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The Tawdry Tale of WorldCom's Sweetheart Deal in Iraq
By Ted Rall

'NEW YORK--WorldCom Inc., recently and hilariously accused of rerouting phone calls to avoid paying connection fees to other phone companies (who was running the joint, frat dudes?), ranks with Enron in the annals of modern corporate debauchery. After an $11 billion accounting scandal sunk the infamous telecommunications conglomerate into bankruptcy, the U.S. General Services Administration banned federal agencies from doing business with WorldCom. So how is a proscribed "company that has demonstrated a flagrant lack of ethics"--the words belong to Senator Susan Collins (R-ME), chairperson of the Senate's Governmental Affairs Committee--poised to land a $900 million Pentagon (news - web sites) contract to build a cell phone system for occupied Iraq?

"I was curious about it, because the last time I looked, MCI has never built out a wireless network," comments Len Lauer of Sprint.

Indeed, WorldCom's MCI division never figured out how to build a cell network in the U.S., and ultimately gave up trying. But who needs experience when you have tasty political connections? Before 2000 WorldCom donated equally to Democrats and Republicans in order to land cell service contracts with U.S. occupation armies in Haiti, Kosovo and Afghanistan (news - web sites). Now it's leveraging a $45 million deal with the Coalition Provisional Authority (CPA) into a Halliburtonesque sweetheart contract to build the first national mobile phone network in Iraq, where more than 2 million new customers are expected to sign up right away.

The Pentagon's rush to protect WorldCom from a scrappy Bahraini-based competitor, Batelco, which has built cell networks in the Middle East, has exposed yet another unholy alliance between corporate America and the Bush Administration. Demonstrating the brand of lightening-quick entrepreneurship traditionally treasured by free-market-loving Americans, Batelco raced into Iraq after the U.S. invasion and installed cell towers throughout Baghdad. With half of land lines out of service and Saddam's 1990 plan to build cell towers stymied by U.N. trade sanctions, Baghdadis welcomed the new service. But the CPA shut down Batelco and threatened to confiscate its $5 million of equipment. Now the CPA is now prohibiting companies more than 10 percent owned by foreign governments from bidding on civilian cell business in U.S.-occupied Iraq. That eliminates Batelco and most other Middle East-based telecommunications companies and, according to analyst Lars Godell of Forrester Research in Amsterdam, leaves MCI with "a head start."

Ordinary Iraqis, meanwhile, are back in the pre-Alexander Graham Bell era.

Companies like Vodafone, T-Mobile and NTT DoCoMo of Japan all have more experience of "setting up green field operations in developing countries [than MCI]," says Godell. He adds that the Bush Administration's decision not to seek competitive bids "confirms the worst suspicions" of European cellular companies. Fortunately for them, being American means never having to say you're sorry.

Old-fashioned influence-buying, coupled with inside-the-Beltway cronyism, is MCI's not-so-secret weapon in the fight over Iraqi spoils. As recently as June 2002, a week before the big accounting scandal broke, The Washington Post reported that WorldCom contributed $100,000 to a GOP fundraising gala featuring Bush--"enough to be listed on the program as a vice chairman of the event." Before becoming attorney general, John Ashcroft (news - web sites) cashed a $10,000 WorldCom check for his losing Senate race. And the University of Mississippi's Trent Lott Leadership Institute, named for the racist GOP Senator, received $1 million from WorldCom. With Republicans controlling Congress, the Supreme Court and the White House, WorldCom no longer needs to be an equal-opportunity corrupter.

WorldCom's rivals, furious at being cut out of Iraq, are lashing out. "We don't understand why MCI would be awarded this business given its status as having committed the largest corporate fraud in history," says AT&T spokesman Jim McGann. "There are many qualified, financially stable companies that could have been awarded that business, including us." Motorola's Norm Sandler, noted that the Iraq gig had never been offered for competitive bidding: "We were not aware of it until it showed up in some news reports."

Perhaps MCI-WorldCom will overcome its lack of experience, $5.5 billion in post-bankruptcy debt and an extensive criminal record in order to provide the people of occupied Iraq with affordable, crystal-clear cellphone service that never drops calls or loses voicemail for hours at a time. But sleazy back-room deals with Halliburton and MCI-WorldCom belie America's supposed faith in the transparency of free markets and their relationship to spreading democracy. They do more damage to our tattered relationship with the people of Iraq than any suicide bomb. And they prove beyond a reasonable doubt that George W. Bush's commitment to fight corporate fraud is just another lie.'

(Ted Rall is the author of the graphic travelogue "To Afghanistan and Back," an award-winning recounting of his experiences covering the U.S. invasion of Afghanistan. It is now available in a revised and updated paperback edition containing new material. Ordering information is available at amazon.com.)