Feeds

Judge waves through Worldcom $750m settlement

Activists cry foul

  • alert
  • submit to reddit

Internet Security Threat Report 2014

The disgraced company formerly known as Worldcom has received court approval for the revised proposed settlement over SEC penalties for the biggest accounting fraud in history.

The US Securities and Exchange Commission had imposed a civil penalty of $2.25bn on MCI/Worldcom, but accepted first a $500m cash settlement and, when it became clear that this was not enough for shareholders, accepted a higher offer of $750m, with the extra amount consisting of common stock to be awarded to shareholders and bondholders.

MCI will now want to get on with moving itself out of Chapter 11. But it will have a much tougher job of persuading shareholder activists to draw a line under the past than sundry regulators and judges. Organisations representing senior citizens, churches and disgruntled small shareholders are demanding that the US Government bars MCI/Worldcom from federal contracts.

Here's a statement from Will Thomas, director of the Corporate Accountability Project of the Gray Panthers.

Judge Rakoff's unfortunate decision to ratify the SEC-MCI/WorldCom settlement comes on the heels of MCI/WorldCom's de facto admission of guilt -- $250 million in new company stock to those who lost $176 billion, including pensioners and 401(k) holders. The new arrangement offers eight cents a share to all those ripped-off investors. It's simply another sweetheart deal arranged for MCI/WorldCom in the Federal government's ongoing campaign to keep the company afloat at all costs.

We're disappointed by Judge Rakoff's decision, but we're far from discouraged. The campaign to hold MCI/WorldCom accountable for its $11 billion fraud is far from over. Congress is now questioning the failure of the General Services Administration to debar MCI/WorldCom from Federal contracting; we know there is hope that retirees, taxpayers, and investors will see the company held to account for its epic fraud. Senators Collins, Hatch, Kennedy, and Santorum deserve much praise and credit for their leadership on this issue. The American people were promised that Washington was serious about cleaning up the fraud in corporate boardrooms. The Gray Panthers want to see results. We won't stop in our efforts to see to it that MCI/WorldCom is barred from Federal contracting and off the gravy train..

Now for Tom Schatz, President of Citizens AGainst Government Waste.

It is disappointing that the company that commits the greatest fraud in American history, $11 billion, leading to a loss of $180 billion to the retirement accounts and savings of thousands of people receives only a slap on the wrist. This decision sends the message that corporate crime does pay. As Judge Rakoff noted, while the company's 50,000 employees deserve protection, so do taxpayers and investors. This fine is not sufficient to act as a deterrent to future corporate corruption.

We suspect the Worldcom saga will run and run. ®

Related stories

Gray Panthers gun for MCI
MCI wins Iraq gig, shovels $500m to shareholders
WorldCom to adopt MCI name
Big church group urges states to punish WorldCom
Capellas vows to clean up WorldCom

Providing a secure and efficient Helpdesk

More from The Register

next story
Scrapping the Human Rights Act: What about privacy and freedom of expression?
Justice minister's attack to destroy ability to challenge state
WHY did Sunday Mirror stoop to slurping selfies for smut sting?
Tabloid splashes, MP resigns - but there's a BIG copyright issue here
Google hits back at 'Dear Rupert' over search dominance claims
Choc Factory sniffs: 'We're not pirate-lovers - also, you publish The Sun'
EU to accuse Ireland of giving Apple an overly peachy tax deal – report
Probe expected to say single-digit rate was unlawful
Inequality increasing? BOLLOCKS! You heard me: 'Screw the 1%'
There's morality and then there's economics ...
Hey Brit taxpayers. You just spent £4m on Central London ‘innovation playground’
Catapult me a Mojito, I feel an Digital Innovation coming on
While you queued for an iPhone 6, Apple's Cook sold shares worth $35m
Right before the stock took a 3.8% dive amid bent and broken mobe drama
EU probes Google’s Android omerta again: Talk now, or else
Spill those Android secrets, or we’ll fine you
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.
The next step in data security
With recent increased privacy concerns and computers becoming more powerful, the chance of hackers being able to crack smaller-sized RSA keys increases.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.
A strategic approach to identity relationship management
ForgeRock commissioned Forrester to evaluate companies’ IAM practices and requirements when it comes to customer-facing scenarios versus employee-facing ones.