- The Washington Times - Wednesday, July 31, 2002

Leaders of three big, troubled telecommunications companies and a top government regulator told Congress yesterday they didn't expect major phone or Internet disruptions as a result of the companies' financial difficulties.
They faced pointed questioning at a hearing from senators who decried excesses of telecommunications executives at a time when thousands of employees were losing their jobs. Senators wanted to know why the companies had not gone after the former executives to recover potentially ill-gotten gains.
Sen. John McCain, Arizona Republican, noted the millions in stock options supposed to be tied to company performance given to executives of telecommunications companies who cashed them in right before the companies collapsed.
"Why didn't you immediately ask for that money back?" he asked company officials testifying before the Senate Commerce Committee.
The telecommunications executives responded that until the accusations against the former executives are shown to be valid by current federal investigations, the companies are unable to move against them.
Earlier, Federal Communications Commission Chairman Michael Powell assured the panel that services will continue without disruption.
Mr. McCain cited Global Crossing's founder and chairman, Gary Winnick, cashing out $734 million in stock before the company collapsed.
Executives of Qwest Communications, another of the three companies being questioned by the committee, made $500 million selling company stock from 1999 to 2001 while they issued profit figures that the company now says were inflated and based on improper accounting, according to research reports made public Monday.
"Protecting consumers from service disruption is our first and highest priority," Mr. Powell testified. Despite the turmoil, he said, "I remain confident that we are not facing a crisis in the provision of services stemming from WorldCom's bankruptcy."
Rooting out corporate fraud is also a top priority of the government, Mr. Powell said.
Top executives of WorldCom Inc., which filed the biggest corporate bankruptcy in history on July 21; Global Crossing Ltd., also bankrupt; and Qwest Communications International Inc., which acknowledged major accounting errors Sunday, also testified.
"We are intensely focused on ensuring that all of our customers consumer, business and government continue to receive the highest-quality service without disruption," WorldCom President and Chief Executive Officer John Sidgmore testified.
The other executives Global Crossing CEO John Legere and Qwest President Afshin Mohebbi gave similar assurances.
The Justice Department and the Securities and Exchange Commission which already has filed civil fraud charges against WorldCom are investigating accounting irregularities at the telecommunications titan whose interests include No. 2 long-distance telephone company MCI. WorldCom has disclosed that it disguised nearly $4 billion in expenses, thereby inflating its earnings.
Global Crossing, which operates a worldwide fiber-optics network, has acknowledged that documents were shredded before and after its January bankruptcy filing and the disclosure of a federal accounting investigation in February.
The SEC is investigating Qwest's swaps of fiber-optic capacity, and the federal General Services Administration is reviewing government contracts with the Denver-based provider of regional phone service. The Justice Department also is investigating the company.
The committee wants to know whether the three companies will be able to maintain essential operations. WorldCom, which has laid off 17,000 of its 80,000 workers, is the largest operator of the equipment that makes up the Internet's backbone.

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