Worldcom Scandal

Topics: MCI Inc., Bernard Ebbers, Accounting scandals Pages: 9 (2925 words) Published: February 20, 2013
Corporate Governance
WorldCom Scam

MCI WorldCom was one of the largest telecommunications companies in the world. Bernie Ebbers founded WorldCom in 1983, after that WorldCom began as a re-seller of long-distance telephone services. WorldCom is located at Mississippi. After Ebbers bought around 50 other small long-distance firms, he set his sight on MCI. Thus MCI WorldCom would have become the second biggest telecom service provider in 1997. MCI WorldCom was formed on September-15-1998. WorldCom merged with the $37 billion MCI Communications Corporations, the company's operations were organized around three divisions: * MCI WorldCom

* U.S. telecommunications
* WorldCom International
The MCI WorldCom division is the second largest long distance company in the United States (after AT&T). It has fibre optic network of 45,000-mile long, which provides local phone service in more than 100 markets and offers services such as data, Internet, and other communications services. UUNET WorldCom has a highly trusted & reliable backbone network which provides local access to the Internet to a reach of more than 1,000 locations in and around the United States, Canada, Europe, and the Asia-Pacific region. WorldCom International is not only a local but also facilities-based competitor in 15 countries outside the United States, connecting to the company's overall global network to more than 5,000 buildings in Australia, Ireland, Germany, Hong Kong, Italy, Japan, Mexico Belgium, Brazil, France, The Netherlands, Singapore, Switzerland, Sweden, and the United Kingdom. Company – Timeline:

Corporate founding
1983: Businessmen Murray Waldron and William Rector devise a plan to create a discount long distance provider called LDDS (Long-Distance Discount Service). 1985: Early investor Bernard Ebbers becomes the first chief executive officer of LDDS. 1989: LDDS becomes public through its first acquisition of Advantage Companies Inc. 1992: LDDS merges in an all-stock deal with discount long distance service provider Advanced Telecommunications Corp. MCI acquisition

1993: LDDS acquires long distance providers Resurgens Communications Group Inc and Metromedia Communications Corp. in a three-way stock. This creates cash transaction that becomes the fourth-largest long-distance network in the United States. 1994: LDDS continues its acquisition spree acquiring domestic and international communications network IDB Communications Group Inc. in an all-stock deal. 1995: LDDS acquires voice and data transmission company Williams Telecommunications Group Inc. for $2.5 billion and changes its name to WorldCom Inc. 1996: WorldCom merges with MFS Communications Company Inc. and UUNet Technologies Inc. 1998: WorldCom completes three mergers: with MCI Communications Corp. ($40 billion)—the largest in history at that time—Brooks Fiber Properties Inc. ($1.2 billion) and CompuServe Corp ($1.3 billion).

Proposed Sprint merger
1999: WorldCom and Sprint Corp. agree to merge.
2000: U.S. and European regulators block proposed merger with Sprint; WorldCom and Sprint terminate agreement.

Accounting scandals & Bankruptcy
2002: A small team of internal auditors worked together secretly at WorldCom. During the night time, the auditors’ secret investigations revealed a $3.8 billion worth of fraud. WorldCom files for bankruptcy protection, listing some $107 billion in assets and $41 billion in debt, on a consolidated basis as of March 31. It was the largest such filing in U.S. history. 2003: The Company's total assets had been inflated by about $11 billion. Creditors had lost faith in the organization. 2004: MCI officially emerges from bankruptcy, 21 months after filing the largest Chapter 11 case in history. 2005: Verizon Communications Inc. announces a $6.75 billion deal to buy MCI Inc. Former WorldCom Inc. chief executive Bernard J. Ebbers is found guilty of conspiracy, securities fraud and making false filings...
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