World, is one of several senior executives who should have been aware of discrepancies in the telecommunications company’s books before the near-$ban fraud was revealed last month, according to people close to the company. The fraud that was allegedly engineered by Scott Sullivan, the chief financial officer who was fired the day the scandal was announced, led to a massive overstatement of World’s capital spending – an area that came under Mr. Beaumont control.
The many disclosed that some of the ordinary operating costs of renting access on other companies’ telephone lines were transferred to its capital accounts, greatly overstating both its reported earnings and capital spending. Although he was not responsible for the company’s accounting, Mr. Beaumont oversaw the company’s capital expenditures. These were reported at $7. Ban in 2001 – though $3.
Ban of that has now been revealed to be linked to the disputed transfers. A further $mm of operating costs were disguised as capital spending in the first quarter of this year.From an overall capital standpoint, probably 80-90 per cent of the capital budget was under Iron’s control,” said one former World executive. Defending Mr.
Beaumont, World said that only Mr. Sullivan had a complete picture of all of the company’s capital spending numbers. “No single operating unit knows what Is going on in the rest of this operation and It all came together at Scott Sullivan level,” John Signore, the chief executive officer who replaced Bernie Beers In April, said last week. It was not clear, for example to Ron Beaumont, who spends most of the capital .
.. That capital was being moved somewhere else,” he added. It Is obvious now that maybe there should have been stronger reviews of some of that.
But at the end of the day … Our system really worked Internally. ” The failure of other senior executives to raise a red flag earlier over the alleged fraud has also raised questions about the role played by Mr. Gladsome himself, who was a vice-chairman at the time, as well as that of Mr. Beers. According to one former executive, the top executives of the company, Including Mr.
Beers, Mr. Sullivan and Mr. Beaumont, would meet for quarterly, sometimes monthly, talks – In which line costs were evaluated with “excruciating detail”.The accounting of those costs, however, were likely to be left to Mr. Sullivan, the person acknowledges.
“If we were talking about a mm budget, maybe Ron wouldn’t see,” the former employee said. “But If they were moving billions of dollars? Somebody should have been asking questions and I suspect that they ere. ” For now, Mr. Gladsome Is relying on the complexity of the accounting Issue and the fact that World’s former auditor.