(Washington, D.C.) – Citizens Against Government Waste (CAGW) was stunned by the announcement that MCI, formerly WorldCom, was awarded the contract to build a cellular network in Iraq after the company committed the biggest fraud in American history.

“It is an outrage that the federal government would continue to do business with a company that cheated thousands of people out of billions of dollars,” CAGW President Tom Schatz said.  “Surely, there are other qualified telecom companies that could do an equally good, if not better, job than MCI.  Instead, the government has once again chosen to bail out MCI despite its fraudulent behavior.”

The contract, worth a reported $45 million, is to set up a network for 5,000 to 10,000 users, mainly government officials, international aid workers, and military personnel.  Once in place, the network will aid in speeding up the reconstruction project.

“Since MCI’s fraudulent practices came to light, the government has continued to reward them with contracts,” Schatz continued.  “In fact, the U.S. government is MCI’s largest customer.  This latest contract is a disadvantage to legitimate, law-abiding companies who will be interested in operating in Iraq on a permanent basis when the time comes.”

Ironically, on the same day the contract was awarded, the Senate passed by unanimous voice vote an amendment to the tax bill that would stiffen the criminal penalties for tax fraud when companies purposely misstate their earnings to the Internal Revenue Service (IRS).  This comes shortly after MCI announced that it would seek a refund from the IRS for the income it misstated in order to cover up its fraudulent practices.  The amendment offered by Senate Finance Committee Chairman Charles Grassley (R-Iowa), however, is not retroactive and therefore cannot punish MCI for its past actions.

“This amendment will help punish future corporate wrongdoers and protect taxpayers from fraudulent practices,” Schatz concluded.  “This is a good example of the government doing the right thing.  Now, they must continue doing what is right for taxpayers by ending all business with MCI.”

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.