AT&T; Accuses WorldCom of Fraudulently Diverting Calls

AT&T; Corp. on Monday objected to rival WorldCom Inc.’s blueprint for emerging from bankruptcy protection and said it planned to seek damages for losses related to connecting high-cost calls.

The biggest U.S. long-distance carrier accused No. 2 carrier WorldCom of fraudulently diverting U.S. calls to Canada to avoid hefty connection fees, adding millions of dollars to AT&T;’s expenses and luring away lucrative clients.

“AT&T; does not know how much damage it has suffered as a result of [WorldCom’s] scheme, but believes that the injury is at least many millions of dollars,” AT&T; told the New York Bankruptcy Court overseeing WorldCom’s reorganization.

AT&T; said it would sue for unspecified damages.

WorldCom Chief Executive Michael Capellas said the firm met with the U.S. attorney’s office and pledged cooperation.

“As I have said all along, we will do the right thing,” he said. “We have a zero-tolerance policy and if any wrongdoing is discovered you can be certain that we will take appropriate action swiftly.”

WorldCom filed for bankruptcy protection last year after being rocked by an $11-billion accounting scandal as well as amassing huge debts and seeing customer demand plummet.

The company, which is trying to win approval to shed much of its $41 billion in debt, is being investigated by the U.S. attorney in New York on allegations by rivals that the company avoided paying higher access fees.

A source close to WorldCom said the company received a subpoena related to allegations it avoided paying connection fees to AT&T; and other rivals SBC Communications Inc. and Verizon Communications Inc.

The U.S. Bankruptcy Court is slated to hold a hearing next month on whether to approve WorldCom’s blueprint to emerge from bankruptcy protection. The company hopes to emerge this fall.

AT&T; shares soared $1.79, or 8.8%, to $22.20 on the New York Stock Exchange.