Companies under a cloud

Print edition : July 20, 2002

Xerox Corp. : On June 28, Xerox announced that it would restate its financial results for five years, reclassifying more than $6 billion of its revenues in these years. In April, the company had settled charges that it used accounting tricks to defraud investors.

Dynegy Inc.: Dynegy, an energy trading company that tried to merge with Enron, is being probed by several federal agencies in the United States. They are looking into alleged bogus trades aimed at artificially boosting its revenues and trading volumes. The company's chief executive, Chuck Watson, resigned in May. Dynegy announced recently that it was to undergo a major restructuring.

ImClone Systems Inc.: ImClone, a biotechnology company, is being investigated by a congressional committee. The committee is inquiring whether the company accurately informed its investors that the U.S. Food and Drug Administration had refused to accept its experimental cancer drug. The company's former chief executive, Samuel Waksal, was arrested on June 12 on charges of insider trading.

Arthur Andersen: Andersen, the accounting and consultancy firm that audited Enron (and also WorldCom), was found guilty on June 15 in a federal court on charges of obstructing justice in the government's investigation of Enron. Sentence will be passed on October 11.

Adelphia Communications Corp-oration: Adelphia, a cable operator, recently filed for bankruptcy. The company is under investigation by the U.S. Securities and Exchange Commission and two federal grand juries. The charges include the grant of off-balance-sheet multi-billion-dollar loans to the company's founders.

Global Crossing Ltd.: The Federal Bureau of Investigation and the SEC are probing Global Crossing, a telecommunications company. The agencies are focussing on the company's accounting practices. Global Crossing is alleged to have swapped network capacities with other telecom operators in a bid to inflate its revenues.

Enron Corporation: Enron, once the biggest energy trader in the U.S., collapsed into the largest ever bankruptcy in U.S. corporate history on December 2, 2001. Investigations revealed that the company had used thousands of off-the-book partnerships - many of them in tax havens - to hide its debts and to overstate profits.

Tyco International Ltd.: Tyco, a conglomerate, is under investigation for alleged misuse of company money by its executives to pay for private purchases of art and real estate. The company's former chairman, Dennis Kozlowski, resigned on June 3, a day before he was indicted for evading about $1 million in sales tax from art purchases.

Merrill Lynch & Co.: Merrill Lynch, the top U.S. brokerage, agreed in May to pay $100 million to settle a probe by the New York State Attorney-General into charges that it tailored stock research to win investment banking business. In June, it suspended two employees after an internal probe into the sale of ImClone shares.

Computer Associates Inter-national Inc.: Computer Associates agreed to pay $638,000 as penalty in April to settle charges by the Justice Department that it violated pre-merger rules relating to its acquisition of Platinum Technology Inc.

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