WorldCom downplays commission scam

WorldCom is working to clear up “misconceptions” surrounding a scam perpetrated by a handful of employees that resulted in as much as $4 million paid out to those employees in sales commissions they didn’t deserve.

A WorldCom spokesman said the company “couldn’t believe” the prominence given the story on Friday by the Wall Street Journal, which called the deception by as many as 15 employees a “scandal” and featured it on page three of its opening section.

“Under normal circumstances, the story would have been buried inside the ‘Marketplace’ section,” he said.

But given the alleged accounting irregularities uncovered at Enron and Global Crossing, these are anything but normal circumstances. Acknowledging the situation, the spokesman stressed that the scam had no bearing on the company’s financial statements or accounting practices.

“This is an ethics issue, not a financial issue,” he said.

A regularly scheduled internal audit uncovered that “a handful of employees had gamed the system” that determines commission payments. WorldCom is still trying to determine just how much in bogus commissions was paid out, but the spokesman estimated it would range from $1 million to $4 million.

“It’s an insignificant amount for a $35 billion company,” said the spokesman. “The good news for investors is that our internal audit process works.”

He added that WorldCom expects to recover every penny of the money that was overpaid. He said the company probably wouldn’t pursue criminal charges against the accused but might reconsider if any balk at making restitution. “We have a pretty good case,” he said.

WorldCom has suspended three employees pending the completion of its investigation. The spokesman predicted those employees would ultimately be terminated. Another 6 to 12 employees are being investigated, but no official action has been taken against them so far.

The spokesman attempted to put the matter into perspective. “Any large company is going to have a few bad apples,” he said. “There are thousands of great salespeople at WorldCom.”