Michigan Attorney General Cox Secures $15 Million for State from MCI-WorldCom

Michigan Attorney General Cox Secures $15 Million for State from MCI-WorldCom Multistate Settlement Resolves Inquiry Into Tax, Accounting Practices LANSING, Mich., Oct. 4 /PRNewswire/ -- Attorney General Mike Cox announced today a $15 million settlement that Michigan, 14 other states, and the District of Columbia have entered into with MCI-WorldCom as payment of back taxes owed by the company to the Michigan Department of Treasury. "Today's settlement will bring much-needed millions for Michigan without requiring the State to litigate numerous tax claims arising out of MCI- WorldCom's 2002 Chapter 11 bankruptcy," said Cox. The settlement with the bankruptcy debtors of MCI-WorldCom concludes more than a year of negotiations between the parties. The agreement relates to taxes owed to the states from MCI-WorldCom, including taxes owed because of potential accounting errors and resulting bankruptcy claims arising from the company's Royalty Program. The states' position is that the accounting methods employed by the company's accountants, KPMG, allowed MCI-WorldCom to take deductions or add-backs from 1999 - 2001 not allowed under the states' tax laws. Under the terms of the agreement, MCI-WorldCom will pay the participating states a lump sum of $315 million related to the Royalty Program by the end of October 2005, of which Michigan will receive approximately $10.2 million. In addition, Michigan will receive an additional $4.9 million by the end of October 2005 as a result of Department of Treasury audits for tax years before MCI's Royalty Program, bringing its total to $15,098,065. The settlement does not include an admission of wrongdoing from MCI-WorldCom. Michigan joined Alabama, Arkansas, Connecticut, the District of Columbia, Florida, Georgia, Iowa, Kentucky, Maryland, Massachusetts, Missouri, New Jersey, Ohio, Pennsylvania, and Wisconsin in the settlement, which was filed by MCI-WorldCom Tuesday in the United States Bankruptcy Court for the Southern District of New York. It is expected to be approved by the Court at an October 11 hearing and payment will be made shortly thereafter. Source: Michigan Attorney General CONTACT: Allison Pierce of Michigan Attorney General's office, +1-517-373-8060 Web site: http://www.michigan.gov/ag

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