AT&T Seeks To File Racketeering Case Against WorldCom

by Glen Shapiro, LawAndTax-News.com, New York

01 August 2003

Telecommunications company, AT&T Corp. has levelled new allegations of fraud against WorldCom Inc. prior to the confirmation hearing for the latter's reorganisation plan, according to reports.

AT&T has alleged that WorldCom put in place a complicated scheme whereby some domestic telephone traffic was routed through Canadian carriers and back into the United States on AT&T's lines, forcing the firm to terminate calls in rural areas where access charges are higher, and incur high fees.

According to The Deal news service, which reported on the filing on Wednesday:

'AT&T's filing states that the alleged practice, dubbed 'The Canadian Gateway Project', allowed WorldCom to reduce its own costs and raise AT&T's. It further asserted that WorldCom took advantage of the cost disparity to poach some of its lucrative corporate clients, citing a defection by Wells Fargo.'

Speaking to The Deal, Dana Frix, co-chair of Chadbourne & Parke's telecommunications practice, observed that:

'It's an explosive filing. It is the kind of filing that looks like it's seeking to have an impact outside of (the) bankruptcy courtroom itself, perhaps in front of Congress.'

Although AT&T is said to be seeking to file a racketeering and fraud case against WorldCom, it does not appear to be seeking to derail the latter's reorganisation plan.

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