BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific
BBCi NEWS   SPORT   WEATHER   WORLD SERVICE   A-Z INDEX     

BBC News World Edition
 You are in: Business  
News Front Page
Africa
Americas
Asia-Pacific
Europe
Middle East
South Asia
UK
Business
E-Commerce
Economy
Market Data
Entertainment
Science/Nature
Technology
Health
-------------
Talking Point
-------------
Country Profiles
In Depth
-------------
Programmes
-------------
BBC Sport
BBC Weather
SERVICES
-------------
EDITIONS
Friday, 28 June, 2002, 16:22 GMT 17:22 UK
WorldCom staff brace for cuts
WorldCom former chief executive Bernie Ebbers
Subpoenaed: Former chief executive Bernie Ebbers
Staff at the troubled US telecoms giant WorldCom are bracing themselves for details of the 17,000 job cuts announced earlier this week.

The majority of the job cuts are expected to hit WorldCom's operations in North and South America.


This at least on the surface appears to be a total breakdown of the ethics of some members of the corporation

Representative Michael Oxley
The company has told the BBC that 450 posts will be lost in Europe, with UK operations set to lose about 200 jobs out of a total of 3,000.

The reports came as WorldCom chief executive John Sidgmore revealed that the firm is was slashing $1bn in costs as it attempted to fight for survival.

The company, which has about $30bn in debts, was also set to sell businesses to help raise $1bn, and was talking to banks in a bid to restructure finances.

"We are dedicated to preserving the value of our company and its long-term viability," Mr Sidgmore said.

Letter to Bush

The pledge came in a letter to US President George W Bush, who had expressed outrage at WorldCom's admission of a multi-billion dollar accounting fraud.

Mr Sidgmore promised to co-operate with probes by "appropriate agencies" into the scandal.

The US financial services watchdog has charged the company with fraud, while Congress has ordered three former and current WorldCom top executives to give evidence.

The firm hoped to "set an example by accepting responsibility and taking decisive action", Friday's letter said.

Mr Sidgmore, appointed chief executive last month, also attempted to distance the firm's current managers from the scandal.

The team was "surprised and outraged" by the revelations, said Mr Sidgmore, adding that he was "proud" that the fraud had been uncovered by WorldCom's own staff, who had possessed "the courage and professionalism to act quickly".

Already planned

WorldCom job losses in the Americas are expected to include 3,000 contractors, sources have told BBC News Online.

Harvey Pitt
Harvey Pitt, boss of the US stockmarket watchdog, promises tough action

The firm currently employs 73,000 people worldwide, and about 8,300 people in its Europe, Middle East and Africa region.

A company spokesman said that the job cuts were not directly related to the accounting fraud, but had been planned because of the global slowdown of the sector.

Cash crisis, internet worries

The WorldCom scandal, which sent share investors throughout the world diving for cover, centres on an book-keeping trick.

The company improperly counted $3.85bn in ordinary expenses as long-term investments, a move that allowed it to post profits of $1.38bn during 2001, instead of a loss.

Representative Michael Oxley signs subpoenas
Representative Michael Oxley signed subpoenas for three executives and an analyst

WorldCom's survival now depends on whether it can secure $5bn in fresh funding that would allow it to cover current expenses and interest payments.

WorldCom, which operates in more than 100 countries, is the second-largest long-distance telephone operator in the US, and is the world's largest provider of internet connections.

Called to account

On Thursday, US politicians ordered three current and former top executives of the scandal-hit telecoms giant to appear before a committee investigating the accounting fraud.


In many respects, this case appears to be eerily similar to the accounting hocus-pocus that occurred at Enron

Representative Billy Tauzin

President Bush has demanded a full investigation into the affair and has admitted he is worried about the economic fallout from the recent wave of financial scandals.

Michael Oxley, chairman of the Financial Services Committee of the House of Representatives, said: "This at least on the surface appears to be a total breakdown of the ethics of some members of the corporation."

He signed subpoenas requiring the attendance at a hearing of:

  • Mr Sidgmore
  • Former chief executive Bernie Ebbers
  • Recently fired financial director Scott Sullivan
  • Salomon Smith Barney telecommunications analyst Jack Grubman, who long praised WorldCom to investors before cutting his rating a day before the US second-largest long-distance phone company disclosed the scandal

A separate committee investigating the Enron collapse has also asked to see WorldCom's books.

Committee chairman Billy Tauzin said: "In many respects, this case appears to be eerily similar to the accounting hocus-pocus that occurred at Enron."

Official outrage

US Treasury Secretary Paul O'Neill was among other officials echoing the president's outrage.

He said the US Securities and Exchange Commission, which on Wednesday filed charges against WorldCom for allegedly manipulating earnings, should be given the right to freeze the assets of officials implicated in financial scandals.

The move would ensure that "while some of these things are being litigated the money doesn't run away and it can be redistributed to employees and shareholders", Mr O'Neill said.

 WATCH/LISTEN
 ON THIS STORY
Retired WorldCom board member Colin Williams
"The MCI deal was probably a step too far"
US Treasury Secretary, Paul O'Neill
"People who abuse trust ought to be hung from the highest branches"
WorldCom

Latest news

Analysis

Background

AUDIO VIDEO

TALKING POINT
See also:

28 Jun 02 | Business
27 Jun 02 | Business
15 Jun 02 | Business
24 Jun 02 | Business
10 May 02 | Business
07 Feb 02 | Business
08 Feb 01 | Business
Internet links:


The BBC is not responsible for the content of external internet sites

Links to more Business stories are at the foot of the page.


E-mail this story to a friend

Links to more Business stories

© BBC ^^ Back to top

News Front Page | Africa | Americas | Asia-Pacific | Europe | Middle East |
South Asia | UK | Business | Entertainment | Science/Nature |
Technology | Health | Talking Point | Country Profiles | In Depth |
Programmes