WorldCom scandal 'may be tip of the iceberg'

WorldCom's €5.53bn accounting scandal could be the "tip of the iceberg," an expert in commercial fraud litigation has suggested.

Steven Philippsohn, senior partner at City fraud litigation specialists Philippsohn Crawfords Berwald, says the financial crisis could eclipse Enron.

"The problem is certainly much starker," he said.

"Everyday expenses which were supposed to be deducted from profits weren't," he said.

"The extent of the fraud could be 'the tip of the iceberg'. Further losses are likely to be revealed," he added.

The latest debacle, which happened six months after the Enron scandal, is expected to result in arrests and civil actions against management, directors, the auditors, and the stockmarket analysts following the group.

"Directors and their auditors at Andersen face the prospect of severe penalties," Mr Phillipsohn said.

"The board must make them directly accountable to them. Failure to do so is a grave lapse of corporate responsibility," he said.