WorldCom has reinvented itself as MCI

Bankrupt US telecoms firm WorldCom has accused its rival AT&T of deliberately sabotaging its attempt to survive.

Last month, federal prosecutors subpoenad documents from WorldCom after AT&T claimed it was defrauding competitors by improperly routing domestic telephone calls to avoid paying fees to other US telecoms firms.

But WorldCom has told a US bankruptcy court that the accusations are part of an escalating campaign to damage its chances of emerging from bankruptcy.

"AT&T's filing makes sensational accusations wholly unsupported by evidence or law," WorldCom said in a statement.

WorldCom is trying to shrug off an $11bn accounting fraud by rebranded itself as MCI, one of the many companies it acquired during its 1980s and 1990s expansionist drive.

But the accusations from AT&T have provoked a new probe into fraudulent activity just as MCI is trying to draw a line under the last one.

'Malicious'

AT&T accused MCI of "playing fast and loose with our national interests" by disguising codes on long-distance calls to route them through Canada.

"AT&T's invocation of the national interest is a transparent attempt to promote its corporate self-interest in shutting down one of its competitors by publishing malicious fabrications," MCI retorted.

"What is striking about those allegations is that...AT&T has described a process for least-cost routing that is entirely legal," MCI said in its 15-page filing.

Long-distance companies have to pay a few cents a minute to other phone firms for "terminating" calls - delivering them to the person on the far end of the line.

But MCI is accused of reaching deals with small local carriers to disguise its own traffic as local calls, thus avoiding paying the termination fees.

AT&T denied that the claims were designed to increase the telecom firm's competitive advantage.

"An act of fraud has been committed upon the shareholders of AT&T through an elaborate scheme to dump high-cost traffic which originated on MCI's network onto AT&T's network," AT&T spokesman Jim Byrnes said.