Feng Yu called Kirilenko and Fu Rongqi to tell them to short WorldCom's shares.
When Ralph uses < Business Weekly > to expose WorldCom's false accounts, WorldCom will be finished like Enron.
Three days later, the new issue of < Business Weekly > was released.
The CEO of an investment organization on Wall Street was sitting in his chair after work, reading the latest business newspapers and magazines to understand the latest business information.
Suddenly, he saw an Asian man on the cover of < Business Weekly >.
This interested him, and he flipped to this issue of < Business Weekly >. This had saved him a lot of losses.
Oh, this is the President of Wind and Rain Holding Group, Masao Kameda. Wind and Rain Holding Group is rumored to be Feng's company. Eh? This Masao Kameda is also the CEO of the first listed company. He must be a genius to get such a company listed.
Wait … what did Masao Kameda say? WorldCom had falsified their accounts?
Kirilenko quickly flipped to the back, and it was an article that proved WorldCom had falsified their accounts. The figures in the article showed WorldCom had falsified accounts, and there were at least 4 billion USD in the company's accounts!
Kirilenko immediately picks up the phone on the table. "Sell all WorldCom's shares. Don't care about the losses. Immediately! "
At the same time, many people who heard about this news started to dump WorldCom's shares. Remember Enron's mistake? Keep the shares and wait for WorldCom to make a comeback? Then wait for WorldCom's shares to become scrap paper!
The US securities regulators had also noticed WorldCom. This company's debt ratio is too high. Every time a small fish eats a big fish, they had to rely on loans and new shares. Now, it's no longer a small fish pulling a big cart. It's a small horse pulling a train!
Today, the regulators had also noticed the article on < Business Weekly >. It states that WorldCom had provided a 366 million USD loan to its CEO, Ebbers, without any collateral. There must be something wrong with this loan. Ebbers had pocketed his own money.
At the end of last year and the beginning of this year, WorldCom's telecommunications expansion costs were not recorded as normal costs. Instead, they were recorded as capital expenditures. This accounting trick brought WorldCom nearly three billion USD in profits.
Last year's profit of nearly 1 billion USD and this year's profit of around 300 million USD in the first quarter were all fake. They had actually lost a lot of money.
Not to mention the large amount of loans, the interest they had to pay every day was not a small amount. Not to mention that their business was ordinary, where did they get the profits from?
If there were profits, would they apply for another 2.5 billion USD loan from the 25 banks?
If it was another magazine that broke the news, people would have suspected that there was something wrong with it. But if it was published by Business Weekly, everyone would believe it instinctively.
Furthermore, that is not evidence. WorldCom's audit firm is the same as Enron. It is Arthur Andersen.
In short, these two scandals brought disaster to Arthur Andersen. In the past, they were the world's top audit firm. Now, no one dared to hire them.
If they hired Andersen, wouldn't others suspect that their company was also falsifying the accounts? Even if they could prove that they did not falsify the accounts, others might not believe them.
The day after Business Weekly's scandal broke, the US Securities and Exchange Commission announced that they will be investigating WorldCom's past mergers and acquisitions. At the same time, they will investigate WorldCom's 366 million USD loans to Abrams.
They will immediately sue WorldCom for civil fraud. They will investigate the falsified accounts, and there might be more to it.
Bush, who was visiting overseas, was furious. WorldCom is the world's biggest internet provider and the second largest long-distance telephone company in the US. How will the rest of the world look at the US if they used fraud to develop their business?
When he took office, the dotcom bubble broke out and caused the US economy to go into recession. In the end, the previous president's economic performance was a facade. These were all created by those companies.
If it weren't for Enron and WorldCom, would the dotcom bubble be so big? Why is he in such a sorry state now? To develop his economy, he had to look for partners from all over the world. This president is too pitiful!
WorldCom's credit rating was quickly adjusted to the lowest level. This meant that this company was finished!
At the same time, the 25 banks that wanted to lend WorldCom 2.5 billion USD joined forces to sue WorldCom for fraud. Even some banks that had not recovered their loans joined the lawsuit. They felt WorldCom had inflated their profits to cheat them of their loans.
WorldCom's share prices plunged faster than Enron. This also showed that investors were already jittery about things like falsifying accounts.
Within a few days, a few audit firms found out that WorldCom had made two more mistakes in its accounts. Masao Kameda's evidence was proven to be true. WorldCom's accounting problems had increased to almost 8 billion USD!
WorldCom's share prices plunged from 70 billion USD some time ago to 20 billion USD, and it is still falling.
Everyone started to dump their shares, and many people could not sell their shares. But WorldCom's share prices continued to fall.
WorldCom quickly changed to a new CEO, but it did not help. Although the new CEO claimed that they had gotten 2 billion USD of financing and will continue to provide high quality services to their customers, no one believes him.
Now, WorldCom's share prices had fallen below the IPO price, and WorldCom's share prices are even lower than WorldCom's actual value.
It's even lower than WorldCom's real value. After all, WorldCom still has a lot of fixed assets, and these assets are worth at least 20 billion USD. It's a pity that WorldCom still has high debts, and these fixed assets are not enough to repay the debts.
So, WorldCom applied for bankruptcy protection faster than Enron.
Feng Yu and the rest bought WorldCom's shares and closed their positions. This time, they made some profits. If WorldCom's debt wasn't too high, they should have made more profits.
This time, Masao Kameda, Ralph, and the rest also made some profits. At the same time, some < Business Weekly > shareholders also made some profits. Because of them, Feng Yu and the rest could not short WorldCom's shares.
But it doesn't matter. < Business Weekly > invited Feng Yu to become an independent director and even promised to sell some of their shares to Feng Yu.
All these shareholders want to be friends with Feng Yu. They hope that Feng Yu will bring them along when he has such profitable business deals in the future!
What Feng Yu did not expect is that the fraud scandal will affect more people.
… …
You've already exceeded your reading limit for today. If you want to read more, please log in.
Login
Select text and click 'Report' to let us know about any bad translation.
