WorldCom was brought down by an $11 billion US accounting
scandal that caused it to file for bankruptcy protection last year.
Only last month a deal was approved between the company and the
Securities and Exchange Commission (SEC) in terms of which the
troubled telecoms giant is to pay $750 million to investors who
lost money as a result of the fraud. The deal opened the door to
WorldCom's emergence from bankruptcy.
But the company's troubles are far from over. On Tuesday,
AT&T lodged a suit accusing WorldCom of diverting US telephone
calls to Canada in order to avoid having to pay connection fees to
rival networks, while hiding the origin of the call.
The legitimate version of this practice is known as 'least cost
routing', and means that the company uses the most efficient
network available to route calls. So, for example, if some networks
are less busy at certain times, then these will be used in
preference to busy ones. It is when the origin of the rerouted call
is hidden that the practice can be unlawful. And the allegation is
that when WorldCom transmitted calls through intermediaries it
stripped software codes to disguise the origin of the calls.
The lawsuit accuses WorldCom and another telecoms company called
Onvoy of orchestrating a scheme called the "Canadian Gateway
Project". This scheme allegedly involved working with other
telecommunications companies to reroute WorldCom customers'
domestic phone calls through Canada. This practice caused AT&T
to pay hefty termination fees for terminating calls to high-cost
independent telephone companies in the US, such as Verizon.
In addition, the suit alleges that WorldCom carried out
fraudulent operations that made AT&T pay access fees to
WorldCom itself.
For good measure, the lawsuit also alleges fraud, civil
conspiracy, unjust enrichment, racketeering conspiracy and
substantive racketeering through a pattern of multiple acts of mail
fraud and wire fraud.
AT&T maintains that the scheme is ongoing and that WorldCom
and Onvoy continue to engage in the misconduct. As a result, the
lawsuit also claims damages for any fraudulent activity carried out
after the lodging of the action.
AT&T first raised the
question of fraudulent rerouting of calls in early August. At the
time, WorldCom denied the charges, and it did so again on Tuesday.
In a statement, WorldCom spokesman Brad Burns said: "This is
nothing more than AT&T trying to make headlines from something
that is at best a commercial dispute that started weeks ago".
Onvoy chief executive Janice Aune told the BBC, "Onvoy
anticipated that in the weeks prior to the September bankruptcy
hearings that AT&T and the other players would make a move such
as this."
