- The Washington Times - Thursday, January 31, 2002

Congressional investigators refused to comment yesterday on why the Pentagon yanked a $400 million contract from Global Crossing, a telecommunications firm that declared bankruptcy this week, stranding its shareholders and employees in much the way the Enron collapse did.
The Defense Department canceled the contract in August, a month after it was awarded, after losing bidders filed protests.
"We think there's something smelly in this," Ray Bjorklund, vice president of a McLean market research firm, said at the time. "Something was wrong in the award, and they are going to try and make it right."
Congressional investigators have been ordered not to comment on the Global Crossing case, staffers said. The White House did not respond to questions about the Pentagon contract.
Global Crossing, headquartered in Beverly Hills, Calif., apparently began negotiating the contract during the Clinton administration. The company and its founder, Gary Winnick, have been major political donors bigger than Enron with a majority of those funds going to Democrats.
Terry McAuliffe, now chairman of the Democratic National Committee, turned a $100,000 investment in Global Crossing into an $18 million fortune during the late 1990s.
Mr. McAuliffe arranged for Mr. Winnick to play golf with President Clinton, and the Global Crossing founder contributed $1 million for the Clinton Presidential Library.
The story of Global Crossing closely parallels that of the high-profile bankruptcy of Texas-based energy giant Enron.
Like Enron, where audits by the Arthur Andersen firm failed to detect the company's perilous financial condition, misleading accounting methods also played a role in Global Crossing's downfall, the Los Angeles Times reported yesterday. Roy Olofson, the firm's former vice president of finance, warned Global Crossing's attorneys last August that the company's accounting practices used inflated revenue figures, the paper reported.
Also like Enron, Global Crossing's collapse has left thousands of laid-off workers without health benefits, severance pay and possibly with empty retirement accounts.
Some Republicans said yesterday Mr. McAuliffe's role in the Global Crossing debacle undermines the DNC chief's effort to tie the Enron collapse to the Bush administration.
"If all these stories about Global Crossing are true, it shows that Terry McAuliffe and the Democrats are holding to a far different standard from the one they are demanding from the Republicans," Virginia Republican Party Chairman Gary Thomson said.
"Like Enron, Global Crossing's business depended on government policy," said American Conservative Union Chairman David A. Keene. "This guy Winnick went to the Clinton administration, met with the president, gave to the Clinton library fund, but he got more for his money than Ken Lay and Enron got from Bush and the Republicans who so far as we know gave Enron nothing in return."
Global Crossing ranked 23rd among political donors in the 2000 election cycle, according to the Center for Responsive Politics (CRP), a nonpartisan watchdog group.
Global Crossing made more than $2.8 million in contributions about $1.5 million of that to Democrats in the 2000 campaign, compared with Enron's $2.4 million in contributions, according to the CRP. Enron gave 72 percent (about $1.7 million) of its contributions to Republicans.
In addition to corporate contributions 74 percent of which were in unregulated "soft money" donations Mr. Winnick and two other Global Crossing executives, former CEO Leo Hindery Jr., and co-Chairman Lowdrick Cook, gave a combined $1.3 million in campaign contributions in 2000, according to left-wing Mother Jones magazine.
"If we're going to compete, we've got to be heard," Mr. Cook told the magazine. "I don't apologize for access."
Meanwhile, the firm's bankruptcy has left former Global Crossing employees without access to company health benefits and severance pay, and possibly without 401(k) retirement funds.
On its Web site www.globalcrossing.com the company tells laid-off workers that it is "prevented by law from continuing severance payments," and that their health benefits are "discontinued as of Jan. 31, 2002."
"If your 401(k) includes investments in the Global Crossing Stock Fund," the Web site tells former employees, "you may lose all or substantially all of the value of that portion of your 401(k)."
While the company's employees look for new jobs, Mr. McAuliffe continues to defend his Global Crossing deal.
"I invested in many companies, and I'm happy this one worked," Mr. McAuliffe, explained to Fox News Channel's Shepard Smith. "This is capitalism. You invest in stock, it goes up, it goes down. You know, if you don't like capitalism, you don't like making money with stock, move to Cuba or China."

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