- The Washington Times - Wednesday, March 13, 2002

At an important bankruptcy hearing in New York today, Global Crossing executives will seek approval from a judge to sell the company to two Asian telecoms, one of which has close ties to the Chinese government. Permission should be denied. Given the slew of unanswered questions about the collapse of Global Crossing, which is being investigated by the FBI and the Securities and Exchange Commission, now is not the time to approve a hastily arranged transaction that raises serious national security questions.

After crushing shareholders, Co-Chairman Gary Winnick and Chief Executive John Legere now seek to stiff creditors. Both men have already profited handsomely some might say obscenely from a company that has never made a profit. Mr. Winnick, for example, sold stock worth $734 million before the firm collapsed. When Mr. Legere, who was chief executive of the separately listed subsidiary Asia Global Crossing (which is also considering filing for bankruptcy), added the CEO duties of Global Crossing last October, his package included forgiveness of a $10 million balance still due from a $15 million interest-free loan extended to him by Asia Global Crossing.

Altogether, the market capitalization of Global Crossing has plunged from a peak of $57 billion. As Investor's Business Daily has reported, Global Crossing insiders sold more than 6 million shares during the summer of 2000 when the stock price hovered around $30. In the wake of the initial deflation of the Internet bubble, as the company was attempting to raise additional funds with a secondary stock offering, Mr. Winnick sold 8.1 million shares, yielding him more than a quarter of a billion dollars, according to the New York Times.

Another early shareholder, Terry McAuliffe, who is now chairman of the Democratic National Committee (DNC), realized a substantial profit from Global Crossing. Mr. McAuliffe insists it is less than the widely reported $18 million, but how much less is not known because he refuses to follow the advice of Democratic strategist James Carville, who recommended more than a month ago that the DNC chairman "ought to … release his trading records."

Today, two Asian telecoms seek to purchase about 80 percent of Global Crossing for $750 million. They are government-owned Singapore Technologies Telemedia and Hutchison Whampoa, the latter of which is controlled by Hong Kong billionaire Li Ka-shing, who, according to Rep. Dana Rohrabacher, is a member of inner circle of the government of communist China. It makes no sense to place control of the firm's strategic undersea cable network in the hands of the Chinese Communist Party. After all, another Chinese telecom has recently been caught building a military-related fiber-optic cable network for Saddam Hussein in Iraq.

Many creditors, who are being offered a 20 percent interest in the reorganized company and a mere $300 million for the $12.4 billion in debt they hold, believe they would do better liquidating Global Crossing. Given all the unanswered questions and the ongoing investigations, transferring Global Crossing assets at worse-than-firesale prices to a Chinese-controlled firm is the worst option of all.


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