Slashdot Mirror
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".
So theres another $50.6 billion down the hole, too.
What I don't get about telecom, esp. the telecom in my area, QWest, is how the hell they are rolling in money. My phone bill is outrageous... and they have a monopoly in the region. 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?
Maybe the American press are skirting the issue - but the British press certainly aren't: try
The Guardian ("fraud" appears 5 times) and The Times which even uses the word "scam".
Zack
"... and more and more now there are all kinds of electronic goodies available" -- Pink Floyd 1972
Trustworthy accounting is the BACKBONE of the economy. If investors are not sure they can trust the books of the companies, then they will not invest, companies will not grow, the economy will flounder. The private sector *needs* the government to perform this function. Because the government has failed in its duty to ensure that fraud was not being committed we are now seeing an increased likelihood of a double-dip recession because investors are wary of Who's Next.
I love you free-market people spouting off about how evil the government is, when it's too much free in the market that has the US economy in trouble.
So what your saying is that the government should turn a blind eye? That would be like saying ignore murders to bring down the offical murder rate. Ignoring it may help you now, but in the medium to long term you're going to end up fsk'd. Who do you suggest investigate the companies, Anderson consulting?
The whole point of private enterprise is that it's meant to be more efficient than public enterprise hence governments being corrupt and inefficient is a given. The problem with the US is that where business ends and where government begines is blured.
Maybe the Democrats don't want to delve into Enron too closely, seeings how former Clinton Treasury Secretary Robert Rubin, now at Citibank, lobbied his former colleagues at the Bush Treasury department to help bail out Enron. Citibank's on the hook big-time for Enron loans. The Bushies politely told Rubin to go away. So far, Rubin is the only compromised politico related to Enron that anyone's been able to find.
When they can straighten out who did what to whom, I'm sure we'll see Enron weasles being hauled into jail. But before a prosecutor goes up against a potential OJ jury he's going to want to take time to assemble a bulletproof case. Proving intentional fraud (rather than mere incompetence, "irrational exuberance", etc) can be a bitch.
Strangely, Michael, it is a convention of the "old media" that one does not refer to someone as having committed a "criminal fraud committed with full knowledge it was a crime" until that person has been found guilty in a court of having done so.
For Christ's sake. Why don't you just go the whole hog and shout "Get a rope! Let's lynch the bastards now!".
If slashdot posters started referring to Michael's "libellous editorial comments committed with full knowledge that he was libelling someone" rather than "stupid remarks", "arrogant editorialising" or whatever, you'd be out of a job in no time.
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Yes, and the equivalent computer industry terms in this case would be:
- maliscious code
- cracking/hacking
- backdoors in critical software
Except that, for doing any of those things, under current laws you will be fired, fined, and imprisoned. Those laws are enforced.
For "miscalculations" you will be noted, fined 1% of your profit, and forgotten.
Let's compare what happened to Mitnick or Sklyarov to the worst cases of corporate fraud you can think of. Pretty depressing innit?
(1) Why isn't every single member of Worldcom's Board of Directors in jail right now? So its okay to throw some kid in jail for cracking some piss poor encryption on a PDF file - but its not so okay to throw some suit in jail that knowingly stole billions upon billions of dollars from investors?
(2) Why hasn't Worldcom's stock been delisted? I mean comeon now - I think its about time to hang up the saddle and go on home because this horse isn't getting back up.
(3) Why is Worldcom being allowed to write off 50 billion dollars (as mentioned earlier) in addition to the 7 billion they already stole? I think Bernie Ebbers and friends better get out to the street corner and start "sucking it up" so he can play these people BACK.
(4) And once again - WHY AREN'T THESE FSCKING IDIOTS IN JAIL? If I bounce a check for 100 bucks I'm sure to face the consequences - yet if they "steal" 7 billion dollars its okay?
J
I love idealists not because I am one, but because they make life bearable for pragmatists such as myself.
Which companies provided the planes used by the Republicans during the Florida recount?
Answer: Enron and Haliburton
development.lombardi.com
Do you need more examples? I can provide plenty!
sPh
/Janne
Trust the Computer. The Computer is your friend.
I know that the Worldcom issue is not quite this simple. Worldcom was writing off operating expenses as capital investments. I also can't believe that I am advocating higher taxes, but...
During this bubble, companies were doing everything that they could to overstate earnings.
I do exactly the opposite with my company. I hire a sharp accountant to make my profits legally look as small as possible. I have to write a big fat check to the IRS at the end of the year for my profits. I certainly wouldn't want to overstate them.
It also seems to me that if I was pulling this kind of stuff I would be in a federal pound you in the ass type of prison already.
Intel is NOT going to expense options. Big respected "old economy" companies like Coke and GM have said they would. What's Microsoft going to do. The lure of riches is a big drive for all the microsurfs. If they discontinue options the employees would be far less motivated, if they don't expense the options they are being (er) irregular.
Because Accountants will do what YOU tell them, you want to pay less tax by reducing your (on paper) profits? No problem, there are legal ways of doing this.
The reason accountants are n't liable is because the CEO's of said companies could just blame the accountants and get away with it. The logic being that if an accounting firm is a bit dodgy then companies will not use them since they will be liable and the accounting firm will eventually die.
Obviously the system does n't work when both parties are crooks.
"Wish I had that kind of cash to miscalculate on my income tax forms."
It isn't cash. It's earnings that were booked when they shouldn't have been. Good ol' matching principle.
Slashdot needs a review in accounting, commercial law, bankruptcy, etc....
or else every corporation in America is guilt of it to almost the same degree. Why do you think they're not looking anymore. After Enron, everyone was looking for the next big thing, sending relatively legitimate new companies plummeting (Tyco.) Pick any fortune 500 company and I can guarantee you will find *at least* $1 billion of the same problem; its only when a company falls out of favor politically or socially that these things are exposed.
Well lets clarify the situation. It's more then likely that the accounting department did do their job(show acurate information) for management then it's likely that the CFO, and possibly the CEO didn't want that info to get out, so they changed the financials. If the screw up was in the accounting dept. then they weren't doing their job, and management didn't really know the financial position of the company. This is unlikely though, there is no incentive for the controller(head of the accounting dept) to defraud his/her bosses, the controller isn't responsible for how money comes in or out, only that those are recorded acuratley. This is why you see CFO's being taken away in chains. So the purpose for accounting remains the same, it's just that there is a difference between what management sees, and what they want to do with that information.