WorldCom pounds more nails into economic coffin

WorldCom's 2001 annual report told shareholders that future corporate results could differ from expectations because of economic uncertainty, the effects of vigorous competition and the impact of technological change, among others. But no where were there warnings that the company would face bankruptcy because of the intentional misaccounting of $3.8 billion.
The U.S. economy took a major blow after Sept. 11, but it is corporate mis- and malfeasance that is delaying economic recovery and causing investor and consumer confidence to sink. Those responsible for the illegalities at Enron, Rite Aid, Arthur Anderson -- which was also one of WorldCom's auditors -- Adelphia, Tyco, Global Crossing and ImClone should be prosecuted and imprisoned. The guilty haven't just stolen cash, they've stolen the dreams of thousands.
Most people investing in the stock market understand that there are risks inherent in an open market. They do not, however, expect to be fleeced by the senior executives of the companies which their savings have bought a part of. It's impossible to be a wise investor when your investments are not governed by market forces, or even world events, but rather by greed.
Shaky economy
Perhaps if Sept., 11 had not rendered the economy so shaky, the problems arising now at too many of the nation's corporations might have remained hidden. An inappropriate optimism about the future may have led some to believe that the losses they hid would be covered when the economy rebounded. Others on the other hand, apparently "forgot" that the money they appropriated for their own use through manipulations and other securities sleight of hand was not theirs. Add to that the recommendations brokers made to their clients of stocks known to be in trouble, and the image of rock solid brokerage firms on an upstanding Wall Street is being rapidly replaced by an image of houses of cards erected on shifting sands
Earlier this month, in the wake of the Enron scandal, we urged Congress to find a way of sending a clear message to Wall Street and the accounting fraternity that those who bilk investors will face the consequences. We suggested that amending the Private Securities Litigation Reform Act of 1995 would give investors the tools they need to call perpetrators of securities fraud to account. That imperative has become even more crucial now.
At risk in the WorldCom debacle are not only the WorldCom investors and bond holders -- including a number of major U.S. banks that financed the bonds -- but the livelihoods of thousands of workers employed by WorldCom and its subsidiary MCI, 1,100 of whom work in Niles.
Yesterday, President Bush promised a full investigation into the accounting problems at WorldCom, vowing to hold accountable those responsible. That accountability must involve restitution and appropriate punishment.