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.
Hmmmmmmmmmmmmmm.....Yes it does.
But FCC chairman Bill Kennard should take note.
It's positively un-American to allow a local phone company that's still a monopoly to merge with a partner that can't successfully be sued in U.S. court. [End Excerpt]
Milken has a strong chance of getting pardoned because his application is backed by one of Clinton's original benefactors, California supermarket mogul and Democratic contributor Ron Burkle, White House officials told the Times.
Clinton Considering Milken Pardon
more:
Gary Winnick
Investor, founder and chairman of Global Crossing Ltd. Said to be Los Angeles' richest person. Not particularly active in political circles. Worked for Michael Milken at Drexel Burnham Lambert. Investor in Playa Vista. No party affiliation. Lives in Los Angeles.
Michael Milken
Investor, philanthropist. Considered a financial genius, pleaded guilty to securities fraud. Friend of Riordan, mentor to Winnick. Helped finance Burkle's supermarket acquisitions. Lives in Encino
Ronald Burkle
Billionaire, supermarket magnate, investor. Friend of Riordan. Major contributor to Gov. Gray Davis. Convention host-committee leader, would-be football team co-owner. Republican. Lives in Beverly Hills.
L.A.'s Inner Circle Is Mostly Rich, Enormously Powerful
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