Case 13: WorldCom (2002)

• Prof. Dr. Klaus Henselmann
• Dr. Stefan Hofmann

When Enron collapsed at the end of 2001, worried investors searched for who was going to be the next fraudulent company. It turned out to be WorldCom, Inc., at the time the second largest long-distance telecommunications company in America. The WorldCom debacle came hard on the heels of the Enron disaster, and once again raised major concerns about how U.S. corporations were managed. Former President George W. Bush condemned the fraud as “outrageous” and vowed to address the problems shaking Corporate America. The SEC said that WorldCom’s accounting improprieties were of “unprecedented magnitude”. But as enormous as the fraud was, it was accomplished in a relatively mundane way. The modus operandi of the fraud was rather simple, and it was carried out over a comparatively short period of time. Yet the reverberations of the fraud would echo around the world of business for years to come.

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