“The company does not deserve the taxpayers’ trust,” Schatz says

(Washington, D.C.) – In response to new allegations of wrongdoing by MCI, Citizens Against Government Waste (CAGW) today renewed its call for the government to debar the company from federal contracts.  The New York Times first reported over the weekend that the Justice Department has opened a fraud investigation into whether MCI acted illegally by rerouting calls to avoid paying access fees to other phone companies since 1994.  Over the last decade, MCI may have fraudulently avoided paying $1 billion in access fees.

“The recent report of additional fraudulent acts by MCI is just one more reason why the government cannot trust the company with taxpayer dollars,” CAGW President Tom Schatz said.  “They have cheated hundreds of thousands of investors out of $180 billion and are now accused of cheating their competitors and the government.  The government should immediately cease business with such a disreputable company.”

Calls made from at least seven government agencies, including the State Department, the Federal Deposit Insurance Company, and the U.S. Postal Service, as well as the office of one member of Congress were apparently rerouted through Canada.  By rerouting calls through foreign countries, the callers are not protected by eavesdropping laws and other security measures afforded to them in the United States.

“It is essential, especially in a time of war and terrorism, that the government is using the most secure telecommunications systems available,” Schatz continued.  “It is outrageous that MCI, entrusted with this responsibility, may have jeopardized national security in favor of its bottom line.  If this is the case, the company should face serious repercussions.”

CAGW has been calling for MCI’s debarment from government contracts since November, 2002 on the basis that such agreements unnecessarily put taxpayer dollars at risk, and amount to a hidden government bailout of the company.  The taxpayer watchdog has been running an ad campaign over the last two weeks, entitled “Crime Doesn’t Pay,” demanding debarment.  When Enron and Arthur Andersen committed similar acts of fraud, the General Services Administration (GSA) immediately debarred them from federal contracts.  A year after MCI declared bankruptcy, no action has been taken against the company.

“With all of these allegations of wrongdoing, one has to wonder what more MCI may be hiding,” Schatz concluded.  “The company has already proven that its only concern is how much money it can make.  GSA and other government agencies need to disconnect MCI and protect taxpayers from any more possible damage.”

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.