Wall Street Journal
https://www.wsj.com/articles/ge-is-new-target-of-madoff-whistleblower-11565866617
Harry Markopolos releases report on GE’s accounting, claiming its cash situation is far worse than disclosed and GE needs to boost insurance reserves
By Thomas Gryta and Mark Maremont
Aug. 15, 2019 6:56 am ET
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An accounting expert who raised red flags about Bernie Madoff’s Ponzi scheme has a new target: General Electric Co.
In a research report posted online Thursday, Harry Markopolos alleges the struggling conglomerate has masked the depths of its problems, resulting in inaccurate and fraudulent financial filings with regulators.
The report, which numbers more than 170 pages and was reviewed by The Wall Street Journal, is a mixture of detailed financial analysis and sweeping claims.
Markopolos said, in an interview ahead of the report’s release, his group found GE’s GE, -3.42% insurance unit will need to bolster its reserves by $18.5 billion in cash and faulted the way the company is accounting for its oil-and-gas business. All told, he said, the accounting problems amount to $38 billion, or 40% of the conglomerate’s market value.
“GE stands behind its financials. We operate to the highest level of integrity in our financial reporting and we have clearly laid out our financial obligations in great detail,” a GE spokeswoman said in an email before the report was published. “While we can’t comment on the detailed content of a report that we haven’t seen, the allegations we have heard are entirely false and misleading.”