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MCI Back In Business

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News Analysis
Light Reading
10/31/2003

U.S. bankruptcy court judge Arthur J. Gonzalez tonight approved MCI's (Nasdaq: MCIT) plan of reorganization, setting the stage for the company's emergence from Chapter 11 (see MCI Reorg Plan Approved).

MCI listed $107 billion in assets and $41 billion in liabilities in its filing, making it the largest bankruptcy in U.S. history.

"This is a great day for MCI. Against all odds, we have reached our confirmation faster than anyone expected,” said Michael D. Capellas, MCI chairman and CEO in a prepared statement.

In the past ten months MCI has recruited seven new key executives -- including a CFO, a COO, a general counsel, and a chief ethics officer -- and has created a three-year plan for improving its margins and cash flow.

But what's most significant about MCI's reemergence, versus the hundreds of other telecom companies squeezing through Chapter 11, is the speed at which it has achieved it.

"They've done it in record time, whereas there's still no word on Enron's reemergence, and it filed earlier than MCI," says Shing Win, analyst with RHK Inc.. "One can only assume it will continue to operate at this pace," he says.

That said, even after its restructuring efforts, RHK notes that MCI’s margins and free cash flow are below those of its main rivals, AT&T Corp. (NYSE: T) and Sprint Corp. (NYSE: FON), despite a lower level of capital expenditures. Operational efficiency metrics also lag, as the company remains burdened with managing 222 separate subsidiaries.

— Jo Maitland, Senior Editor, Boardwatch

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BobbyMax
BobbyMax
12/4/2012 | 11:17:48 PM
re: MCI Back In Business
The US Government has been unfair to the shareholders and workers by continuing to do business with MCI while the company officials cheated by stealing over a billion dollars. "Dr." Capella, Chairman and CEO has also been a primary beneficiaries of the corrupt policies of the US Government.



The US Government has been unfair to the shareholders and workers by continuing to do business with MCI while the company officials cheated by stealing over a billion dollars. "Dr." Capella, Chairman and CEO has also been a
mdwdm
mdwdm
12/4/2012 | 11:17:47 PM
re: MCI Back In Business
From NYT

Who's Sordid Now?
By PAUL KRUGMAN

Published: September 30, 2003

It's official: the administration that once scorned nation-building now says that it's engaged in a modern version of the Marshall Plan. But Iraq isn't postwar Europe, and George W. Bush definitely isn't Harry Truman. Indeed, while Truman led this country in what Churchill called the "most unsordid act in history," the stories about Iraqi reconstruction keep getting more sordid. And the sordidness isn't, as some would have you believe, a minor blemish on an otherwise noble enterprise.

Cronyism is an important factor in our Iraqi debacle. It's not just that reconstruction is much more expensive than it should be. The really important thing is that cronyism is warping policy: by treating contracts as prizes to be handed to their friends, administration officials are delaying Iraq's recovery, with potentially catastrophic consequences.

It's rarely mentioned nowadays, but at the time of the Marshall Plan, Americans were very concerned about profiteering in the name of patriotism. To get Congressional approval, Truman had to provide assurances that the plan would not become a boondoggle. Funds were administered by an agency independent of the White House, and Marshall promised that priorities would be determined by Europeans, not Americans.

Fortunately, Truman's assurances were credible. Although he is now honored for his postwar leadership, Truman initially rose to prominence as a fierce crusader against war profiteering, which he considered treason.

Iraq's reconstruction, by contrast, remains firmly under White House control. And this is an administration of, by and for crony capitalists; to match this White House's blithe lack of concern about conflicts of interest, you have to go back to the Harding administration. That giant, no-bid contract given to Halliburton, the company that made Dick Cheney rich, was just what you'd expect.

And even as the situation in Iraq slides downhill, and the Iraqi Governing Council demands more autonomy and control, American officials continue to block local initiatives, and are still trying to keep the big contracts in the hands of you-know-who.

For example, in July two enterprising Middle Eastern firms started offering cellphone service in Baghdad, setting up jury-rigged systems compatible with those of neighboring countries. Since the collapse of Baghdad's phone system has been a major source of postwar problems, coalition authorities should have been pleased.

But no: the authorities promptly shut down the services. Cell service, they said, could be offered only by the winners in a bidding process ?one whose rules, revealed on July 31, seemed carefully designed to shut out any non-American companies. (In the face of strenuous protests the rules were revised, but still seem to favor the usual suspects.) Oddly, the announcement of the winners, originally scheduled for Sept. 5, keeps being delayed. Meanwhile, only Paul Bremer and his people have cellphones ?and, thanks to the baffling decision to give that contract to MCI, even those phones don't work very well. (Aside from the fact that its management perpetrated history's biggest accounting fraud, MCI has no experience in building cell networks.)

Then there's electricity. One reason Iraq still faces blackouts is that local experts and institutions were excluded from the repair business. Instead, the exclusive contract was given to Bechtel, whose Republican ties are almost as strong as Halliburton's. And if a recent story in The Washington Post is accurate, Bechtel continues to ignore pleas by Iraqi engineers for essential spare parts.

Meanwhile, several companies with close personal ties to top administration officials have begun brazenly offering their services as facilitators for companies seeking Iraqi business. The former law firm of Douglas Feith, the Pentagon under secretary who oversees Iraq reconstruction, has hung out its shingle. So has another company headed by Joe Allbaugh, who ran the Bush-Cheney campaign in 2000 and ran FEMA until a few months ago. And a third entrant is run by Ahmad Chalabi's nephew.

There's a moral here: optimists who expect the administration to get its Iraq policy on track are kidding themselves. Think about it: the cost of the occupation is exploding, and military experts warn that our army is dangerously overcommitted. Yet officials are still allowing Iraqi reconstruction to languish, and the disaffection of the Iraqi public to grow, while they steer choice contracts to their friends. What makes you think they will ever change their ways?
vvdip1
vvdip1
12/4/2012 | 11:17:34 PM
re: MCI Back In Business
You know, in the end, it is people like you and me that get to pay for MCI's mistakes and the greed that the crooked executives had.

All of the creditors have to take a write-off for $41 BILLION in debt. Regardless of how you slice it, the creditors (most who are local or LD carriers) have to somehow recover the lost revenues.

This stinks. How on earth can any sane person agree to let MCI get off the hook for so much debt?!?!?

If I were a judge, I would look at the fact that the company continues to have a way to make money and force them to pay ALL THE CREDITORS a minimum of 70%.

It is easier to file for business bankruptcy than personal bankruptcy!!!! What is wrong with this picture?

glad2Bgone
glad2Bgone
12/4/2012 | 11:17:31 PM
re: MCI Back In Business
BobbyMax:

You have no chance to survive make your time

Ha Ha Ha Ha G«™
Digit Al
Digit Al
12/4/2012 | 11:17:30 PM
re: MCI Back In Business
G2bGone,

You may be right. Usually I take BobbyMax's posts as a good chuckle. However, in this, he's very right.

MCI is claiming that AT&T and Sprint were trying to gang up on them unfairly to delay their re-emergence. However, this does not appear to be the case; AT&T and Sprint's claims have merit. In the midst of MCI's bankrupty proceedings, they were awarded some very lucrative government contracts in several areas. While these were not direct government loans, the comparison to the Chrysler bailout is obvious. A number of new and very large government contracts went to Chrysler when they were in trouble and helped them make their comeback. The big difference as I see it is that Chrysler was driven into its situation by poor marketing in the face of serious market demand shifts coupled with bad management decisions. MCI's situation was indirectly caused by it's accounting fraud.

Among other things, MCI's pricing models were based upon their fraudulent numbers which hurt them in the long run as well as the entire industry. AT&T, Sprint, and others had to compete with these falsely derived figures to survive so margins and revenues were gutted. Also, MCI continued to make acquisitions which were fueled by the fraud. If the real numbers were made available, would the acquisitions have happened? Not counting the personal corruption and theft at the highest levels, I'm surprised charges haven't been brought against those responsible for the fraudulent reporting parts alone. Makes me wonder how much money MCI contributed to GW's 2000 campaign. Or maybe I should be asking how much they contributed to his 2004 campaign to be given such light and preferential treatment.
Just my $.02..

-- Digit Al
mdwdm
mdwdm
12/4/2012 | 11:17:28 PM
re: MCI Back In Business
Al,
FYI
--------------
Middle East
Nov 1, 2003

Profiting from war
By Emad Mekay

WASHINGTON - Some 70 United States companies with connections to the Bush administration have won at least US$8 billion worth of reconstruction contracts in Iraq and Afghanistan in the past two years, an independent research group said Thursday.

According to the six-month probe by the Center for Public Integrity, a nonprofit, nonpartisan, tax-exempt organization based in Washington, the 70 firms donated more money to the presidential campaign of George W Bush than they did collectively to any other politician over the past dozen years.

The investigation, which examined contracts awarded in 2002 through September 2003, provides the most complete list to date of US contractors in the two nations that were invaded by the US in what has been termed the war on terror. The study does not look into the dozens of subcontracts.

The findings, which came out in a brief report, "Windfalls of War: US Contractors in Iraq and Afghanistan", show that Kellogg, Brown & Root (KBR), the subsidiary of the giant US oil field services firm Halliburton, was the top recipient of federal contracts for the two countries, worth more than US$2.3 billion.

Vice President Dick Cheney led the Houston-based corporation prior to being chosen as Bush's running mate in August 2000. Cheney still receives a six-figure deferred annual compensation from Halliburton that the company says is not affected by current business decisions.

Halliburton said on Wednesday that its revenue rose to $4.1 billion from $3.0 billion in the third quarter as a result of government work by KBR. KBR's no-bid contract with the US Army Crops of Engineers to modernize Iraq's oil industry has been under fire from many Congressional Democrats and civil society groups who say the deal illustrates favoritism in the Republican administration.

The San Francisco-based Bechtel Group, a leading engineering company and a major government contractor, also with high-ranking ties, was second with awarded contracts worth $1.03 billion.

Bechtel's chief executive officer, Riley Bechtel, was appointed in February by Bush to the President's Export Council, an influential economic advisory panel.

Another company with ties to the administration that won contracts in Iraq and Afghanistan is Science Applications International Corp (SAIC). SAIC received seven contracts in Iraq, one to help rebuild the country's media, a deal estimated to be worth $38 million dollars in year one but perhaps more than $90 million in 2004.

David Kay, the former United Nations weapons inspector who was hired by the Central Intelligence Agency to track down weapons of mass destruction in Iraq, is a former vice president of SAIC.

The CPI, which says it does not accept funding from corporations, labor unions or governments, said its research also found that dozens of lower-profile but well-connected companies also won big in the reconstruction bonanza.

The top 10 US contractors in Iraq include International American Products, Perini Corporation and Contrack International.

"Their tasks ranged from rebuilding Iraq's government, police, military and media, to providing translators for use in interrogations and psychological operations," said the report. G«•There are even contractors to evaluate the contractors."

The center says that nearly 60 percent of the 70 companies had employees or board members who either served in or had close ties to the executive branch for Republican and Democratic administrations, for members of congress of both parties or at the highest levels of the military.

It also found that nearly every one of the 10 largest contracts awarded for Iraq and Afghanistan went to companies employing former senior government officials with close links to those agencies or to Congress.

Using an analysis of campaign finance records, the findings show that the top 10 contractors were also long-time political donors. The companies gave nearly $11 million to national political parties, candidates and political action committees since 1990.

"Indeed, most of the companies that won contracts in Iraq and Afghanistan were political players," says the report. Of individual candidates that received money from those contractors, Bush collected more money than any other, a little more than $500,000.

According to the investigation, Iraq outpaced Afghanistan, once ground zero in Washington's war on terrorism, as the locale for contracted work. The center says at least $5.7 billion in government funding went to US contractors in Iraq. Nearly one-half of that, $2.7 billion, went for work in Afghanistan.

The center's team of journalists, researchers and former media figures said they had to wrest the information in the report from the administration. The group had to rely on 73 Freedom of Information Act (FOIA) requests and appeals to demand information from the Pentagon, the State Department and the United States Agency for International Development (USAID).

The center filed suit in the US District Court in Washington, DC, against the State Department and the Army after both agencies declined to cooperate fully with its request for information as outlined under the FOIA.

In a statement, the center charged that USAID and the Pentagon went as far as to initially omit the largest contracts they had awarded in Iraq from the information provided to the investigation - contracts to Bechtel and to Halliburton's KBR subsidiary.

The CIP warned that because of such secrecy shrouding contracts in Iraq, and because of official reluctance to share information, the total value of contracts awarded for reconstruction work in Iraq and Afghanistan may be actually much larger than what is publicly known.

Analysts say such findings are disturbing and illustrate how US policy in Iraq is in fact counter-productive.

"Both US and Iraqi interests would be better served if the management of reconstruction funds served as a concrete demonstration of how to create a capable post-war state rather than a secretive contracting operation," said Gayle Smith of the Center for American Progress, a liberal think tank.

"The mere perception that US contractors with ties to the Bush administration are profiting from their connections damages support for the operation in Iraq and at home."

(Inter Press Service)
)!(@*#&$^%
)!(@*#&$^%
12/4/2012 | 11:17:27 PM
re: MCI Back In Business
mdwdm,

Based on your posts, I think you are looking for the "Bash Bush on Iraq" board. Or maybe the "Sore loser - anti-Bush" board.

This happens to be the "MCI Back in Business" board which, regardless of how much you may dislike the American government, does not have much to do with Iraq.

regards

telebud
telebud
12/4/2012 | 11:17:24 PM
re: MCI Back In Business
and also Saddam's government..
Oooops..former government of Saddam insane!
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