(Washington, D.C.) – Citizens Against Government Waste (CAGW) today named the General Services Administration (GSA) its Porker of the Month for January 2004 for lifting a suspension imposed on MCI, formerly WorldCom, in July 2003 for unethical practices.  The company has since been prevented from receiving any new government contracts.

The short-lived suspension amounts to nothing more than a slap on the wrist.  MCI could have faced a three-year suspension and debarment, but GSA determined that the company had strengthened its ethics and internal controls and therefore lifted the ban.  Other companies, including Enron and Arthur Andersen, who committed similar acts received much stiffer penalties.  If GSA truly wanted what was in the best interests of taxpayers, the agency should have permanently debarred MCI.

In 2002, WorldCom filed for the largest bankruptcy in U.S. history after revealing accounting irregularities that have swelled to around $11 billion.  The company also may have overcharged the government for its services and illegally routed calls through competitors.       

GSA based its original decision to suspend MCI on reports from former U.S. Attorney General Richard Thornburgh, the Special Investigative Committee of WorldCom’s Board of Directors, a report from the company’s own ethics office, and a June 3, 2003 report by the MCI’s outside auditors, KPMG.  The GSA inspector general specifically noted the 10 “material weaknesses” in the KPMG report.

Shortly after the suspension went into effect, MCI launched a publicity campaign claiming it had changed its fraudulent ways and also managed to secure seven waivers for government contracts worth $100 million.  The company has proven that it will engage in unacceptable, unethical, and fraudulent behavior.  GSA not only tolerated fraud by refusing to debar MCI, but it rewarded the company with more tax dollars.

This is what GSA is telling corporate America:  “If you defraud your shareholders, set a bankruptcy record, and engage in financial misconduct but do enough business with the federal government, we will give you a token suspension of business (but don’t worry, we will waive those restrictions), and be happy to welcome you back as a contractor after a few months, since it’s not our money in the first place.” 

CAGW has been calling for MCI’s debarment from government contracts since November, 2002 on the basis that the Federal Acquisition Regulations required such a conclusion, as well as that the agreements unnecessarily put taxpayer dollars at risk and amounted to a hidden government bailout of the company.  Taxpayers should share CAGW’s outrage that MCI is back in business at the people’s expense.

The government is MCI’s largest customer.  The GSA’s responsibility is to ensure that the government contracts with reputable, ethically sound businesses.  For tolerating and rewarding a fraudulent operation perpetrated on the U.S. taxpayers, CAGW names GSA the first Porker of the Month of 2004.

Citizens Against Government Waste is the nation's largest nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.