CNNFN Money & Markets Transcript

CNNFN

SHOW: MONEY & MARKETS

July 28, 2003 Monday

HEADLINE: Sen. Collins Comments on MCI, CNNfn

GUESTS: Susan Collins

BYLINE: David Haffenreffer

BODY:
DAVID HAFFENREFFER, CNNfn ANCHOR, MONEY & MARKETS: Senator Susan Collins chairs the Senate Government Affairs Committee, which has been looking into whether MCI should still receive government contracts. She joins us now from Washington to talk about these latest developments and how they might hurt MCI's standing on Capitol Hill or perhaps if they will. Senator, thanks for coming on the program.

SEN. SUSAN COLLINS, (R), MAINE: Glad to join you.

HAFFENREFFER: What do you make of our last guest's assessment there that at least during this period in this nation's life the government does need MCI in order to protect I guess national security communications?

COLLINS: Well, I would make two points. One is that the General Services Administration is in the midst of doing an analysis that will help to answer that question, does MCI have some unique capability that the other telecom providers do not have that would warrant the continuation of government contracting with the firm? But the second point gets at the national security issue from a different angle. One of the allegations, and this is just an allegation at this point against MCI is that it may have routed secure calls through unsecured lines. And if that proves to be true, that is very serious indeed.

HAFFENREFFER: Well, what are the rules when it comes to government contracts with corporations? And this obviously brings to light a much larger issue, that maybe we should have stricter standards.

COLLINS: Federal procurement law requires that a contractor not only have the capability to perform well on the contract but also that it has the necessary business ethics and integrity. That's to protect our taxpayers' investment when we do business with a firm. So they have to meet both an integrity standard and a capability standard.

HAFFENREFFER: OK. So you would like to see what? And obviously, we need a further exploration of these charges against MCI by its competitors, which obviously warrants some looking into at this point. But what would you like to push for?

COLLINS: I've asked the federal government to conduct a review of MCI's ethics and business practices to make a determination of whether or not we should continue to do business with the firm. After all, aside from these new allegations, MCI has admitted to conducting the largest financial fraud in our nation's history. That fact alone should trigger the kind of review that is now under way. These new allegations are very serious, and they also raise troubling new questions about whether we should be doing business with the company.

HAFFENREFFER: MCI already gets a whole lot of money from the federal government, various agencies and whatnot. You've asked a number of agencies within the government to come forth with information detailing newly extended contracts and new initiatives with the company itself. What do you hope to find out in that type of information?

COLLINS: One is we want to discover the extent to which the federal government is continuing to award new contracts or extend old ones to the company. And second, if they are extending or awarding new contracts, are they doing so after a careful review of whether MCI has implemented the necessary reforms to ensure that this is in fact a company with whom the federal government should be doing business? Until my committee started looking into this issue, we found that the federal agency that was doing the largest amount of business with MCI had not conducted the kind of thorough review that led to a suspension of business with Enron and Andersen, for example. Now, I'm not prejudging what the result of that review should be, but certainly it should be conducted.

HAFFENREFFER: It is no secret, of course, that these big telecom companies have a lot of lobbying dollars at work down in Washington. Are you concerned about what the opposition might be in pursuing this line of thinking?

COLLINS: Well, one of the disappointing factors has been that the MCI has begun to question the motives of anyone who raises issues about whether or not they should continue to receive federal contracts. And I think that's very troubling. In my capacity as chairman of the Governmental Affairs committee I oversee federal procurement, and it's my responsibility to make sure that the federal government's investment in these companies is being protected and that the federal government is just doing business with ethical firms. Whether or not MCI WorldCom meets that standard remains to be seen.

HAFFENREFFER: Senator, thank you for taking time out of your day.

COLLINS: Thank you, David.

HAFFENREFFER: We appreciate it. Senator Susan Collins from the state of Maine.