In a lawsuit filed on Tuesday, AT&T is seeking damages from MCI and Onvoy Inc. under the federal Racketeer Influenced and Corrupt Organisations act.

The suit accuses MCI, formerly known as WorldCom, and regional telecom group Onvoy of orchestrating a scheme called the “Canadian Gateway Project,” where both telecom firms worked together to reroute domestic phone calls through Canada to cause AT&T to pay high fees.

MCI, from the re-baptised bankrupt telecom group WorldCom, faces more turmoil on new allegations of fraud.

AT&T said: "MCI/WorldCom conspired with Onvoy to create access charges 'out of thin air' for AT&T by rerouting the calls through Canada and then to AT&T for completion on the MCI/WorldCom local network – where MCI/WorldCom would receive the access payments."

AT&T is arguing that that MCI/WorldCom should have properly kept the telephone traffic on its own network and should have been responsible for terminating any access fees through transfers.

"The lawsuit alleges, among other claims, fraud, civil conspiracy, unjust enrichment, racketeering conspiracy and substantive racketeering through a pattern of multiple acts of mail fraud and wire fraud," AT&T said in a statement, adding that it believes the scheme is "ongoing."

AT&T is seeking an unspecified amount of damages from MCI upon its emergence from bankruptcy. MCI had denied any wrongdoing and claims that routing disputes are frequent in the industry.