Justice Department Investigates WorldCom/MCI For Access-Charge Fraud

MCI/WorldCom Inc., the bankrupt telecommunications company that has won a contract to offer mobile-phone service in Iraq, is now being investigated by the U.S. Department of Justice for fraud related to the payment of access charges to wireline telephone companies.

“Access charges between local and long-distance carriers have existed for decades and are routine in the industry. As always, we take all inquiries by the U.S. attorney’s office very seriously and will cooperate fully with any investigation,” said WorldCom, which is now doing business as MCI, in a statement.

The investigation is the result of a whistleblower that claimed that MCI had two illegal operations.

The first known as Canadian Gateway routed calls to Canada and then back onto AT&T Corp.’s network causing AT&T to pay the access charges to deliver the calls to their final destination.

The second known as Project Invader was started before WorldCom bought MCI and allowed the nation’s second-largest long-distance player to disguise long-distance calls as local thus avoiding the access charges.

WorldCom/MCI had hoped to soon emerge from bankruptcy and recently settled with the Securities and Exchange Commission after admitting to accounting fraud totaling at least $11 billion.

The new investigation could add fuel to the fire of those who believe WorldCom/MCI should not be awarded government contracts.

“To the extent that these allegations prove true, they raise additional troubling questions about WorldCom’s business ethics and practices,” said Sen. Susan Collins (R-Maine), chairman of the Senate Governmental Affairs Committee. Collins has been one of WorldCom/MCI’s harshest critics.

Verizon Communications Inc. plans to urge the General Services Administration to stop doing business with WorldCom/MCI based on the new allegations, according to the Washington Post.

The allegations, which were reported first by the New York Times, came just days after Verizon and WorldCom settled their dispute and Verizon agreed to drop its opposition to MCI emerging from bankruptcy.

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