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AOL is the latest company to be slammed. |
WASHINGTON,
Aug 11 (IslamOnline & News Agencies) – The latest in a long
succession of corporate fraud investigations, U.S. media giant AOL Time
Warner was slammed with lawsuits late Saturday, August 10, 2002, by
shareholders who claim the company committed fraud by trying to hide
declining advertising revenues for its Internet service.
The
lawsuit, filed in a U.S. District Court in Washington, is the latest
against AOL Time Warner, which said late last month it is cooperating
with a U.S. Justice Department probe of the company's accounting
practices. The probe is the second recently launched by U.S. regulators
at the company.
On
July 31, AOL Time Warner's chief executive officer Dick Parsons
acknowledged an investigation was ongoing by the U.S. Securities and
Exchange Commission. That investigation was touched off by a series of
stories in the Washington Post newspaper, which stated that AOL had
inflated its advertising sales between 2000 and 2002 by $270 million
through a series of "unconventional deals."
"In
the current environment, when anyone raises a question about accounting,
it's not surprising that the relevant government agencies will want to
look into the facts," said AOL in a statement regarding the U.S.
Justice Department investigation. "As we said last week, we are
cooperating 100 percent with the SEC, and we will cooperate with the
Department of Justice as well."
AOL
added that it believes its accounting methods were "appropriate and
in accordance with generally accepted accounting principles." The
company said its outside auditor, Ernst and Young, has repeatedly
confirmed the integrity of those audits.
AOL
says it has 35 million subscribers. The company has been blamed for
dragging down the whole of AOL Time Warner since the merger between AOL
and Time Warner media concern in 2000, which created the world's largest
media conglomerate.
In
a statement, the law firm of Finkelstein, Thompson and Loughran said its
lawsuit seeks damages for anyone who bought shares of AOL Time Warner
from October 18, 2000, and July 17.
Last
month, AOL Chief Operating Officer Bob Pittman resigned, amid criticism
that the traditional media divisions, led by Time Warner, were being
dragged down by the underperformance of AOL, which claims 35 million
subscribers for its Internet service, since the two companies merged
into the world's largest media conglomerate in 2000.
Shares
of AOL closed Friday at $11.05, a fraction of its 52-week high of $44.12
a share.
Just
before the merger, the combined market value of AOL and Time Warner was
$290 billion. The combined companies Friday had a market capitalization
of about $45 billion.
