MCI Swallows Government Ban

ASHBURN, Va. -- MCI (WCOEQ, MCWEQ) todaysaid that it accepts the General Services Administration's (GSA) decision forproposed debarment, which will not affect MCI's ability to serve its existingfederal government customers. The company said that it has been communicatingwith GSA for some time and will continue to work diligently to implement newinternal controls systems and strengthen its Ethics Office. The company willbe allowed to seek new government business once it achieves theserecommendations and receives approval by GSA.

Michael Capellas, MCI chairman and CEO, said "Throughout the events of thepast year, our 55,000 employees have been working harder than ever to provideworld-class service to all our customers, including government agencies.Today's announcement will not affect MCI's existing contracts with state andfederal government customers who can continue to count on us to provide theindustry's best service and support.

"We are in the process of rebuilding our ethics program and understandthat there is still more work to do. MCI has made significant progress onmany fronts. We remain committed to operating with the utmost integrity.

"Today's news does not in any way affect the timing of our emergence fromChapter 11 protection."

Irwin Gold, senior managing director, Houlihan Lokey Howard & Zukin,financial advisors to MCI's Creditors Committee, said: "MCI's creditorscommittee fully supports Michael Capellas and his management team as theyrapidly work to fulfill GSA's recommendations so they can again compete fornew government contracts. We remain very confident in the company's plan ofreorganization."

Bob Blakely, MCI chief financial officer, said: "No one has ever had toreconstruct three years of financial history for a company of this magnitude.We are working diligently and have no higher priority than to implement ournew internal controls systems. The company's customer-facing transactionsystems remain solid and we continue to operate with world-class networkperformance and the lowest FCC reportable outages in the industry."

Blakely said that MCI has hired more than 400 accounting professionals,established a new internal controls team, brought in a new external auditor,KPMG, and retained Deloitte & Touche to assist the company with the internalcontrols project.

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