Posted on 05/09/2005 11:22:07 AM PDT by WKB
JACKSON, Miss. - MCI Inc. will pay $100 million in cash to cover back taxes that its predecessor WorldCom Inc. owed Mississippi, state Attorney General Jim Hood announced Monday.
The telecommunications company also will turn over its former headquarters building in downtown Jackson to the state as part of the settlement, Hood said. The building has not been appraised, he said.
WorldCom collapsed in 2002 amid revelations of an $11 billion accounting fraud to inflate earnings and hide expenses.
WorldCom, which got its start in Mississippi, was once headquartered in Jackson and later moved to nearby Clinton. MCI is now based in Ashburn, Va., and recently accepted an $8.54 billion buyout offer from Verizon Communications Inc.
Hood said the $100 million will cover back taxes, including corporate income taxes, owed to the state.
In March, former WorldCom CEO Bernard Ebbers was convicted on charges of fraud, conspiracy and false regulatory filings in the WorldCom accounting scandal. Ebbers' sentencing is set for June 13.
Hood said the settlement was filed Monday in U.S. Bankruptcy Court in New York. He expects court approval later this week.
Mississippi's claim for unpaid taxes, interest and penalties arose from an alleged complex tax shelter that the former WorldCom devised to avoid paying income taxes by characterizing management fees as royalties, rather than income or service fees, Hood said.
Hood said at least 18 other states have also sued the company over the royalty program, through which WorldCom allegedly licensed intangible assets - mainly "management foresight" - to its units in exchange for royalty payments totaling about $19 billion.
Hood said MCI did not admit any wrongdoing. MCI officials said they would release a statement later Monday.
Hood said the state is investigating KPMG, a German accounting firm that he alleged helped WorldCom come up with the scheme. Hood said the state is seeking $900 million from KPMG. KPMG replaced auditing firm Andersen Arthur Andersen LLP as WorldCom's auditor shortly before WorldCom collapsed.
In April, Andersen paid $65 million to settle claims that it should have sniffed out the fraud.
The settlement brought to $6.13 billion the amount investment banks, auditors and former board members of WorldCom have paid to settle historic class-action claims by angry investors in the big telecom company.
Besides Andersen and major investment banks, 12 former directors of WorldCom had already agreed to pay more than $60 million, including nearly $25 million of their own money, to settle the investor lawsuit. Insurers are expected to pick up the rest.
Mi$$i$$ippi ping
OK, when do I get my check?
I would never go with MCI - never. Being burned once is enough.
Uh It's in the mail?
I'm just sure the politicians in charge of the good state of Mississippi will put the money to good use. Debt retirement, tax reductions, etc.
Yeah, right.
Keep your eye on this little nest egg and watch it be used by Hood and Moore to get Moore elected Governor in 2007.
As a matter of fact Mikey was standing behind Hood
when he made this announcement.
"Mi$$i$$ippi"
LOL!
That was cute. ;o)
Watch the marvelous morphing corporate entities play 3-card monte with other peoples money. MCI used to be WorldCom. But before that WorldCom used to be MCI. And KPMG, the German? accounting firm that replaced the disgraced Arthur Andersen. Didn't the PM in KPMG used to be Peat-Marwick, an American accounting firm? What will they all morph into next on the way to the next swindle?
Palo Alto, CA has to pay Enron millions The Libs out on the Left coast can't even get something to stick to Enron!
"As a matter of fact Mikey was standing behind Hood
when he made this announcement."
Why am I not surprised?
What about the folks who worked for WorldCom/MCI? Will they be vindicated, will they get their savings, if ever?
"As a matter of fact Mikey was standing behind Hood
when he made this announcement."
I think I got'em figgered out and I only been living here 3 years.
I'll take mine in small bills please :)
Jeff
Another building full of parasites. That'll help burnish Mississippi's reputation.
Agree on the tobacco money...but it'll be fascinating to see them justify Mikey getting a slice of this. Hood's already pegged it as needing to be used for MAEP and that's not something he'd have done if he'd hoped to funnel it into the tobacco account (like Haley would let em do that anyway).
I'm getting to the point where I REALLY need to see Haley paste Moore in an election to make my life complete. ;)
BTW, I went to the district GOP meeting tonight and came away encouraged. If we can capitalize on the potential support in the NE part of the state, we can put the Dems in the permanent minority.
Politicians never have seen a dollar they would like to spend, it is going to be do different this time.
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