Congressional investigators are putting a blowtorch under the scrutiny of fallen telecomm giants Qwest and Global Crossing. Public hearings are scheduled for next Tuesday. Press accounts yesterday and today describe the posturing of Global Crossing chairman Gary Winnick to appear cooperative with the investigations. Yesterday the AP reported that a Qwest spokesman said the company had turned over 250,000 pages of documents to investigators. But the AP story noted complaints from the subcommittee that Qwest had refused to produce findings from an internal investigation into one of the questionable deals.
At issue are so-called "swaps" of telecom capacity. The Washington Post put these transactions into plain English: The companies "traded network capacity of equal value but declared hundreds of millions of dollars in revenue." Qwest's deals with FLAG Telecom Holdings and Cable & Wireless are among those under scrutiny.
Several outlets ran a sound bite from the chair of the House Commerce Committee's Oversight and Investigations Committee: "I'm stunned by what we've learned so far," Rep. Jim Greenwood said. "Companies seem to have had cultures that demand making Wall Street numbers at all costs, even if it meant entering into sham transactions."
The Washington Post's story today detailed the attempts of Global Crossing's Winnick to avoid appearing in the witness chair next week. The story left little doubt that the man will have to appear. "Winnick is no position to try to dictate terms of his appearance," the Post quoted a subcommittee spokesman. "He can cooperate or take the Fifth." And if you were wondering whether the telecom mess could get any worse, WorldCom just added $2 billion to its accounting "flaws." That brings it up to $9 billion, for those of you keeping count at home.- Keith Dawson
Congressional investigators say Global Crossing, Qwest withholding information (AP)
CEO Seeks A Deal To Avoid Subpoena
Former Qwest Finance Chief Helps House Telecom Probe
Congress Closing In On Qwest
New WorldCom Report to SEC Will Acknowledge More Flaws
(Paid subscription required.)