March 10 (Bloomberg) -- EchoStar Communications Corp., the No. 2 U.S. satellite-television company, may have improperly booked transactions with suppliers and made suspect consulting payments to a friend of Chairman and Chief Executive Officer Charles Ergen, said people familiar with an internal probe of the company's accounting. The investigation by EchoStar's audit committee was prompted by KPMG LLP, which uncovered evidence of potentially illegal conduct while auditing the company's 2004 accounts, the people said. The U.S. Securities and Exchange Commission also has opened an inquiry into Ergen's role in EchoStar's accounting, said two of the people, who declined to be identified.
The situation threatens to weaken Ergen's grip on the company he founded in 1980 and still controls, with 91 percent of the shareholder votes and stock valued at about $7 billion. Once the audit committee presents its findings to Ergen, 52, KPMG must then decide whether EchoStar is going far enough to address the failings or refuse to sign off on the company's accounts, said three of the people familiar with the matter.
The situation threatens to weaken Ergen's grip on the company he founded in 1980 and still controls, with 91 percent of the shareholder votes and stock valued at about $7 billion. Once the audit committee presents its findings to Ergen, 52, KPMG must then decide whether EchoStar is going far enough to address the failings or refuse to sign off on the company's accounts, said three of the people familiar with the matter.
