Former Global Crossing chairman Gary Winnick will appear before a Congressional committee today. It won't be pretty. CNN predicted he will plead the Fifth. Most other outlets expected Winnick to testify.
Impetus for all the coverage was yesterday's release by the House Energy and Commerce Committee of memos indicating that Winnick was in the thick of the company's suspect dealmaking. A committee spokesman said, "If he tries to portray himself as an out-of-the-loop ceremonial chairman, we intend to remind him that he is under oath."
The memo that got most of the attention was one from then-CEO Leo Hindery to Winnick in June 2001. Hindery warned in colorful language that the company was heading for a fall. The Financial Times, Washington Post, and New York Times all ran a quote from the memo comparing telcos to salmon. Hindery urged Winnick to unload the company -- "without looking like we are shaking our bootie all over the world," quoted the two Timeses -- and resigned shortly thereafter.
One little detail from the memos is guaranteed to make Winnick's time under the television lights even more uncomfortable. Among the companies he used his influence with, to help close deals, was Enron. All the reports mentioned Enron, but the New York Times seemed to be alone in noting that Global Crossing never completed a deal with the fallen energy giant.
The Wall Street Journal looked beyond the obviously embarrassing details of the memos to point out that, despite such evidence, the gun might not be smoking yet. "Prosecutors would still need to prove that he knew the transactions were improper and used them mainly as a way of enriching himself by boosting the company's stock price artificially," the Journal reporters wrote. The AP noted that all of the memos were dated after Winnick's last sale of Global Crossing stock, $123 million in May 2001.
Despite his $734 million in stock profits, Gary Winnick was not among the five telco executives being sued by New York attorney general Eliot Spitzer to return their ill-gotten gains. Is Spitzer betting, with the Journal, that Winnick might walk away clean? - Keith Dawson
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