Washington, Aug 01: WorldCom Inc. suffered another blow on Thursday after a US agency said the bankrupt telephone company could no longer compete for new US government contracts after finding it lacked proper internal controls and business ethics. The General Services Administration said it would review whether the temporary ban on WorldCom, which is embroiled in an $11 billion accounting scandal, should be extended for up to three years.

Meanwhile, the US Bankruptcy Court for the Southern District of New York delayed a hearing to approve WorldCom's reorganization plan to September 8 from August 25. The company filed the largest bankruptcy in US history last year.

These developments come just a day after the Federal Communications Commission said it is investigating whether WorldCom illegally routed telephone calls to avoid paying connection fees to other carriers.
The GSA agency, which doles out government contracts, said its investigation found the No. 2 US long-distance telephone and data services company had not adequately addressed its material accounting and business ethics weaknesses. Bureau Report