KANANASKIS, Alberta, June 26 (UPI) -- President George W. Bush on Wednesday called WorldCom Inc.'s admission that it will restate almost $3.8 billion in earnings outrageous and said the government will investigate and hold people accountable.
On the opening day of the Group of Eight summit, Bush proclaimed the American economy as strong, but said the U.S. markets are not as strong as they should be because of concerns about WorldCom, Arthur Andersen LLP, Enron Corp. and other cases of corporate malfeasance.
"We will fully investigate and hold people accountable for misleading not only shareholders but employees as well," Bush said. "When we find egregious practices, such as the one revealed today, we'll go after them. And need to."
The president's comments came shortly after the Securities and Exchange Commission announced it was "actively investigating" WorldCom's financial statements and disclosures.
"The matter is under review," Justice Department spokesman Bryan Sierra told United Press International. Sierra declined further comment. The Justice Department is already investigating the collapse last summer of Enron.
The president also called for a renewed sense of corporate responsibility in America. "Those entrusted with shareholder money must strive for the highest of high standards," he said.
WorldCom, which owns the nation's No. 2 long-distance carrier MCI, announced Tuesday after the market closed that more than $3 billion of expenses in 2001 and $797 million in the first quarter of 2002 were incorrectly listed on company books as capital expenses, thus not reflected.
In Washington, Senate Majority Leader Tom Daschle, D-S.D., called the latest case of corporate fraud "reprehensible." Billy Tauzin, chairman of the House Energy and Commerce Committee, said his panel would immediately begin to investigate the facts surrounding WorldCom's restatement of earnings.
"We are dismayed and we are angered with the news of WorldCom," said Daschle, who was joined by Sen. John Corzine, D-N.J., at Wednesday's news briefing with reporters on Capitol Hill. "We don't know if yet whether laws were broken, but there must be aggressive enforcement of the law, and if the laws were broken, somebody needs to go to jail."
Corzine said the repeated abuses of business ethics undermine investor confidence.
"It's unacceptable to most people who I know in business, and it is one that we have to react strongly to," said Corzine, the former chairman and chief executive officer of Goldman Sachs.
In many respects, Tauzin, R-La., said this case appears to be eerily similar to the accounting "hocus-pocus" that occurred at Enron.
"Once again, it seems as if accounting rules were manipulated to hide debt and inflate income, violating all accepted accounting standards and, perhaps, violating federal law as well," he said. "Clearly, it was an orchestrated effort to mislead investors and regulators, and I am determined to get to the bottom of it."
(Reported by Chris H. Sieroty in Washington)
