WorldCom

» see worldcom.com as it lived, on the wayback machine

~ the goodbye ~

worldcom was never a brand i could buy a service from. in 2002 i was 18 years old on ttnet dial-up in ankara, the long-distance carrier that touched my life was turk telekom and the backbone i did not think about. that backbone partly ran on uunet, which worldcom had bought in 1998. so in a sense the company was sitting under every web page i loaded, just not on the bill at the end of the month.

bernie ebbers started the company in 1983 in hattiesburg mississippi as long distance discount services, an outfit that resold at&t long-distance minutes at a discount to small businesses in the south. back then. ebbers took over as ceo in 1985 and ran the next fifteen years on acquisitions. by the late 90s lddc had renamed itself worldcom and pulled in metromedia and then mfs communications. mfs came with uunet, which by 1996 was carrying about half of all internet traffic on the planet. the 1998 mci communications deal for 37 billion was the biggest of the lot.

i was not paying close attention to any of this at the time, but anyway, in 1999 worldcom and sprint announced a 129 billion dollar merger that would have made the combined company the largest carrier on earth. the doj and the eu blocked the deal in july 2000 on antitrust grounds. the share price had already started slipping. ebbers had borrowed about 408 million from the company against his worldcom stock to cover margin calls on outside investments. that loan was the first piece of the story that did not fit on a press release.

in june 2002 cynthia cooper, the internal-audit director in clinton mississippi, ran a query that her cfo scott sullivan had been telling her to leave alone. honestly, she found about 3.8 billion dollars of line costs that had been moved from operating expense to capital expenditure, which let the company keep reporting profits. by the time the final number was tallied the figure was around eleven billion. chapter 11 followed on july 21 2002 with 107 billion dollars of assets on the petition. in those days. that was the largest us bankruptcy on record and held the title for six years until lehman.

~ the chronicle ~

~ the fraud ~

the mechanism was small and dull. line costs are what a long-distance carrier pays other carriers to terminate calls on their networks. those are operating expenses by every gaap rulebook. honestly, sullivan started booking them as capital expenditure in 1999, which let worldcom amortize them across years instead of taking the hit in the quarter. the entries were huge and round-numbered, three-billion-dollar adjustments that anyone reading the ledger would have questioned. ebbers and sullivan both maintained for months that the books were clean.

ebbers was convicted in march 2005 on nine counts and sentenced to 25 years in federal prison. he served thirteen years before being released for compassionate reasons in december 2019 and died about six weeks later. sullivan testified against ebbers as part of a plea deal, served five years, and is alive in 2026. cynthia cooper wrote a memoir in 2008 called extraordinary circumstances and lectured on the auditor's role for the next decade.

~ what got buried with it ~

i saw this part only from a distance. mostly. the company emerged from chapter 11 in 2004 under the mci name and moved its headquarters from clinton mississippi to ashburn virginia, where the original mci had always been. that was a way of erasing the worldcom name from the building. verizon bought what was left in january 2006 for around 7.6 billion in stock. the mci brand survived inside verizon for a few years on business-product lines before going dark.

uunet, which was the part of the company i had been routing through without knowing it, became verizon business and is still operating as backbone infrastructure in 2026. the original lddc storefront in hattiesburg has a historical-marker plaque now. the bend oregon equivalent for telecom-fraud nostalgia tourism, if you wanted to drive past the spot where eleven billion dollars used to be on the books.

@}-->--

              )
             (_)
            .-'-.
            |   |
            |   |
            |   |
            |   |
          __|   |__   .-.
       .-'  |   |  `-:   :
      :     `---'     :-'
       `-._       _.-'
           '""""""

« previous  ·  random  ·  next »