A federal jury in Alexandria has found that MCI Communications Corp. is not entitled to damages as the result of contracts a former company executive awarded to vendors with whom he had personal or business relationships.

The decision Thursday morning reversed an October 1988 verdict, in which a jury awarded MCI $1 million in damages after finding Boyd Wanzer liable for a breach of fiduciary responsibility.

Wanzer, 50, MCI's former director of corporate services, appealed that verdict to the Fourth Circuit Court of Appeals in Richmond, which granted him a new trial because it found that the first trial judge had incorrectly excluded testimony.

William F. Pendergast, Wanzer's attorney in both trials, said his client "was very emotional when he got the verdict because finally after 2 1/2 years of pursuit by MCI he feels exonerated."

John R. Houser, a spokesman for MCI, said the jury in this week's three-day trial "misunderstood the case."

"We are presently studying our options," Houser said. "... From our viewpoint, to use the vernacular, the case is not closed."

MCI had brought a civil suit against Wanzer, accusing him of conspiring with H&L Movers Inc., a now defunct Landover contracting firm, to overcharge MCI for services or charge the communications company for services never performed. The MCI suit said Wanzer accepted more than $100,000 in kickbacks or bribes as a result of the conspiracy.

The jury two years ago found Wanzer not guilty of conspiracy, fraud and conversion, but ruled that he was wrong in not informing his superiors that he had personal or business relationships with some of the contractors he hired for MCI.

Wanzer, who had been with MCI for 15 years, testified that the activity in his bank account during the years at issue could be explained by his gambling, Pendergast said. "He owned some horses, and the trainer testified that they had a winning streak in 1986 and 1987," Pendergast said in an interview.