|
Congress Summons WorldCom Executives, G8 Scrambles to Restore Investor Confidence
 |
| Oxley
signing a subpoena for WorldCom executives to appear before
Congress.
|
WASHINGTON,
June 28 (IslamOnline & News agencies) - A congressional
panel
announced Thursday, June 27, 2002, that it would call WorldCom
executives to testify on the telecom firm's 3.8 billion-dollar
accounting misstatement, as the Group of Eight leaders in Calgary,
Canada scrambled to restore confidence in global markets.
The
House Committee on Financial Services said it will also subpoena Jack
Grubman, the former telecom analyst at Salomon Smith Barney with close
ties to the industry, for the planned July 8 hearing, Agence
France-Presse (AFP) said.
Committee
chairman Michael Oxley said former chief executive Bernie Ebbers,
current president and chief executive John Sidgmore and sacked chief
financial officer Scott Sullivan would all be called in front of the congressional
panel.
"Sadly,
the news brings us yet another incident of accounting overreach,"
Oxley said. "These alleged short-term gains created by the
executives are going to cause long-term pain for the WorldCom
families."
The
hearing is to delve deeper into the accounting problems plaguing the
telecommunications sector, and their effects on employees, retirees,
and investors, a committee statement said.
"The
WorldCom news dramatically underscores the need for legislative and
regulatory reform," Oxley said.
"Problems
with accounting in telecommunications are, unfortunately, damaging a
key growth sector of the economy that is already facing other, steep
challenges."
Salomon
Smith Barney said it will fully cooperate with the panel, adding that
Grubman would appear voluntarily and did not need to be issued a
subpoena.
Grubman,
who once worked at AT and T Corp, became a familiar figure during the
late 1990s high-tech boom as the author of reports on the telecom
sector.
A
class-action lawsuit filed earlier this month accused Grubman of
recommending another firm, Global Crossing, "without any
reasonable factual basis," and failing to disclose significant,
material conflicts of interest to obtain investment banking business.
The
day before the WorldCom scandal broke, Grubman cut his rating on the
former long-distance giant and said there was growing evidence the
company's position was deteriorating further.
Meanwhile
in Calgary, Canada, the Group of Eight leaders scrambled to restore
confidence in global markets after revelations of the WorldCom
scandal, another accounting scandal to rock a multinational company.
"It
is a preoccupation of all the leaders," G8 host, Canadian Prime
Minister Jean Chretien said Wednesday, June 26, 2002, at the start of
the two-day summit of the world's leading industrialized nations, of
revelations that telecom giant WorldCom
had overestimated profits by some 3.8 billion dollars.
"This
is creating at this time a lack of confidence in the market and people
are not sure about the way the information is transmitted to the
public. They are very concerned."
Analysts
were skeptical of what role the G8 could play in returning confidence
to markets shaken by accounting scandals at WorldCom,
Enron Corp, Tyco International Ltd and others, AFP said.
"What
they are going to do about it as the G8, I'd be interested to
hear," Fred Bergsten, director of the Institute for International
Economics in Washington, said wryly, noting the growing debate over
the differing accounting standards used by the Europeans and the
Americans.
European
Union regulators have urged U.S. regulators to accept international
accounting standards by the year 2005, but the United States has shown
little interest in making the switch.
Bergsten
said the G8 could have pitched a move toward international standards,
but said "at the end of the day it does fall upon individual
countries to enforce their existing laws."
Ahead
of the summit's opening, President George W. Bush used a bilateral
meeting with British Prime Minister Tony Blair to highlight his
concern about the WorldCom
accounting scandal, which he called "outrageous."
"We
have had too many cases of people abusing their responsibilities. And
people just need to know that the [Securities and Exchange Commission]
is on it," Bush told reporters. "When we find egregious
practices, such as the one revealed today, we will go after
them."
|
