Irate over a $7.2 billion accounting fraud that forced WorldCom Inc. to file the largest bankruptcy in U.S. history, the Communications Workers of America and eight other organizations have asked the General Services Administration to bar the communications giant from bidding on federal contracts that one person valued at an estimated $1 billion a year.
“By barring WorldCom from federal contracts, the GSA will send a clear message that this Administration will not now or in the future condone fraudulent behavior from corporate America,” an Oct. 30 letter addressed to GSA administrator Stephen A. Perry and signed by leaders of the nine groups stated.
“WorldCom’s fraud has thus far cost investors more than $175 billion -- roughly three times the amount lost by investors in Enron, a company that GSA debarred from federal contracts in March 2002.”
In a press call Wednesday, CWA President Morton Bahr also said WorldCom’s powerful Internet subsidiary, UUNET, and its long-distance giant, MCI, should either be spun off from WorldCom or sold off as part of the company’s reorganization.
The regional bell operating companies and AT&T Corp. and Sprint Corp., the No. 1 and No. 3 long-distance carriers, would be suitable candidates to buy MCI and UUNET if the government approved such acquisitions, said Bahr, who represents 700,000 members including those working for AT&T, Sprint and the Bells, but not WorldCom.
Bahr said WorldCom's fraud over a three-year period "ultimately hurt every telecom employer" inciting AT&T's management, for example, to cut its head count due to pressure from WorldCom for now matching its profits.
“We simply find WorldCom to be the most egregious corporate malefactor on the scene today,” said Will Thomas, director of the Corporate Accountability Project for The Gray Panthers, an advocacy group.
In a retort Wednesday, WorldCom said the groups' actions were supported by the Bell companies in a bid to crush competition and keep it from emerging from bankruptcy.
“It’s unfortunate that a major labor union is attacking the jobs of 63,000 WorldCom employees in an effort to shield its members from competition,” said Michael H. Salsbury, WorldCom’s general counsel in prepared remarks before the media call was held. “CWA’s sole interest in this stems from its cozy relationship with the Bell companies, whose stated goal is to prevent WorldCom from emerging from bankruptcy.”
The organizations that signed a joint letter to the General Services Administration include a varied lot: Communications Workers of America, National Consumers League, Gray Panthers, National Black Chamber of Commerce, Asian Pacific American Labor Alliance, American Association of People with Disabilities, Community Action Partnership, Labor Council for Latin American Advancement and the Native American Chamber of Commerce.
