Bankrupt telecommunications giant WorldCom has revealed an additional $3.3 billion in earnings errors, almost doubling the total disclosed in its widening accounting scandal to more than $7 billion.
WorldCom, the second largest US long-distance telephone carrier, also said it may write off $50.6 billion of goodwill and other intangible assets and it would re-evaluate the value of its property, plant and equipment.
Such a charge would be rivaled only by the $54 billion charge taken by media conglomerate AOL Time Warner Inc. in the first quarter of this year. That amount would be almost as big as the 2001 gross domestic products of Hungary and the Czech Republic, according to the OECD.
WorldCom said an internal audit had discovered that $3.3 billion in earnings were improperly recorded on its books from 1999 to the first quarter of 2002. That is on top of the $3.85 billion in expenses the company previously said it had improperly booked as long-term capital investments, which masked a loss starting in 2001.
The deepening crisis at Clinton, Mississippi-based WorldCom could add fuel to the crisis in financial markets, which have dropped significantly in recent months.
The wave of accounting scandals, starting with the fall of energy giant Enron last fall and followed by companies including Global Crossing, Tyco International Ltd and Adelphia Communications have rocked confidence in corporate America.
The crisis has led to high-profile arrests of several executives on criminal charges, including two accused of being at the center of the WorldCom scandal: former Chief Financial Officer MrScott Sullivan and former Controller Mr David Myers.