CAGW Wonders if the Government will Continue to Balk

(Washington, D.C.) – Citizens Against Government Waste (CAGW) today reiterated its call for the federal government to stop contracting with WorldCom, citing new allegations of fraud committed by the once-mighty telecommunications company.  According to a report in the Wall Street Journal, WorldCom may have deceptively shifted about $3 billion in expenses to its MCI unit in 2001, thus giving the appearance that it was on much stronger financial footing.

“WorldCom has a history of fraudulent corporate behavior.  Faced with these fresh revelations about the company’s past misconduct, the government no longer has any excuse for continuing its business with this fallen enterprise,” CAGW President Tom Schatz said. “Federal agencies need to step up and set an example that it will not tolerate such behavior by cutting the cord connecting it to this conniving company.”

Previously the second-largest U.S. long-distance telephone and data service carrier, WorldCom filed for bankruptcy in July 2002 after company executives admitted to defrauding investors to the tune of $9 billion.  But despite WorldCom’s illegal behavior, the General Services Administration renewed the company’s contract to provide communications services for several government agencies – including the Departments of Defense, Commerce, and Interior.  The estimated value of the contract was $11 billion over its lifespan.

“Federal laws and regulations state that the government may only award contracts to contractors with a satisfactory record of integrity and business ethics,” Schatz continued. “WorldCom has clearly forfeited its right to be considered for such work, and the government should cease doing business with the company.”

Furthermore, WorldCom has yet to be fined by the Securities and Exchange Commission (SEC) after agreeing to significantly increase anti-fraud protections and refrain from violating any SEC laws in the future.

“It is time the government stops providing WorldCom with only a slap on the wrist,” Schatz concluded.  “In order to protect the bests interests of the taxpayers, the government must refuse to give WorldCom any new business.”

Citizens Against Government Waste is the nation's largest nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.  For more information, please visit www.cagw.org.