Global Crossing Tossed More Cash Around Town Than Enron
FEBRUARY 11, 2002
WASHINGTON OUTLOOK
If Enron (ENE ) has become Exhibit A for campaign-finance reform, Global
Crossing's (GX ) adventures in Washington make for an even more
audacious--and cautionary--tale of influence-buying. While Enron spent
years cultivating lawmakers and party chieftains, the telecom upstart shot
to the top ranks of political donors almost overnight. Global Crossing,
which filed for bankruptcy on Jan. 28, became a lobbying powerhouse just as
fast, as it sought help from lawmakers and regulators to expand its
international cable network.
Global Crossing, founded in 1997 by Gary Winnick, a former junk-bond
salesman and associate of Michael Milken, contributed $2.9 million to
candidates and political parties during the 2000 election, up from just
$34,000 in 1998, according to the nonpartisan Center for Responsive Politics
(CRP). That made Global Crossing, based in Beverly Hills and Bermuda, the
fifth-highest donor among communications companies--ahead of WorldCom and
BellSouth. Global even topped Enron's $2.4 million in such donations for
2000. "They came out of nowhere and papered the town with money," says Larry
Makinson, executive director of CRP.
The then-high-flying telecom was an evenhanded giver: Of its total $3.6
million in contributions since 1998, Republicans pocketed 53%, Democrats got
47%. Top recipients in Congress were key figures in telecom regulation:
Senator John McCain (R-Ariz.) got $31,000, and Representative Edward J.
Markey (D-Mass.), $12,500. In 1999, on behalf of Global Crossing, McCain
asked the Federal Communications Commission to encourage the development of
undersea telecom cables.
The high point of Global Crossing's nonideological courtship was the summer
of 2000. The company dished out $250,000 to each party's convention,
hosted lavish parties for pols such as Senate Majority Leader Tom Daschle
(D-S.D.), and provided all of the Web hosting and connections for the GOP's
confab.
Winnick collected powerful friends the way some moguls collect art. The
company's onetime president, Leo Hindery Jr., is a top Democratic
fund-raiser. Its vice-chairman, Lodwrick Cook, a former ARCO exec, is a
prominent GOP giver and friend of ex-President George Bush. In 1998, Bush
pere made a speech in Tokyo on behalf of Global Crossing and pocketed shares
of stock in lieu of $80,000 for his fee. His holdings were worth millions a
year later, when he filed papers to sell some shares.
In 1999, Global Crossing was planning to lay a transpacific fiber-optic
cable and faced competition from a powerful consortium of companies,
including AT&T (T ) and WorldCom (WCOM ). Winnick hired Anne Bingaman,
former Justice Dept. antitrust chief from 1993-96, and Greg Simon, a former
domestic policy adviser to Vice-President Al Gore, to lobby the Federal
Communications Commission. Global Crossing paid Bingaman, now chairman of
Valor Communications in Irving, Tex., an unprecedented $2.5 million for six
months' work. The company failed to block the rival group from getting a
license but did force it to modify its proposal in ways so it couldn't
dominate the market.
Global Crossing wasn't the only brash New Economy company to cut a swath in
Washington. But it raised eyebrows because its largesse was so out of
proportion to its needs--mostly routine regulatory approvals rather than
high-profile legislation. "With Enron, you can list lots of examples of
doors that were opened to them," says CRP analyst Holly Bailey. "With Global
Crossing, it's hard to fill a page." For Winnick, who was in a hurry to
build a global telecom system, the price may have been right. He's now
learning, though, as Enron has, that paying the pols won't keep the debt
collectors away.
By Amy Borrus
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