Activists call on gov’t to stop doing business with MCI

WASHINGTON — A taxpayers group is the latest organization calling on the U.S. government to stop doing business with MCI on the heels of two reports detailing alleged fraud there, but the telecommunications company officials insist the former WorldCom is a reliable government partner.

Citizens Against Government Waste (CAGW) issued a statement Tuesday questioning why the U.S. government continues to do business with WorldCom, now operating under the MCI name, following similar criticisms from the Gray Panthers on May 22 and the United Church of Christ, which in October petitioned the U.S. Federal Communications Commission (FCC) to block the transfer of federal licenses and authorizations that WorldCom uses for its long distance, Internet, and other services. The church urged the FCC “to retake the moral authority that has been ceded to, and abandoned by, the leaders of WorldCom and to restore confidence in the telecommunications industry.”

MCI competitors, including AT&T and Sprint, and trade union the Communications Workers of America, have also questioned MCI’s government contracts in recent weeks.

CAGW questioned why MCI is being rewarded by the U.S. government after the company’s multibillion-dollar accounting scandal surfaced in early 2002. “While the evidence continues to mount against MCI, the government keeps on rewarding the company with new contracts,” CAGW President Tom Schatz said in a statement. “MCI committed the largest fraud in history and cheated thousands of people out of billions of dollars, yet the government continues to bail it out. This is a slap in the face to all of the innocent victims of MCI’s fraud. Americans are being hit twice — first as investors in MCI/WorldCom and then as taxpayers.”

MCI, however, went on the offensive last week, calling a press conference in which it defended its reliability as a federal contractor. On June 4, Jerry Edgerton, senior vice president of MCI Government Markets, detailed several contracts the company has with the U.S. government.

MCI employees have focused on fulfilling their contacts, and the company has saved the U.S. government money with its telecommunications contracts, Edgerton said.

MCI was guaranteed $750 million from federal agencies for several services, including voice and data networking, in a Federal Technology Services 2001 contract.

“We continue to be a competitive provider,” Edgerton said June 4. “The government has realized literally millions and millions of dollars of savings, and they’ve been able to provide service to the public … as a result of the improved processes and capabilities brought about by data networking.”

On Monday, two reports, one from a law firm appointed by the WorldCom board of directors and one ordered by a bankruptcy court overseeing the WorldCom case, faulted the way former chief executive officer Bernard Ebbers ran the company for the accounting scandal.

Following those reports, Michael H. Salsbury, MCI’s executive vice president and general counsel, and Susan Mayer, the company’s senior vice president and treasurer, both resigned Tuesday. The bankruptcy court report questioned the roles of Salsbury and MCI’s treasury department in WorldCom financial dealings.

CAGW’s Schatz said MCI’s $500 million settlement with the U.S. Securities and Exchange Commission, announced May 19, pales in comparison to $750 million that MCI has received in federal contracts since filing for bankruptcy in July 2002.

“Other companies, such as Enron and Arthur Andersen, have been debarred from conducting business with the government for similar fraudulent practices,” Schatz said in his statement. “There is no reason for the double standard currently being applied to MCI.”

But Edgerton on June 4 questioned the MCI critics’ knowledge of providing telecommunications services and government contracts. “My question would be, why do they have an interest, and what is their motivation?’ he asked. “Why did they come out of the blue to do this?”

A CAGW spokesman said his group’s motivation was to watch out for U.S. taxpayers. “The taxpayers need to be protected in this case,” he said.

Edgerton said the company has been a responsible government contractor, “as we always have, with the highest ethical standards.”