WorldCom scandal settled for $500m

MCI, formerly WorldCom, has agreed a settlement with US regulator the Securities and Exchange Commission (SEC) on a civil penalty to be imposed for the company's alleged illegal accounting practices in the past.

Though the settlement finds the disgraced telco liable for a civil penalty of $1.51bn, it will pay just $500m upon emerging from Chapter 11 bankruptcy protection, a process which will see the firm shake off at least $36bn of debt.

"This settlement recognises our cooperation with the SEC's investigation, the company's acceptance of responsibility for its past accounting practices, and the significant strides we have made in rebuilding MCI as a model of good corporate governance," said MCI's executive vice president and general counsel Michael Salsbury, in a statement.

"This is an important milestone in our progress to emerge from Chapter 11 on schedule this fall."

The settlement has still to be granted the necessary approval by the US District Court overseeing SEC's lawsuit against the company, as well as by the US Bankruptcy Court overseeing its Chapter 11 proceedings.

The court invited interested parties to submit comments on the proposed settlement on or before 6 June, 2003.

If the settlement is approved by the courts it will resolve all claims by the SEC against the company for its past accounting practices.