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GE financials are old news: Former Vice Chair Bob Wright on Markopolos report

General Electric (GE) has been defending its finances after last week’s report by Madoff whistleblower Harry Markopolos, which claimed the company hid billions in losses. Meanwhile, GE’s former Vice Chairman Bob Wright says these financials are old news.

“Most everything that was alleged has already been discussed internally and externally,” Wright tells Yahoo Finance’s The Ticker. “It was like bringing out old laundry and getting it out there as if nobody knew what it was. They did a twist on it. They made it seem like it was fraudulent. They made it seem like it was illegal.”

Markopolos details in his 171 page report, that GE needs to immediately increase its insurance reserves by $18.5 billion in cash. He also says the company is hiding a loss of more than $9 billion on its holdings in Baker Hughes, an oilfield services company. Speaking to Yahoo Finance’s The Final Round, he reaffirmed his claims, saying, “Only GE’s accountants know where the skeletons are buried. We dug up several, $38 billion worth. There’s probably a lot more.”

But Wright says those numbers are most likely overstated.

“I think the numbers are exaggerated,” he says. “[Markopolos] has elected that GE has no reserve money— that GE is going to go broke, it can’t meet its obligations. I don’t see any of that. I think [GE CEO Larry Culp] has addressed the issue of cash reserves and the issue of cash availability.”

WASHINGTON - FEBRUARY 04: Harry Markopolos hold up a book while testifying during a House Financial Services Committee hearing on Capitol Hill February 4, 2009 in Washington, DC. The committee is hearing testimony on the alleged $50 billion dollar Madoff ponzi scheme and regulatory failures. (Photo by Mark Wilson/Getty Images)

Steve Winoker, GE’s vice president of investor communications, responded in a newsletter Monday morning, writing in part, “Finally, some of the questions I’ve been receiving go straight to the heart of GE’s culture, so let me be clear: we operate with absolute integrity and stand behind our financial reporting. We are focused on delivering on our strategic priorities and we remain committed to providing accurate, complete and timely financial information to you."

GE also said that Markopolos will not reveal the hedge fund he is working with on his findings. For those who wonder why Markopolos would risk his reputation and publish possibly inaccurate claims, Wright says there may be a connection.

“I don’t buy any of that,” Wright says. “Remember Herbalife? There were many hedge funds in the last five or ten years that have decided to short particular companies by offering testimonials that they have prepared and they purchased. And Herbalife was one of them. Herbalife (HLF) has rebounded and is a better stock than it was. So I don’t know that that’s illegal from the standpoint of the SEC to do that, but it’s certainly unethical.”

Shares of GE tumbled more than 11% on the back of Markopolos’s report, but have since pared some of those losses. And while Markopolos says the company could soon file for chapter 11 bankruptcy, Wright says there is still upside to investing in the stock.

“I don’t see why they can’t get to $15 or $20, which is what Culp is trying to do because he’s invested his own money in this thing,” says Wright. “It’s going to take a little bit of time. But I don’t see any fault in any of that. This is really a discouraging moment for him and other senior executives but they’ll get through it. I don’t think this is going anywhere legally.”

Meghan Fitzgerald is a producer with Yahoo Finance.

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