BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific Arabic Spanish Russian Chinese Welsh

 You are in:  Business
Front Page 
UK Politics 
Market Data 
Your Money 
Business Basics 
Talking Point 
In Depth 

Commonwealth Games 2002

BBC Sport

BBC Weather

Wednesday, 13 March, 2002, 07:20 GMT
Global Crossing accounts under fire
Global Crossing logo graphics
Global Crossing hopes for a rescue takeover
Global Crossing, the bankrupt telecoms group, has become the latest firm to attract an investigation into its accounting practices from the US Congress.

Global Crossing has been asked to hand over documents to a Congressional committee which is exploring similarities with the Enron affair.

This is a huge bankruptcy and its gotten very little Congressional attention

Congressional investigator
The demand came from the House Energy and Commerce Committee, who's chairman Billy Tauzin has played a leading role in subpoenaing top executives of Enron and its auditors.

Global Crossing also faces a Congressional hearing from another committee on 21 March.

Congress gets tough

Mr Tauzin's committee has made explicit its concern that Global Crossing's accounting practices may have served to conceal its financial weakness from investors.

In a letter to the telecoms firm's chief executive John Legere, it said Global Crossing "may have engaged in similar accounting practices [to Enron] that had the effect of increasing Global Crossing's revenues without increasing its cash flow".

"Further allegations surround omission of material disclosures that would be necessary for investors to understand Global Crossing's true financial condition", the letter said.

High-speed failure

Global Crossing said it was reviewing the letter and did not wish to comment at this stage.

Global Crossing grew rapidly during the 1990s by building a network of high-speed fibre optic cables, linking more than 200 cities in 27 countries.

It filed for bankruptcy protection on 26 January with debts of $12.4bn.

The firm already faces two inquiries, one by the US Securities and Exchange Commission and the second from the Federal Bureau of Investigation.

The House Financial Services Committee will hold a hearing on 21 March into Global Crossing's collapse.

"This is a huge bankruptcy and its gotten very little Congressional attention", said an aide to Financial Services Committee chairman Mike Oxley.

The BBC's Mark Gregory
"They've been particular question marks raised against Global Crossing"
See also:

12 Mar 02 | Business
Watchdog scrutinises Worldcom
04 Mar 02 | Business
New suitor for Global Crossing?
27 Feb 02 | Business
Global Crossing eyes bigger losses
22 Feb 02 | Business
Boom-time takeovers 'coming unstuck'
13 Feb 02 | Business
Accounting fears hit telecom shares
11 Feb 02 | Business
Echoes of Enron in telecoms collapse
08 Feb 02 | Business
FBI launches Global Crossing probe
08 Feb 02 | Business
Markets suffer from 'Enronitis'
07 Feb 02 | Business
Global Crossing to rise from ashes
28 Jan 02 | Business
Global Crossing files for bankruptcy
14 Jan 02 | Business
Audit giants called to account
14 Dec 01 | Business
Global Crossing bankruptcy fears
Internet links:

The BBC is not responsible for the content of external internet sites

Links to more Business stories are at the foot of the page.

E-mail this story to a friend

Links to more Business stories