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Non-Tech : The ENRON Scandal -- Ignore unavailable to you. Want to Upgrade?

To: Mephisto who wrote (2016)	1/31/2002 4:39:22 PM
From: Mephisto	Read Replies (1) \| Respond to of 5185

Embarrassment for Andersen after Global Crossing files for Chapter 11 By Andrew Gumbel in Los Angeles 29 January 2002 The accounting firm Andersen yesterday faced fresh embarrassment after Global Crossing, a Wall Street giant, filed for Chapter 11 bankruptcy protection. The global telecoms company's insolvency, the fourth-largest in US history, comes hot on the heels of the collapse of the energy group Enron. Both companies used the auditing services of Andersen. The Bermuda-based Global Crossing had been struggling for months following the collapse of the dot.com bubble, and its share price lost 96 per cent of its value over the past year. There is no suggestion of any impropriety by Andersen in this case, in contrast with the Enron collapse in which the accounting giant stood by inflated profit statements, despite misgivings about its client's off-balance sheet activities, and shredded documents once the extent of the company's hidden debts began to be made public. Global Crossing's bankruptcy filing had been widely expected, because of mounting debts arising from its construction of high-speed transcontinental network links. The news nevertheless came as unwelcome publicity for Andersen at a sensitive time. Enron's collapse is said to be the largest corporate failure in US history. Global Crossing, which owns Racal Telecom in Britain, said its worldwide operations – servicing 200 cities in 27 countries – would be unaffected by the reorganisation. The company is now relying on an injection of $750m (£532m) from two Asian business partners, Hutchison Whampoa of Hong Kong and Singapore Technologies Telemedia, which will receive a majority stake in the company in return. Although jobs and customers' services do not appear to be at risk – Racal employs 600 people in the UK – common equity and preferred shareholders will be left empty-handed. The company was forced to make the move after the collapse of its stock price over the past year. At the height of the telecoms boom, Global Crossing's founder Gary Winnick – a former colleague and confident of the disgraced financier Michael Milkin – boasted that he was the richest man in Los Angeles. The shares closed on Friday at just 51 cents, and yesterday trading was suspended as the Chapter 11 deal was announced. Slack demand and declining prices for high-speed network access, particularly on undersea routes, was largely to blame for the slump in Global Crossing's fortunes. The company posted a third-quarter loss of $3.4bn, cut capital spending, agreed to sell its trading systems units to raise cash, and cut 3,200 jobs. Standard & Poor's in December downgraded Global Crossing's credit ratings to junk status. The company's Asian arm said yesterday it had failed to meet listing standards for the New York Stock Exchange and hired the consultants Lazard Freres to help weigh financing and restructuring options. Global Crossing in December rejected its Asian unit's $400m loan request under a credit facility set up last year. It did not immediately appear that the bankruptcy, filed in the federal court in New York in conjunction with the Supreme Court in Bermuda, involved any suspicious activities by Andersen. Nevertheless, in accordance with relatively recent US regulatory procedures that have come in for blistering criticism in recent days, Andersen acted as both auditor and consultant for Global Crossing, as it did for Enron. According to official filings, Andersen billed Global Crossing $2.3m in auditing fees in 2000, and almost $12m for consulting and other services. news.independent.co.uk

To: Mephisto who wrote (2016)	1/31/2002 4:45:41 PM
From: Bill	Read Replies (1) \| Respond to of 5185

At least Bush41 earned his money. On the other hand, for DNC chief Terry McAuliffe to have turned $100k of GX into $18 million, he would have had to purchase the stock for $0.30 or less per share. He admits to buying his shares in early 1998. GX went public in August 1998 at $12 per share. The highest it ever achieved was in the $60s. Bottom line. He was invited to buy into a "Friends and Family" pre-IPO round for less than 30 cents/share and sold his shares after it rose on the public markets. Anyone who looks up the stock history and does the arithmetic can figure out he lied about buying it "on the open market". He's not the great investor he claims to be, he's just a political insider who was offered a lucrative opportunity as a quid pro quo. FWIW, IRS regulations require him to report the difference between his price and the fair market value of the securities as income because of the proximity of his transaction to the IPO. Wonder if he did...