WorldCom Hires L.A. Law Firm in Access Case

WorldCom Inc., the second-biggest U.S. long-distance telephone provider, said Tuesday that it had hired Los Angeles-based law firm Gibson, Dunn & Crutcher to investigate allegations that the company illegally avoided paying network access fees to rivals.

WorldCom, which is changing its name to MCI, also said it was reviewing its relationships with small companies that find cheaper routes for some phone traffic. A congressional committee said Tuesday that it would hold hearings in September to probe the matter.

The Justice Department is investigating allegations by other phone companies that WorldCom avoided paying millions of dollars in network access fees by rerouting calls through Canada, including some from the federal government, and disguising others as local connections.

The accusations threaten the $1 billion a year in business that WorldCom gets from the government and may derail the company’s plan to emerge from bankruptcy proceedings.

“MCI is committed to providing all necessary company resources and its full cooperation to the review,” said the Ashburn, Va.-based company, which filed for Chapter 11 protection after uncovering more than $11 billion in overstated profit.

The Washington partners of Gibson, Dunn who are handling the latest probe are Joseph Warin, a former assistant U.S. attorney in Washington, and Douglas Cox, WorldCom spokesman Brad Burns said.

Cox represented George W. Bush in the disputed 2000 presidential ballot count in Florida and was in the Justice Department during the presidencies of Bush’s father and Ronald Reagan.

WorldCom and other long-distance companies use the networks of local rivals to originate and complete customers’ calls. By disguising a connection as a local call, a long-distance carrier could avoid paying tariffs.

The Justice Department is looking into whether the company and its predecessor, MCI Communications, did so since 1994.

WorldCom says it sends about 8% of its traffic through so-called least-cost routing companies. They provide “a legitimate alternative to terminate traffic and reduce access fees,” WorldCom said.

Separately, the House Energy and Commerce Committee announced plans to hold hearings in September on the access charge claims, which were leveled by SBC Communications Inc., Verizon Communications Inc. and AT&T; Corp.

Panel Chairman W.J. “Billy” Tauzin (R-La.) will send a letter to the Federal Communications Commission today to seek an investigation into the matter, committee spokesman Ken Johnson said.

“If the allegations are true,” Johnson said, “we’re concerned about how this could have gone on undetected for so long.”