Wes Vernon, NewsMax.com
Friday, March 22, 2002

However, the same lawmakers deftly avoided addressing the political dirty laundry characterizing much of the scandal that has plagued the company.

Subcommittee members accused the company of "unfettered greed,” of lacking "character,” of impropriety and of "using fancy names” to cover the fact that its employees and shareholders got the shaft prior to, in the words of Subcommittee Chairwoman Sue Kelly, R-N.Y., "the fourth-largest bankruptcy in history.”

But neither the panel nor the Global Crossing executives summoned to testify said so much as one word about the political angle in all this.

After the testimony, NewsMax.com wanted to know why the company’s chairman, Gary Winnick himself, did not appear before the panel. Global Crossing CEO John Legere responded that because he was in charge of day-to-day operations, he was the one designated to testify before the congressmen.

"What they wanted today was the people that run the company,” he told NewsMax. "I run the company. I’m responsible for the operations of this business every day. I think I’m the right person to speak for the company.”

"Do you speak for him”? NewsMax wanted to know.

"I speak for the company,” he answered. "Gary is the chairman of the board, but as chief executive officer, I’m 100 percent accountable for running this company. So I think that’s the person that should be here.”

That, of course, lets Winnick off the hook from answering any questions about his $1 million gift to the Clinton presidential library after being introduced to the then-president by close Clinton friend Terry McAuliffe, now Democrat national chairman.

It also avoids the touchy question of McAuliffe’s reaping a reported $18 million profit on a $100,000 investment in Global Crossing. Even Hillary Clinton’s cattle futures bonanza pales in comparison with that.

So Typical

A reluctance to get into the political angle apparently is shared by subcommittee Chairwoman Kelly. When NewsMax at the end of the hearing started to ask the New York Republican about the McAuliffe scandal, an aide who resembled a bar bouncer whisked her away, promising to bring the congresswoman back for questions "in just a minute.” The impromptu appointment was not kept. As of the time this story was filed, Kelly’s office had not returned repeated calls asking for comment.

This is the sort of thing that prompts cynics to believe that all too often there is a bipartisan inclination on Capitol Hill for lawmakers to cover each other’s tracks.

Perhaps some Republicans are gun-shy because the first President Bush took Global Crossing stock in lieu of a speaking fee. But that was a pittance compared to McAuliffe’s profiteering, which Judicial Watch says raises questions of "insider trading,” and besides Bush had been an ex-president for four years.

Inside the hearing room, Global Crossing came under sharp criticism from Kelly and the chairman of the parent Financial Services Committee, Rep. Michael G. Oxley, R-Ohio. But the real fireworks came from Democrat lawmakers whose constituents include thousands who were laid off by the company and who did not get their severance pay, even as the top brass walked off with about $15 million in "golden parachute" money while the company’s stock was tanking.

'Unfettered Greed'

"Absolute unfettered greed,” charged Rep. Michael Capuano, D-Mass., who appeared to be so angry that he declined to give an opening statement as the hearings began because, he said, anything he would have to say would be unprintable.

Later, he said he had a raft of questions to ask Global Crossing executives. He noted that they had dodged questions during the morning and that he could see he wasn’t going to get any straight answers. He would try to get written responses.

Rep. Stephanie Tubbs-Jones, D-Ohio, went straight for the jugular.

"What is your salary?” she demanded of Global boss Legere.

When the CEO hemmed and hawed, the congresswoman demanded an answer.

When he finally said his annual pay was $1.1 million, she asked what bonus he had received. When he answered $3.5 million, the congresswoman cited a worker in her district who lost health benefits and received no severance. She asked how many unfortunate workers could have been helped for that kind of money.

"I don’t do math in public,” Legere finally replied.

"I asked you for a straight answer, and you give me a quirk,” said the angry lawmaker. "I demand you apologize.”

The congresswoman told NewsMax.com after the hearing that Legere also had a $10 million loan forgiven, a fact that time constraints had prevented her from discussing in the committee session.

Several suggestions were made that additional regulation would deal with problems spotlighted in the Global Crossing and Enron scandals. But Tubbs-Jones told NewsMax.com, "The reality is no matter how much regulation we do as a Congress, people have to have better character. They have to have a better sense of ethics as to what is right whether it’s legal, whether it’s right, whether it’s moral.”

The Ohioan added, "In my opinion, it’s immoral for anyone to be treated in the fashion [of her out-of-work constituents] and for this guy to get a $3.5 million dollar bonus, and a $10 million dollar loan forgiven!”

Rep. Louise Slaughter, D-N.Y., said there was "real pain” in her district where about 13,000 Global Crossing workers had been thrown out of work. She accused Global Crossing of "trying to fool the public.”

Legere and chief financial officer Dan Cohrs told the skeptical lawmakers, "Global Crossing is no Enron." According to a statement they released, "Some may see superficial similarities between Enron and Global Crossing." They admitted that, like Enron, Global Crossing had: experienced a collapse in its stock price, had executive stock sales faced questions about accounting procedures and employee pension plans, and shared the auditor Arthur Andersen.

But they claimed their company's problems resulted from aggressive expansion, overcapacity in the telecommunications network market and the national economic downturn, not business improprieties.

Inflated Stock Price

However, Rep. John LaFalce of New York, the top Democrat on the committee, said, "Global Crossing may well have succeeded in keeping its share price inflated much longer than was justified based on its true value."

Several Washington newshounds questioned Legere outside the hearing room, though it was too early to determine if the mainstream media would give this scandal the overwhelming coverage accorded to Enron.

Even the usually reliable Wall Street Journal on March 4 fuzzed up the McAuliffe angle by mentioning in paragraph 2 that Global Crossing also had a former Republican senator on its board. Not until paragraph 28 does the story identify the former Republican senator as William Cohen, who more recently, for four years had been the Clinton administration’s defense secretary, thus offering valuable connections to the telecom giant all throughout the defense establishment.

But this is only the beginning of Global Crossing’s troubles. Lawmakers with the House Commerce and House Government Reform Committees are also busy looking into this financial mess. Whether they have the courage to explore the suspicious political ties is another matter.

Read more on this subject in related Hot Topics:
DNC

Clinton Scandals

Enron

Global Crossing Scandal

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