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June 12, 2003 — (WEB HOST INDUSTRY REVIEW) — A report prepared by former attorney general Richard Thornburgh on WorldCom’s accounting practices said the acquisition of Maryland-based hosting provider Digex was a particularly problematic purchase amid the company’s prior transactions.
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The report, which was released this week, detailed CEO Bernard Ebbers pressuring the company’s board of directors to quickly complete the acquisition. The report also found that the board did not approve the February 15, 2001 transaction until two weeks later on March 1.
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Suggesting further impropriety, the report also documented various sources that suggested the acquisition was motivated for Ebbers? personal reasons.
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Prepared for Worldcom?s bankruptcy judge, the report is intended to help the courts determine whether Worldcom will be able to emerge from chapter 11 bankruptcy protection. The company is currently seeking to settle fraud charges filed by the Securities and Exchange Commission (SEC) by proposing a $500 million payment into a fund for investors victimized by the company?s estimated $11 billion fraud.
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“The issuance of these reports is yet another important step in putting the past behind us as we remain on a fast track to emerge from Chapter 11 protection this fall,? said MCI chairman and CEO Michael Capellas. ?The company has proactively implemented a significant number of management, policy and structural changes. No one even arguably associated with the past wrongdoing continues to work at the company.?
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Worldcom currently operates under the name of MCI, its long-distance service.
