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To: Bill who wrote (9517)	2/1/2002 12:12:47 PM
From: sandintoes	Respond to of 17683

The news is out there. The problem is, it is buried on the the last page...the reporters don't want the news of Global Crossing out, with it's cast of known characters. Global Crossing Exec Warns Company By SIMON AVERY, AP Business Writer LOS ANGELES (AP) - A vice president of Global Crossing, the fiber optics firm that became one of the nation's largest bankruptcy cases, warned the company about misleading accounting techniques before he was laid off. Roy Olofson, vice president of finance at the time, sent a letter to the firm's top lawyer in August, advising him that the company was inflating revenue and cash flow to enhance the appearance of results. Global Crossing, which spent billions of dollars over the last five years building a global fiber optics network, filed for bankruptcy protection on Monday. The Beverly Hills-based firm listed $12.3 billion of debt and $22.4 billion of assets - one of the largest bankruptcy cases in U.S. history. The company confirmed Wednesday that Olofson made the allegations three months before he was laid off, but said they were baseless and not connected to his leaving the company. ``This is a situation we are very familiar with, which has been thoroughly investigated both internally and externally and is without merit,'' said Global Crossing spokesman Dan Coulter. Olofson asked then-general counsel Jim Gorton to exclude chief financial officer Dan Cohrs and Olofson's own boss, Joe Perrone, from any investigation. Gorton left the company just days after receiving Olofson's letter and Olofson was laid off three months later. Global Crossing also said Olofson threatened to make his allegations public if the company didn't pay him to keep quiet. Olofson's lawyer, Paul Murphy, denied his client attempted to blackmail the company. Olofson warned his superiors for months about aggressive accounting practices, Murphy said. ``The company would not give him assurances things would change, and he was not willing to work for them under those conditions,'' Murphy said. Olofson will file a wrongful dismissal suit against Global Crossing shortly, Murphy added. Craig Shere, a telecommunications analyst for Standard & Poor's in New York, said Global Crossing's accounting practices were particularly aggressive, even in an industry known for pushing accounting boundaries. In one instance, the company bought some $300 million of network space from its own customers. That swap led Shere to believe one of two things: either there was insufficient demand for capacity or the demand was there, but customers couldn't pay for it. Shere compared the practice to failed Internet companies booking millions of dollars of revenues for running each other's ads. ``It left me kind of queasy,'' he said. Other debt rating firms agreed that Global Crossing used aggressive accounting practices. Egan-Jones Ratings Co., a Wynnewood, Pa., firm that provides credit ratings and research for institutional investors, downgraded Global Crossing debt to junk status in late September. ``The company had a need to show revenues and show a profit as early as possible and therefore had every incentive to push the envelope as far the accounting practices are concerned,'' said Sean Egan, managing director. But Randolph Beatty, dean of accounting at the University of California, Los Angeles' Marshall School of Business, warned against developing ``hindsight bias'' toward Global Crossing. He said asset swaps between a company and its customers can be perfectly legitimate in many cases.