If federal enforcement agencies are shoring up their information-sharing, as they say, no one apparently extended it to Congress.
The U.S. House of Representatives fell back on news reports for its suspicion that something might be up at Global Crossing, and yesterday took decisive action, demanding the bankrupt telecom turn over a "significant number of financial records and internal documents."
Global Crossing has been the subject of separate investigations by the U.S. Securities and Exchange Commission and the Federal Bureau of Investigation since shortly after its Jan. 28 bankruptcy filing.
In an open letter to Global Crossing CEO John Legere, House Energy and Commerce Committee members noted their recent review of Enron Corp.'s accounting standards and its auditor, Arthur Andersen, and repeatedly cited news reports to support their suspicion something similar was up at Global.
"News reports have indicated that Global Crossing Ltd., for whom Andersen was also the auditor, may have engaged in similar accounting practices that had the effect of increasing Global Crossing's revenue without increasing its cash flow," the letter says. It also cites news accounts for allegations that the company engaged in deals "without an apparent legitimate business purpose, which had the impact, however, of substantially enhancing revenue." The letter also cites news accounts that Global Crossing omitted information that investors need to understand its true financial condition.
The committee gave Global until March 26 to come clean with the documents, including records on capacity swaps and how each was accounted for, definitions of "roundtripping" as it applies to the swaps, internal reports on the swaps, a letter from a former financial executive, names of those who reviewed the alleged improprieties, all bonuses and other payouts to company officials, information on a $400 million Department of Defense contract, and minutes from past meetings.
The letter and lengthy list was signed by committee chair Bill Tauzin (R-La.) and Rep. John Dingell (D-Mich.), as well as House Oversight and Investigations Subcommittee Chair James Greenwood (R-Pa.) and Rep. Peter Deutsch (D-Fla.).
Global Crossing says in a statement it is reviewing the request and intends to provide the documents.