Posted on 02/14/2002 10:18:32 PM PST by knak
Yet another high profile figure emerges in the Global Crossing Ltd (GCL) failure.
Virtually inconspicuous, revealed in pages buried in required filings of the Securities and Exchange Commission (SEC), is an individual who could have been influential in securing Global Crossing a lucrative contract in exchange for post-Clinton employment.
Global Crossing’s staff, however, pointed out Wednesday a release dated April 16 that effectively camouflages the name of the former Secretary of Defense in the Clinton Administration.
The release dated April 16, 2001 says nothing about William S. Cohen until the second paragraph. The unassuming headline on the company website reads merely, “Global Crossing Names New Directors.” Cohen is named along with two others, Maria Elena Lagomasino and Mark Attanasio.
Cohen’s responsibilities according to a report filed with the SEC encompass personnel and compensation.
Cohen was appointed to the board four months after his stint in the Clinton Administration. However, a Global Crossing spokesperson was neither able to confirm nor deny that Cohen, as SECDEF, was in any way helpful in obtaining the defense communications contract for GCL, which was initially approved under Clinton.
Global’s stock price hit a record low August of 2001 after the government announced cancellation of a half-billion dollar Defense Research Engineering Network (DREN) contract given the final go-ahead just one month before.
The 10-year project builds secure US defense communications around the globe. The deal was $137 million for the first year with seven one-year options exceeding $400 million. The contract was yanked by Bush’s Defense Information Systems Agency a division of the US Defense Department citing other bidders complained about how the contract was awarded.
The four losing bidders protested independently. They are AT&T, Sprint, Qwest and WorldCom.
Global Crossing filed Chapter 11 Reorganization Jan. 28, the fourth largest in history. Global’s value at its peak was $50 billion, slightly higher than Enron’s. Though questions of extreme proportions plague GCL, the company hasn’t the notoriety of Enron, historically the largest bankruptcy as measured in debt. (Several days after GCL’s bankruptcy, NBC News president, Bob Horner, announced the selection of Global Crossing to transport video feed from the Winter Olympics in Salt Lake City, Utah to seven broadcast stations around the country).
Both bankruptcies have similar elements. Both Global Crossing and Enron donated heavily to political parties and candidates. Both chairmen, Ken Lay of Enron and Gary Winnick of Global engaged in massive stock selling within a year of the filings, roughly a billion dollars a piece.
Both firms locked down employee liquidations from 401 (K) retirement accounts during some of the executive sell off. Both companies have been adversely affected by government, GCL in the cancellation of a lucrative government contract and Enron by governing decisions in California, Europe and most notably India where the governing power board ruled rates of phase I of the project were too high canceling the remaining construction phases. Enron’s return on capital was less than half what it needed for a profit. Then secret obligations the company had with undisclosed partnerships suddenly appeared. Enron filed Chapter 11 on Dec. 3. Ken Lay resigned as chairman several weeks later.
A key difference between the two companies is Enron is associated with Republicans, though it has given generously to Democrats as well, and Global Crossing is associated with Democrats.
Winnick’s fate has been somewhat different. Rather than be disgraced in the past couple weeks by a Congressional committee wanting to count every hair on his head and on other places, Winnick entertained former President Clinton at the Super Bowl.
Although Enron contributed $113,000 of soft money to the President Bush’s compaign, and $1 million to the Republican Party, Global Crossing donated over a million to the DNC. Global arranged for DNC Chairman Terry McAuliffe an investment in company stock that increased 18,000 percent, from $100,000 to $18 million in about a year and a half. The company paid a former justice department lawyer, Anne Bingaman $2.5 million for lobbying efforts. Bingaman was assistant Attorney General under Janet Reno, head of the Anti-trust Division and considered an expert in international monopolies. Global Crossing owns 20 percent of all undersea communications cable and was increasing its ownership. She is also the wife of Senator Jeff Bingaman, D-NM, one of those investigating Enron. GCL also made a donation of $1 million to the Clinton library.
Washington Dispatch has also learned DNC Chairman Terry McAuliffe may have been an “affiliated person” with Global Crossing. Though he’s denied it, using the securities regulatory term specifically, the possibility lies in the following:
--According to SEC filings, as a member of now bankrupt Telergy’s board of directors, McAuliffe raised equity capital. For that he was paid a $1.2 million fee in 2000 for money raised in 1999.
--Global Crossing invested heavily in Telergy, $40 million, almost half the firm’s present value.
--Telergy says in its prospectus that even though Global Crossing offers Telergy considerable competition, GCL is entitled to a position on its board of directors. (Telergy withdrew its public offering, but its documents remain on file).
--Though the Global Crossing board member with Telergy is not specifically named, the closest known board member to GCL is McAuliffe.
This story does not stop there. Bidding for the remains of Global Crossing are two Asian firms, one from Singapore called Telemedia (SST) and the other based in the Peoples Republic of China (PRC) known as Hutchison Whampoa. The later is owned largely by Chairman Li Ka-Shing who has close ties to the Chinese ruling inner circle. Whampoa owns the Panama Canal operations contract and is a bidder for Enron’s Wessex Water utility in Britain.
Global Crossing, which lost the contract for America’s defense communications network, owns 20 percent of all undersea communications cable, much of Manhattan’s private fiber-optics and Britain’s defense communications. And that’s a very small part of the Global communications empire.
And there’s more. The SEC announced last week an investigation into the accounting practices of Global and its trading partners; and as previously reported here, so is the FBI. At issue are communications capacity swaps. This is where a firm trades excess capacity, say seven minutes every other Tuesday, for excess capacity from another carrier. The transaction, though of no value, is booked as income.
And Global is reported to have inflated its books by $800 million in the final quarter—alone--of 2001. It is anticipated nearly all telecommunications firms will come under heavy scrutiny for this alleged abuse.
Kind of explains the vast gulf between the two cases in the press, doesn't it...
All kinds of high placed players. I wonder if Gary Hart is associated with any of this.
I remember Cohen came down like a ton of bricks on the poor fellow doing a security clearance on Hart.
Apparently Cohen and Hart are good friends from school, I believe, and co-authored a book, as I recall.
Gosh, I'm begining to sound like a Democrat.
Never ;^)
Morning, Cincy
Also, wasn't there a controversy over the amount of DOD money that was spent on a big West Coast farewell bash that Cohen and others attended a couple of years ago? Be interesting to see the guest list for that affair.
Check this out.
World Development Federation: Expert Panel on Communications (41.)U.S. West: U.S. Senator Gary Hart (financing packages)*******
(May 17, 1999) GLOBAL CROSSING BUYS USWEST "It seems like almost no one in the U.S. had even heard of Global Crossing six months ago. Now they are taking over some of the largest telecomms in the country. Technically, this should go down as a merger, though Global Crossing obviously has the upper-hand in the deal. What is unclear from the release is if US West will be changing their name. Also unclear is how the FCC would allow an RBOC like US West to own a long distance company (Frontier), when it is not itself allowed to offer long distance service in most states. Obviously, this deal still has some regulatory hurdles to clear."
(May 17, 1999) This Way to the Future, Stay Tuned [Excerpt] The new Global Crossing Class L shares will include: U S WEST's 16.6 million local telephone lines in 14 Western and Midwestern states. Frontier's 1.0 million local telephone lines. The U S WEST Dex printed directory business. Frontier's printed directory business.
The merger is expected to be immediately accretive to Global Crossing Class G operating cash flow and to Global Crossing Class L earnings per share. The transaction will be accounted for as a purchase, and is expected to be tax-free to U S WEST and Global Crossing shareholders. The new Global Crossing Corporation will be incorporated in Delaware, headquartered in New York City, and have operations in Denver;
Rochester, NY; Los Angeles; the New York/New Jersey metropolitan area; Minneapolis; Phoenix; Seattle; London; Tokyo; Amsterdam; Buenos Aires and many other locations throughout the world. The transaction is subject to the approval of shareholders of both companies, expiration of the applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act, and approval by the Federal Communications Commission and other regulatory review. It is expected to close by mid-2000 [End Excerpt]
(November 18, 1999)--Secretary of Defense William S. Cohen's speech to Global Crossing--[Excerpt] The American Civil War soldier and Supreme Court Justice Oliver Wendell Holmes Jr. once wrote, "I believe in my country. Next to my country, my crowd, and England is my crowd." So let me say that I am both honored and humbled to stand before this distinguished crowd tonight. I’ve visited 18 countries during the past 40 days, so when Lod asked me to come to Global Crossing I took him literally, travelling 16 hours from Chile. [End Excerpt] ----(I still can't believe this man was Secretary of Defense)
(From this thread)-Quiet Global Crossing Board Member: Former Secretary of Defense-- The company paid a former justice department lawyer, Anne Bingaman $2.5 million for lobbying efforts. Bingaman was assistant Attorney General under Janet Reno, head of the Anti-trust Division and considered an expert in international monopolies. Global Crossing owns 20 percent of all undersea communications cable and was increasing its ownership. She is also the wife of Senator Jeff Bingaman, D-NM, one of those investigating Enron.
(June 12, 2000)-- When Mr. Bingaman went to Washington, Mrs. Bingaman [Excerpt] was stunned to find that Washington considered political wives "dumb, arrogant, boring" women who live in the suburbs. She knocked at 35 doors before joining a high-powered D.C. firm. She describes all this not as complaint but as a series of humorous events. And this is the woman who's supposed to quake and change her career path at the rantings of Billjohn Redmondendahl? She's now chairwoman and CEO of Valor Telecommunications, the largest Hispanic-owned telecom company in the country. When you consider that among the heavy hitters who started this company are the venerable Lujans, Manuel and Ed, Republican stalwarts, the conversations among the party's leadership must be interesting these days. That's just one reason it's unwise to shoot at Valor. The other is the telecom landscape these days. Listen to any five minutes of conversation among business people, and four minutes will be spent complaining about US West. (That's another column.)
Valor is now acquiring the old GST network in the process of becoming a powerhouse in the Southwest. What Billjohn Redmondendahl don't seem to understand is that Valor is the best and, at the moment, only alternative on the horizon. [End Excerpt]
Hart-Scott-Rodino Antitrust Improvements Act of 1976 [Hart-Scott-Rodino Improvements Act of 2000]
(April 16, 2001)-Novell and Cambridge Technology Partners Announce Early Termination of Hart-Scott-Rodino Waiting Period [Excerpt] PROVO, Utah and CAMBRIDGE, Mass.- -Novell, Inc. (NASDAQ: NOVL), the leading provider of Net services software, and Cambridge Technology Partners, Inc. (NASDAQ:CATP), a global eSolutions provider, announced today that early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, has been granted, effective April 30, 2001, relating to their previously announced proposed merger.
Editors Note: The Hart-Scott-Rodino Antitrust Improvements Act of 1976 requires that parties to certain mergers and acquisitions file notification with federal antitrust authorities and obtain clearance prior to consummation. The statute imposes a 30-day waiting period during which time the government reviews the competitive aspects of the transaction. The statute is intended to identify transactions involving competitive overlaps between the parties. Where such overlaps do not exist, the government typically grants early termination of the 30-day waiting period imposed by the statute. [End Excerpt]
(February 2001)CompTel Attendance Skyrockets in Orlando [Excerpt] CompTel also launched its Hall of Fame for the "Champions of Competition" with a private ceremony. Eleven people were inducted. They are:
William Baxter Jr., former Assistant Attorney General, antitrust division, U.S. Department of Justice (www.usdoj.gov);
Anne Bingaman, chairman and CEO, VALOR Telecom LLC (www.valortelecom.com);
Thomas Bliley, former U.S. Representative, R-Va.;
Bernard Ebbers, president and CEO, WorldCom Inc. (www.worldcom.com);
Judge Harold Greene, U.S. District Court, District of Columbia (www.dcd.uscourts.gov);
Sen. Ernest "Fritz" Hollings, D-S.C.;
Rep. Edward Markey, D-Mass.;
Bill McGowan, founder and CEO, MCI Communications Corp.;
Alan Peyser, co-founder and chairman, Simplexity.com Inc. (www.simplexity.com);
Sen. Ted Stevens, R-Alaska; and
Roy A. Wilkens, president and CEO, data network operations, McLeodUSA Inc. (www.mcleodusa.com).
Baxter, Greene and McGowan were honored posthumously.
On the second day, former Ohio Democratic Senator John Glenn wowed the crowd with a keynote speech that promoted public service and education. [End Excerpt]
20th ANNIVERSARY CELEBRATION & LUNCHEON (By ticket only) John Glenn's appearance sponsored by Global Crossing- Laser Show sponsored by El Paso Global Networks- Champagne Toast sponsored by EPIK Communications- Location: Grand Ballroom 7 --- Everyone should be in the Grand Ballroom by 12:15 pm to be seated in time for the "Laser Show Celebration." Admission is by ticket only and tickets will be collected at the door. Those who have purchased tickets should have received them with your registration badges. Keynote Speaker: Senator John Glenn In 1998, as John Glenn and his crew ascended into the Earth's Orbit among the full throttle of rockets and glowing engines, NASA proclaimed: "Lift off of Discovery with a crew of six Astronaut heroes and one American legend." John Glenn: American legend, Astronaut, United States Senator, distinguished Marine, Businessman, Husband, Father. Be sure you're on hand for an awesome opportunity to be inspired by this sterling American hero! [End]
Gosh, I wonder if John Glenn made any money with Globl Crossing.
(April 2001) Hart-Rudman Calls for Homeland Defense-- "Such was the principal conclusion of the US Commission on National Security/21st Century, better known as the Hart-Rudman Commission after co-chairmen Gary Hart, a former Democratic Senator from Colorado, and Warren Rudman, a former Republican Senator from New Hampshire. The panel was chartered in 1998 by Defense Secretary William S. Cohen. It has now reported to both Cohen and to President Bush's Pentagon leader, Donald H. Rumsfeld." (This was the Commission Gary Hart was getting security clearance for when William S. Cohen came down on the agent investigating Hart.)
And I am SO glad to see Senator Foghorn Leghorn's name on that list.
There's a political as well as a company bankruptcy going on here, and I'm not sure if the politicians have yet realized just how bad they're looking as this process goes forward.
Morning CW..just bumping along a most excellent thread..
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