WASHINGTON-The judge overseeing the bankruptcy of WorldCom Inc. on Wednesday approved the company’s settlement with the Securities and Exchange Commission.
“It represents additional validation of all the positive steps the company has taken over the past year to both put its house in order and establish itself as a leader in good corporate governance,” said Stasia Kelly, general counsel of WorldCom, which is doing business as MCI.
Earlier this year, WorldCom agreed to pay $500 million in cash and$250 million in stock to satisfy the complaints of accounting fraud. WorldCom has acknowledged at least $11 billion in accounting fraud.
Bankruptcy Judge Arthur Gonzalez’ decision came amid continuing bickering between MCI and its competitors about its business practices.
The Department of Justice is investigating whether MCI-both before and after it was bought by WorldCom-routed calls in an illegal manner to avoid paying access charges.
“We fully expected our competitors to continue their efforts to obstruct our emergence from bankruptcy, and that appears to be exactly what they are doing,” said MCI.
AT&T Corp. has a different view. In a filing with Gonzalez, AT&T set out its evidence that MCI routed calls through Canada and then back to the United States, but onto AT&T’s network, causing AT&T to pay the access charges to the local telephone company.
“We’re talking about the difference between shopping for bargains and shopping with somebody else’s credit card. The latter is clearly a crime that people can go to jail for,” said James Cicconi, AT&T chief counsel.
In addition, AT&T has charged that some of the routed calls were from government agencies, including the departments of State and Defense.
“The truth is secure government traffic travels over MCI’s network via a dedicated connection and encryption, not through gateways,” responded MCI.
The SEC settlement does not deal with these routing fraud charges, which were made after WorldCom agreed to the settlement.
MCI recently was awarded a contract to build a mobile-phone network in Iraq for use by military and government officials during the reconstruction. WorldCom is also the parent of SkyTel paging.
