General Electric isn’t backing down after being accused of committing a total of $38 billion in accounting fraud, which allegedly includes hiding $29 billion in losses related to its long-term care insurance business.
Steve Winoker, GE’s vice president of investor relations, said Monday that the company operates with “absolute integrity and stands behind our financial reporting,” according to a report by Yahoo Finance.
“We are focused on delivering on our strategic priorities and we remain committed to providing accurate, complete and timely financial information,” Winoker said.
A recent report released by accountant Harry Markopolos and his team alleges that GE has been hiding massive losses, with the report also focusing on the company’s LTC insurance deals.
The report suggests that an accounting rule change for insurance liabilities and “significant under-reserving” will cause GE to take $29 billion in additional reserve hits for its LTC liabilities. GE will immediately need $18.5 billion in additional reserves in order to pay insurance claims and $10.5 billion for a non-cash charge in 2021, the report states.
It also says LTC losses will continue to rise at an “exponential rate” until the company either files for bankruptcy protection or finds a way to “out-earn” its LTC liabilities.
GE initially responded to Markopolos’ report last week, calling his claims “meritless”
“The company has never met, spoken to or had contact with Mr. Markopolos, and we are extremely disappointed that an individual with no direct knowledge of GE would choose to make such serious and unsubstantiated claims,” the company said in a statement.
Markopolos was the whistleblower on Bernie Madoff, who is currently serving a 150-year federal sentence for conducting a multibillion-dollar Ponzi scheme.