WorldCom chief ignores bankruptcy
With his company accused of a massive £2.5bn (€3.85bn) fraud and facing bankruptcy, WorldCom chief executive John Sidgmore has vowed to continue cutting costs.
Sidgmore called the disclosure ‘‘an undeniable setback’’ for the telecoms giant, America’s number two long distance telephone provider.
But he said he was moving forwards with plans to make the company leaner and simpler, a process that will involve axeing up to 17,000 staff, beginning tomorrow.
WorldCom employs 4,000 staff in Britain, at sites including Reading, Manchester, Leeds, Edinburgh, Bristol and three offices in London.
It was not known how the job losses, which amount to 20% of the worldwide workforce, would affect them.
Sidgmore said the sale of certain assets and other cost-cutting measures would follow, but he did not mention what many analysts believe is inevitable - a bankruptcy filing.
‘‘This has been a very tough week for WorldCom, there is no doubt about it,’’ said Sidgmore, who replaced ousted WorldCom founder Bernard Ebbers in April.
‘‘We are going to continue to make the kinds of aggressive changes that are required to strengthen this company,’’ he said.
One of those changes was the sacking of former chief financial officer Scott Sullivan, who appears to be at the centre of this week’s accounting disclosure.
WorldCom reported that £2.5bn (€3.85bn) was wrongly listed on its books as capital expenses in 2001 and 2002.
That means the company may have actually lost millions of pounds when it reported profits.
The news sent stocks plunging. In London, more than £35bn (€54bn) was wiped from shares yesterday in a market already racked with post-Enron nerves.
US President George Bush vowed to ‘‘hold people accountable’’.
The Securities and Exchange Commission said late last night that it had filed fraud charges against WorldCom in New York.
They said the filing was intended in part to prevent the company from destroying documents or making pay-outs to WorldCom executives while the SEC investigates.
Meanwhile, analysts warned that WorldCom could declare bankruptcy within a week, dwarfing the collapse of Enron, the first in a string of recent scandals that rocked public confidence in corporate America.
