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WorldCom Fraud Doubles
Silvaran writes "No, this isn't a repeat story. WorldCom claims another $3.3 billion accounting error. That's about $7 billion, for those that are counting. Wish I had that kind of cash to miscalculate on my income tax forms." There's also a NYT story. I love how the news outlets are saying, "error", "irregularity", "problem", as if this was all some sort of tragic accident, instead of laying out the obvious truth, "criminal fraud committed with full knowledge it was a crime".
I love how the news outlets are saying, "error", "irregularity", "problem",
Those just happen to be the industry terms. The accounting has terms just like the computer industry. And considering that WorldCom executives are being arrested, it is pretty obvious that fraud is involved also. Just another slashdot editor adding his two cents to a post instead of just posting it.
...that you never hear of any accounting 'errors' that make the company look less wealthy than it is?
A pizza of radius z and thickness a has a volume of pi z z a
At this rate and with all the companies they are investigating, the government is going to single handily destroy the US economy. Sure some company's are lying about their books...but let's look at the governmental books and see how many places we can find fraud there!!
As in 3,300,000,000 $'s, bucks credits ?
You know, I've heard about calculating errors, but
3.3 bill, is not a calculation eror, thats darn gross negligence at beast, villanous stupidity at slightly worse, and punishable by long term jail at worst..
There are countries that make less money than that on their national budgets.
I sit here, and the only way I can react to this is with a slightly disbelieving laugh.. It's so far out it's almost funny in a slight Twilight Zoney way.
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The justice department needs to stop being a bunch of whores and realize that "limited liability" has to do with financial, not criminal liability. Fraud is fraud, theft is theft. Put them in the same cell with a guy doing 5 years for forging a check. It makes me sick.
I spent a year in Iraq looking for WMD and all I found was this lousy sig.
The spin by the media is guided by the principle that you are innocent until proven guilty. Thus the "nice" choice of words for the WorldCom bastards who are responsible for this "alleged" fraud.
the obvious truth, "criminal fraud committed with full knowledge it was a crime".
We call this Libel / Slander.
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The reason for this might be that news outlets are small parts of much larger companies, who also happen to be vulnerable to the rise and fall of the market. If you take a look at any of your major news sources, you will find that they are also fully-owned subsidiaries of large megacorps. Controlling the spin on the stock market in general is in the best interest of those who are directly affected by the public's confidence in investing in corporate stock.
For the most part, corporate news has long since quietly renounced its role as public watchdog, and is now little more than a marketing arm for its new masters.
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About forty years ago, it looked like Lockheed was going to go bankrupt. The stock fell from $60 to $3, which was below par (i.e. breaking up the company and selling off the assets would have recovered more money than the stock was selling for). The problem was that Lockheed wasn't just a defense contractor, it was the defense contractor, and during the height of the cold war, to boot. They couldn't be allowed to go bankrupt.
So the government bailed them out.
Then, some years later, there was a little problem at a generating plant owned by General Public Utilities (GPU). You might not have heard of GPU but you've heard of the plant: Three Mile Island. GPU stock took a hit, as you might imagine. In fact it looked like it might go broke. The problem was that it was a utility, which means it was a monopoly. If it went broke the lights went out over a fair stretch of countryside. That couldn't happen.
So the government bailed them out.
Now, my father saw both of those coming. He bought Lockheed stock at fire-sale prices because he knew that they couldn't be allowed to go broke. He cried because he couldn't afford more. He made out like a bandit.
When GPU started to go under, he bought all the GPU stock he could. And this time, he could afford more. He made out like a bandit. So well, in fact, that he assured himself a comfortable retirement. He's quite conservative, and told me ruefully, "I always preached the values of thrift and economy. Now I'm comfortable in my old age, but it isn't due to any of that. Hmph."
Then the Seattle public utility, through a boring series of blunders, started to go broke. They couldn't be allowed to go broke, for the same reasons that GPU couldn't and Lockheed couldn't.
So the government...said "Hey! Wait just a darn minute here!" And didn't bail them out.
And they went broke. And the lights stayed on.
Ditto when California started having rolling blackouts. Big raspberries from the Fed, because the Shrub knows California wouldn't vote for him if he was rolling out the red carpet in front of Jesus Christ for the Second Coming. Much stick-waving, stunningly bad contracting, and shouting, but the lights came back on and stayed that way.
The days of government bailouts are over.
Does it go on forever?
It's not just a smear campaign. The Bush administration did have unusually close ties to Enron, and even asked them for advice in setting policy.
Now, certain Democrats also had ugly ties to the company. The only way this absolves Bush is if you believe that two wrongs make a right-- or that moneywhoring cancels out if other people do it, too.
While this is god awful, there is a small silver lining for them. They paid taxes on that 6 billion dollars of false income. The federal government will now have to refund them that money. Futhermore, since these losses occured so far back, they are unlikely to effect the current fiscal status of the company. They may very well be doing this recoup taxes; in other words, they are going to get a nearly a billion dollar windfall from this restatement.
Go on, then, explain to the court how the capitalisation of local line costs in de novo telecom operations is the wrong accounting policy. Then prove that it is so obviously the wrong accounting policy that no reasonable man could have thought otherwise. Then prove that the particular officers of WorldCom who are up for trial were the ones responsible for the adoption of this policy, rather than auditors, consultants, other managers. Then prove that they adopted it with the intent to commit criminal fraud. Then, maybe, you'll have some credibility in your glib assertion that the defendant is guilty without need for a trial. This is a complex case, and the assertion that the defendants are guilty of criminal fraud (rather than of some lesser offence of the kind generically described as "accounting irregularities") is not supportable.
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What bugs me the most about all this is how people still don't seem to make a big deal about it. Here's a good way to think:
Imagine every crime that has been committed against you that cost you money. This can include having your bicycle stolen, your car stolen for a joyride and crashed into a wall... your house vandalized and your stereo ripped off, your credit card number hijacked, your wallet taken in a mugging, etc. Whatever cost you money. Now, try to remember the anger. Try to remember how pissed off you were. How much you would've loved to bash the punk's face in with a brick.
Now listen.
Corporate crime has stolen about twice that from you, and other investors and tax payers. You are an invesor if you have a retirement plan. You are a taxpayer if you have a job. Even if you don't in either case, your sales taxes go to governments, and governments are effected by the stock market. The total monetary cost per year of street crime in the United States is well below the total amount of money lost due to white collar corporate crime. That is money you should have in your assets right now.
The thief, the mugger, at least they have some balls about it - if you catch them, you could very well bash their faces in with a brick, then get them arrested by the police (who kick the living crap out of them if they try to run) and then end up in a federal "pound me in the ass" prison for quite a long time.
The white collar criminal is not caught. If he is, his company gets fined something around 1% of their earnings this quarter. If he personally is caught, he just gets sent to a minimum security country club for a few months.
And people don't seem very mad about this.
Pardon me for interfering with / analyzing your domestic policies.
What you are experiencing is quite normal. After a period of living out of touch with reality, you're falling out of the clouds. Gravity is a bitch.
Enron to me exemplifies that your power structure is far from ideal. Rather than having the people pay for the campaigns (through the national treasury), you have the corporations that care about profits and only profits buying influence in the political circles. Giving corporations a lot of power is generally a bad idea, since they care less about ethics and more about money.
Greed is essentially a destructive force. Greed fosters bad judgement and short-term benefits. The Enron and WorldCom people knew they were out of line, but the enormous payoffs kept them going even though their logic central must have been saying "you're way out of line, mister. this will collapse!". I would look really hard for executives who quit after the accounting fraud began. Some of them might have seen where this was going, and left the sinking ship with bloody hands - their common sense overpowering the greed.
As Aimee Mann sings - "it is not going to stop.. until you wise up". You really, really need to look at who you elect during the upcoming elections. Don't just look at the words, but examine the past. If you wish to come through this alive, you'll need wisdom and courage, not demagogues (sp?) and special interest representatives.
If this was not so damned serious, I would be experiencing some schadenfreude now, but this is too damn serious on a global scale. I really hope you'll learn your lessons and regain your balance.
Stop the brainwash
Yeah! Lets all vote Democrat, because we know that the Democrats would NEVER try to protect corporate cronies. We can all vote in people like Joe Lieberman, who led the fight in the Senate to stop the SEC from implementing tighter controls on accounting firms. Many of these accounting irregularities happened under the watchful eye of Clinton's SEC.
Republicans tend to believe in a more free market than Democrats, but that does not mean that they believe that misrepresentation of corporate financials is a good thing. A free market need accurate information to operate correctly, and many Republicans know that. (Almost) no one is for the fraud that has been occuring, and to blame Republicans for the current corporate scandals is silly.
Let's keep in mind that our Republican friends constantly say that they want to "run the Government like a business."
The last time I checked, that meant charging too much, underpaying the working stiffs, and playing golf on the profits for the handfull of winners. Good luck.
What do you think that government does right now? The main push for running government like a business is so that government will have some incentives to be a little more effecient than the crap that it pulls these days. A government organization is one of the most ineffecient organizations there can be, and trying to minimize this ineffeciency can only be a good thing. Of course, there are many times when government plays an important role in keeping our society operational, but all parts of government need to be analyzed to make sure that they are operating in the most effecient manner.
Sorry about the rambling.
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I know they're getting at least $40 out of every person with a phone in the midwest... where the hell does all that money go?
:)
If Qwest is anything like PacBell out here on the west coast, then much of that money pays for a team of about 75,000 monkeys to answer the phones - all of whom could be replaced by about six lines of perl.
The rest of the money is spent on cable maintenance personnel, who are out there day after day repairing 40+ year old copper wiring and switching equipment that should have been retired long ago.
This is bad not just for the US, but for a whole lot of other economies in other countries.
Just as an example, VSNL, a semi-govt. owned organization in India and the biggest ISP, had deals worth billions with WorldCom.
Now, VSNL is unsure whether it would get the services or the money. The crux of the matter is that this would affect the shares here a whole lot more, since there are a lot of companies that use the services from VSNL, which in itself is paid for.
And unfortunately, who pays for this? The second and third tier customers in developing countries, who have to endure a whole lot more than their counterparts. Because, they too would be accountable, and I'm just waiting for the VSNL stock prices to plummet, along with others.
I think the executives of Multinationals should be held responsible and should be put to something of an international tribunal that analyses the consequences of their actions, worldwide.
Maybe the punishment should be to throw them in some third world country's prison with hardly a square meal a day and no water to drink, then they'd understand what the hell they were doing.
It goes into twenty to fifty $250 rounds of golf at Hilton Head Golf Club under the guise of a "management retreat."
It goes into the corporate learjet that whisks some of these officers away to the above two destinations.
It goes into the CEO's million dollar annual pension whether he retires a hero or gets the pink slip for delivering his company to chapter 11.
It trickles...straight up.
The tragedy isn't that this stuff happens. It is part of the human condition. Admit it. Most of us would do the same if we were in these fuckers shoes. The real tragedy is that we won't challenge this behavior until it is too late to make meaningful amends. Think Charles Dickens.
Pres. Bush is a good and honorable person who makes his decisions based on what's morally and ethically correct, not by putting his finger to the wind; unlike our last president.
I'm really tired of hearing people smear a good and decent man, I may not agree with everything he's done but he's certainly a person with integrity.
W is a bully and a slacker. He can barely read, write or speak english. Take a look at The Bush Dylsexicon for an in depth character study (not political or economical, but character). This man is my every nightmare.
Bush and co are probable the most insidious lot ever to make it to the Whitehouse, and that is saying a lot. I lived in Texas when he was elected Governer. He lied and twisted everything in his campaign. He tried to ruin the Texas education system and was only prevented by a legislative override (he later took credit for this). He assaulted the prior Governer for her prison reform actions, then later took credit for those.
Now, at a national level, he is sending the national budget into extreem defecit so he can give massive tax breaks to all the rich people, while everyone else will end up paying for the debt.
As far as putting his finger to the wind, he seems to have little or no interest in what the public wants unless EVERYONE gets right in his face about it and threatens him.
Nuff said.
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