WASHINGTON-The judge overseeing the bankruptcy of WorldCom Inc., parent of SkyTel paging, delayed by two weeks the telecom giant’s confirmation hearing. Bankruptcy Judge Arthur Gonzalez’s decision followed a decision by the General Services Administration to debar WorldCom, doing business as MCI, from future government contracts.
“It is important that all companies and individuals doing business with the federal government be ethical and responsible, said GSA Administrator Stephen Perry, noting that the GSA Inspector General on June 2 had recommended the debarment after determining that WorldCom lacks the necessary internal controls and business ethics.
Obviously Michael Capellas, chief executive officer of MCI, was not aware of Gonzalez’s decision when he quickly called a press conference late Thursday afternoon to respond to the GSA debarment.
“We have now 25 days ticking to our confirmation hearing in bankruptcy,” said Capellas as he started the press call. “We fully expect to be having our confirmation hearing on Aug. 25.”
Capellas said that approximately 6 percent of its business was with government entities but could not break down the exact revenues from the company, but the issue of WorldCom/MCI’s government contracts is not new. At a hearing before the Senate Judiciary Committee last month, Morton Bahr, president of the Communications Workers of America, said fraud contributed to WorldCom/MCI being awarded government contracts. “MCI was able to low-ball the bids because of the fraud,” said Bahr.
WorldCom/MCI is working to establish a chief ethics officer who will report directly to Capellas. Because this is a new position, Capellas said it has been difficult to find the right person.
GSA’s debarment ruling came days after it was revealed that WorldCom/MCI is now being investigated by the Department of Justice for fraud related to the payment of access charges to wireline telephone companies.
In addition to being the parent of SkyTel, WorldCom/MCI has won a contract to offer mobile-phone service in Iraq.
Gonzalez last month agreed to allow WorldCom to sell its fixed-wireless assets to Nextel Communications Inc. for $144 million. BellSouth Corp., which originally entered an agreement to buy the licenses for $65 million, will receive a $1.95 million breakup fee.
The FCC still must bless the sale of the fixed-wireless licenses.
