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WorldCom Suspends Executives In Order Over-Booking Scandal
The Wall Street Journal

Deborah Solomon contributed to this article



Company conducts broad probe into sales commissions

WorldCom Inc. has suspended three star employees that it says will soon be fired or asked to resign, and frozen the commissions of at least 12 salespeople as it conducts a broad internal investigation into an order-booking scandal that boosted sales commissions in three of its branch offices

The investigation comes at an awkward time for the Clinton, Miss., company, whose stock has plummeted from a high of $64.50 in June 1999 to a low of $7.03 earlier this month. The shares have inched upward in recent days after Chief Executive Officer Bernard Ebbers bluntly assured investors the company’s finances were sound. “We stand by our accounting,” he said on a conference call with analysts last week.

The probe, which focuses on three of the company’s branch offices, has found that two managers improperly boosted their sales teams’ commissions -- which were used to calculate their own pay -- while one sales representative knowingly boosted her own commission, according to WorldCom General Counsel Michael Salsbury. In all three cases, the employees took credit for sales that already had been accounted for by other divisions of the telecommunications company. Because WorldCom’s revenue and sales commissions are calculated using different systems, the probe should have no effect on the company’s earnings, according to Mr. Salsbury.

“You’re talking about a few bad apples here who figured out how to game the system and break our rules,” Mr. Salsbury said. “But this has nothing to do with our financial reporting.” The existence of the internal investigation hasn’t previously been disclosed. It has led to the suspension of two sales executives, including one of its top revenue producers last year and another of the company’s highest-ranked salespeople. Lawyers for the employees are negotiating the terms of their departures from WorldCom, and WorldCom officials said they haven’t decided whether to fire the employees outright or give them the chance to resign.
(More: MSNBC.com News Source)
2002 © Dow Jones & Company, Inc.

A somewhat dated report. I was indisposed last week, so this one slipped by.

Not the first time we’ve had to escort terminated employees off the premis, and it likely won’t be the last.

Dan (never worked in the sales department -- as I prefer to be considered trustworthy)