WorldCom Uncovers Another $3.3 Billion In Improper Accounting

Bankrupt telecommunications firm WorldCom Inc. said Thursday it has uncovered another $3.3 billion in bogus accounting, adding to the $3.85 billion fraud it revealed in June.

The newest discovery was made as the company reviewed its books for 1999 and 2000, with most of it tallied in 2000, the Clinton, Miss.-based company said.

The fraudulent accounting already revealed occurred in 2001 and the first half of 2002. The additional fraud would bring the total of phony accounting at WorldCom to some $7 billion. As a result, WorldCom will restate its financial statements for all of 2000.

The company had already said it would restate its financials for all of 2001 and the first quarter of 2002. When the company made its initial disclosure in June, it said it would go back and review financials from prior years.

WorldCom, the once high-flying long-distance and Internet services company, filed for Chapter 11 bankruptcy protection July 21. It was the biggest such filing in U.S. history.

Last week, two former executives, chief financial officer Scott Sullivan and controller David Myers, were arrested and charged with hiding the nearly $4 billion in expenses and lying to investors and regulators in a desperate bid to keep the company afloat.

The accounting fraud that occurred in 2000 is said to differ from the techniques used in 2001 and 2002, according to a report Thursday by the financial news network CNBC.

In the latest case, the report said, Sullivan is believed to have used a variety of techniques to bolster operating income, including reversing reserves for bad debts into operating income.