Engineer Claims ISP Conspired With MCI on Fees

MCI continues to deny it defrauded competitors of millions of dollars by rerouting calls.
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A telephone engineer who worked for a small Internet service provider called Onvoy reportedly has told federal investigators that the firm conspired with MCI to help the long-distance giant circumvent networks run by large competitors like

AT&T

(T) - Get Report

and

Verizon

(VZ) - Get Report

.

The engineer, who worked for MCI until 1995 and Onvoy until earlier this year, is cooperating with federal prosecutors investigating whether MCI rerouted calls around its competitors' networks, potentially defrauding them of hundreds of millions of dollars in fees. Both Onvoy and MCI deny the allegations.

In a sworn statement, the engineer claimed Onvoy actively worked with MCI for years to divert calls through Canada to avoid the steep access fees paid to local companies for originating and terminating calls, according to

The Wall Street Journal

, which cited people close to the situation.

MCI, whose corporate parent used to be called

WorldCom

(WCOEQ)

, says it is cooperating with the investigation.

The probe came to light publicly when the House Energy and Commerce Committee Wednesday asked the FCC about charges, which were brought by its rivals. The committee also wants documents about any violations of rules uncovered by the agency.