reported by the financial news cable network
CNBC. Stocks had already fallen in regular trading
yesterday. The Nasdaq 100 index, composed mainly of big
technology stocks, fell almost 3 percent in after-hours
trading, while the Standard & Poor's 500 index of major
companies dropped more than 1.5 percent.

David Tice, another short-seller, said WorldCom's rise and
fall was emblematic of larger problems in Wall Street and
corporate America.

When WorldCom's stock was rising, Mr. Tice said, investors
cheered its acquisition binge and paid little attention to
how the company generated its profits. That attitude, he
said, encouraged the company to stretch accounting rules
and take ever-bigger risks in an effort to keep its stock
rising.

During the late 1990's, "the executives, the money
managers, the auditors, the C.F.O.'s, the C.E.O.'s, the
ones that got ahead were the most reckless, the least
ethical," Mr. Tice said.

"The most reckless guys were the ones that ended up having
the most power and the highest market valuations," he said.


www.nytimes.com/2002/06/26/technology/...1&en=09f9937634153bda

While investigators for the district attorney, Robert
Morgenthau, have begun interviewing witnesses in Houston,
where Enron is based, and overseas, the Manhattan
prosecutors do not appear to be close to bringing any
charges, people involved in the case said. There is no
indication that the banks themselves are targets of the
inquiry.

Combined with the recent conviction of Enron's former
accountant, Arthur Andersen, these latest lines of inquiry
signal that investigators are putting the conduct of the
company's financial advisers under a harsh light, even as
they consider bringing charges of fraud and related crimes
against Enron's former top executives.

Banks had complex financial relationships with Enron, and
the full details of those only began to emerge amid the
debris of the collapsed company. Like most companies, Enron
borrowed money to finance its operations. But banks also
provided cash for the company's off-the-books partnerships
and for outside investors in those entities. Some financial
institutions and bankers were themselves investors in the
partnerships.

Major New York banks, meanwhile, engaged in circular trades
with Enron that allowed the company to obtain billions of
dollars in loans without disclosing them to shareholders,
according to trading records and court documents.

The federal investigation of banking matters related to
Enron stepped up in recent weeks, even as much of the
Justice Department's task force on the scandal was occupied
with the long-running criminal prosecution of Andersen.

According to people involved in the case, some of that
effort was handled behind the scenes by William Kimball, a
task force prosecutor who specializes in securities-related
cases. Mr. Kimball, an assistant United States attorney in
San Francisco, has long worked with Leslie Caldwell, the
head of the Washington-based task force.

Mr. Kimball was said to be focusing on matters related to
Chewco, which was formed by an Enron financial executive in
1997 to engage in transactions with Enron. Under accounting
rules, at least 3 percent of Chewco's capital had to come
from independent investors for Enron to keep the
partnership's financial results off the company's books.

At least part of the outside equity for Chewco purportedly
came from Barclays through an entity called Big River,
whose sole member was another entity called Little River.
But Andersen learned that the money from Barclays was
actually a loan secured by $6.6 million in cash collateral.


Since the supposed equity investment was actually a loan,
Andersen insisted that Chewco failed the 3 percent test and
its finances had to be consolidated with those of Enron - a
decision that was a big factor in a huge restatement of
Enron's financial results last November.

In recent weeks, Mr. Kimball, the prosecutor, was said to
have been interviewing numerous participants involved in
the structuring of the Chewco transaction, including
bankers from Barclays. Telephone calls to a bank spokesman
went unanswered late yesterday. However, a spokesman for
the bank had previously said that it did not believe that
there was "any basis" for a claim against it. Bank
officials have also said there was no personal investment
by Barclays executives in the deal.

Separately, according to people involved in the case,
bankers interviewed by the government have repeatedly been
pressed about whether they enriched themselves in dealings
with people or entities related to Enron.

In an instance involving at least one American bank, these
people said, prosecutors have discovered evidence of such
self-dealing, and were said to be deciding whether to bring
indictments. The identity of the bank and the employees
involved could not be immediately determined.

The investigation by the Manhattan district attorney's
office has been proceeding for at least several weeks.
Witnesses said that they had been questioned about
transactions between Enron and Morgan that involved an
off-shore entity known as Mahonia Ltd. In addition, at
least two witnesses were asked by investigators about a
transaction that involved Citigroup and an off-shore entity
called Delta.

Kristin Lemkau, a spokeswoman for Morgan, declined to
comment, as did Daniel Noonan, a spokesman for Citigroup.

Mr. Morgenthau, who has a long-established reputation for
fierce independence, has frequently investigated both
banking matters and cases involving off-shore financial
maneuvers. At this stage, people involved in the case said,
his investigation appeared to be completely independent of
the federal inquiry.

In the Mahonia deals, according to records of the
transactions and energy industry experts, Enron appears to
have used natural gas trades with a series of offshore
companies linked to Morgan to move hundreds of millions of
dollars in loans off its books.

The gas-trading transactions have led to charges in
bankruptcy court that Enron and Morgan intentionally
misrepresented the nature of the deals to obtain surety
bonds from insurance companies. With Enron's collapse, the
insurers, including the St. Paul Companies and Liberty
Mutual, are balking at making payment.

The transactions involved a web of corporations - several
of them based in the Channel Islands - including Mahonia
and Stoneville Aegean Ltd. that at first blush seem
independent but whose records show are linked companies
with ties to Morgan.

The companies traded gas in a circle, with Enron both being
required to deliver the commodity on a future date and
being owed the same amount of gas for delivery on the same
date at the same price.

The transactions involving Citigroup and Delta, which is
based in the Cayman Islands, functioned in a similar way,
according to a lawsuit filed by Enron shareholders.
According to that suit, Citigroup used Delta to carry out
$2.4 billion of financial "swaps" with Enron that
"perfectly replicated loans and were, in fact, loans," but
were not disclosed on Enron's books.

One current Enron official who reviewed the deal said that
it was done to improve the company's cash flow through a
transaction that appeared on the books as a trading
liability rather than as debt. That helped Enron in its
dealings with the rating agencies, the official said.

The Manhattan investigators have obtained documents related
to both the Mahonia and Delta transactions, according to
current and former Enron executives who have been
interviewed.

Some of those witnesses have also recently been interviewed
by investigators from the Senate Permanent Subcommittee on
Investigations.


www.nytimes.com/2002/06/26/business/...i=1&en=77147d5645fa2eb1

WorldCom entlässt Finanzchef wegen fehlerhafter Buchführung  






Clinton (Reuters) - Der US-Telekomkonzern WorldCom hat seinen Finanzchef Scott Sullivan wegen fehlerhafter Buchführung entlassen. In fünf Geschäftsquartalen seien Ausgaben im Umfang von mehr als vier Milliarden Dollar (rund 4,07 Milliarden Euro) falsch verbucht worden, teilte der Konzern am Dienstag weiter mit. WorldCom werde seine Ergebnisse für das erste Quartal 2002 sowie aus dem Jahr 2001 berichtigen.

Das Unternehmen wird den Angaben zufolge zudem am Freitag mit der Entlassung von 17.000 Mitarbeitern beginnen.

Sullivan habe überhöhte Aufwendungen und Investitionsausgaben bilanziert und damit einen größeren Cash Flow als tatsächlich vorhanden ausgewiesen, hieß es. Ohne die falschen Angaben habe man in 2001 und dem ersten Quartal 2002 einen Netto-Verlust gemacht. Zudem seien im vergangenen Jahr 3,06 Milliarden Dollar und im ersten Quartal diesen Jahres 297 Millionen Dollar entgegen der GAAP-Regeln zwischen internen Konten transferiert worden.

Die WorldCom-Bücher für 2001 und das erste Quartal 2002 wurden von dem Wirtschaftsprüfungsunternehmen Andersen durchgesehen.

Deutsche Aktienmärkte brechen ein - Angst vor falschen Bilanzen  






Frankfurt (Reuters) - Die deutschen Aktienmärkte sind am Mittwoch massiv eingebrochen, was Händler auf die Nachricht um fehlerhafte Bilanzen beim US-Konzern WorldComzurückführten. Der Deutsche Aktienindex (Dax) fiel im frühen Handel zeitweise um mehr als sechs Prozent und damit auf den tiefsten Stand seit dem 25. September 2001.

"Hier geht die Angst um, dass WorldCom kein Einzelfall ist und die anderen Unternehmen auch falsche Bilanzen ausgewiesen haben", sagte ein Händler.

Am stärksten unter Druck standen die Titel von MLP, die um mehr als zwölf Prozent auf 25,90 Euro fielen. Allianz- und Telekom-Papiere stürzten um mehr als acht Prozent. Auch die anderen Technologie-Titel fielen um rund zehn Prozent. Am Markt herrsche Panik, sagte ein Händler.

Der Dax brach um 5,55 Prozent auf 3969 Punkte ein. Am Neuen Markt gab der Blue-Chip-Index Nemax50 7,42 Prozent auf ein Rekordtief von 549 Zählern nach. Der MDax für mittelgroße Werte notierte 2,47 Prozent tiefer bei 3764 Punkten. Die US-Börsen hatten bereits am Mittwoch deutlich schwächer geschlossen.