US bars MCI Worldcom from new federal contracts

Too little, too late

Shareholder activists have won a victory in their campaign to ban MCI Worldcom from supplying the US government. But they say it's too little, too late.

A US agency, the General Services Administration, has barred MCI from bidding for new federal contracts, ruling that the telco giant "had not adequately addressed its material accounting and business ethics weaknesses. The ban is temporary - just a month - but the GSA says it will consider if this should be extended to three years.

"It is important that all companies and individuals doing business with the federal government be ethical and responsible," GSA Administrator Stephen Perry said in a statement, Reuters reports.

In recent days, MCI has come under fire from rivals which accuse the company of fraudulent behaviour in rerouting federal calls through their networks. The FCC has launched an investigation.

The GSA's move is a step in the right direction for Mitch Marcus, founder of BoycottMCI.com, but he remains suspicious.

"However, this whole thing smells of being a pre-negotiated deal under which MCI can wiggle out of it in as little as a month. MCI/WorldCom is what it is and the GSA must hold steadfast on the suspension and debarment. It is imperative that the U.S. House and Senate keep up the heat on the GSA to assure that today's action, which was long overdue, becomes permanent", he said.

The Gray Panthers are also in attack dog mode. In a statement, corporate accountability project director Will Thomas said the GSA move should have come much sooner. "We call on the General Accounting Office (GAO), which is investigating GSA's original decision, to look into how this travesty came about. Yes, the GSA did the right thing, but it finally acted after tens of millions of dollars in contracts were awarded. By the time the tardy GSA acted, the MCI horse was not only out of the barn, it was already in the next county," he said. ®

Sponsored: Designing and building an open ITOA architecture