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Finance & Accounting
Pages 4 (1004 words)
Name Professor Class Date Corporate governance: WorldCom I. Introduction If one will talk about how the failure of corporate governance resulted to fraud that led a company to its collapse, the case of Worldcom is one of the classic cases. The company practiced shady accounting methods to hide its deteriorating financial condition and falsely reported growth and profitability for the value of its stock price to increase.
The Fraud was first discovered when its budget and financial Analyst Kim Emigh blew the whistle in December of 2000 when he asked engineers in Richardson, Texas unit and elsewhere to stop charging their time for long term projects to capital expenditures (Young 2002). It was also when he told his accounting manager Frank Guckes after receiving an email to charge it to another account that it is fraud and that it is a SEC violation that he should make everybody aware of it because Kim Emigh will (Young 2002). Ten weeks later, Kim Emigh was fired which prompted him to sue WorldCom leading to a congressional and SEC inquiry which eventually led to WorldCom’s filing for Chapter 11 bankruptcy protection in July 21, 2002. Later, its CEO Bernard Ebbers was found guilty on March 15, 2005 and was sentenced to 25 years in prison. WorldCom’s other officials such as its CFO Scott Sullivan, former controller David Myers, former accounting director Buford Yates and former accounting managers Betty Vinson and Troy Normand all plead guilty to fraud, conspiracy and filing of false statements. II. ...
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