WorldCom Inc. on Sunday confirmed that federal prosecutors this month subpoenaed documents concerning fees its MCI unit paid rival telephone companies to carry long-distance calls over their local lines.
The telephone company declined to confirm whether the subpoena relates to a federal probe into whether it defrauded three local carriers nationwide of possibly more than $1 billion in special access tariffs since 1994.
Adding to the company's difficulties, AT&T Corp. is expected to file a document in WorldCom's bankruptcy case today alleging that numerous U.S. federal government phone calls were inappropriately routed through Canada to avoid tariffs.
Among the agencies whose calls were redirected were the Department of Defense, the State Department, the Federal Deposit Insurance Corp. and the U.S. Postal Service. It was unclear whether the security of the calls was jeopardized.
AT&T is set to argue that WorldCom cannot be trusted to do business with the federal government, currently the carrier's largest customer.
The probe by the U.S. attorney's office in Manhattan was disclosed Sunday by the New York Times.
"We did receive a subpoena but can't discuss the details," WorldCom spokesman Brad Burns said.
A source close to WorldCom said the subpoena related to allegations that it avoided paying the access fees to AT&T, SBC Communications Inc. and Verizon Communications Inc.
WorldCom, the nation's No. 2 long-distance carrier, filed for Chapter 11 bankruptcy protection last year.
The company hopes to emerge from bankruptcy protection in the fall and change its name to MCI.
The Justice Department declined to comment.