A District Court Judge here has reportedly barred telecommunications giant MCI, formerly known as WorldCom, from making further payments to the accounting, law and consulting firms steering it through bankruptcy that haven't already been approved through the budgeting system set up by the court.

Southern District of New York Judge Jed Rakoff this week ordered MCI and any firms under question to file affidavits explaining why his budgeting procedure wasn't followed and justifying the expenses, according to a report by the New York Law Journal, which said that Rakoff is questioning fees totaling more than $25 million.

On Monday, the judge barred the company from making any further payment for any services or fees that weren't previously approved by MCI corporate monitor Richard Breeden, and called on Breeden to recoup any wrongly made payments, the Law Journal said.

MCI, whose $104 billion bankruptcy was the largest in the nation's history, has reportedly already spent $800 million to emerge from Chapter 11 protection, which it did in April, following an $11 billion accounting scandal. Since then, the dozens of law firms, accounting firms, investment banks and other firms that helped bring the company back to life have billed hundreds of millions more, according to the Law Journal.

Judge Rakoff had reportedly established an unusual budgeting process in which the firms were required to submit quarterly budgets to Breeden to assure savings for the company. Breeden ended the review process in June because the company emerged from bankruptcy.

According to the report, problems arose when several firms -- which Judge Rakoff didn't name -- submitted payment requests that exceeded their quarterly budgets or that had never received budgetary approval from Breeden. Others may have also received payments in excess of their submitted budget, the judge said.

The report noted that KPMG requested $115 million in fees and expenses from the period between October 2003 through July 2004 for auditing MCI's books and records dating back several years, while Deloitte & Touche and Deloitte Consulting requested $75 million in fees and expenses for the same billing period. According to the Law Journal, those filings exceeded most of the fees requested by other firms during the final billing cycle.

An MCI spokesman told the Law Journal that the company would comply with the judge's demand to explain the bills.

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