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The House Energy and Commerce Committee on March 12 asked Global Crossings Ltd. to hand over financial documents and records by March 26. In a letter to Global Crossing CEO John Legere, Committee Chairman Billy Tauzin, R-La., cited news reports that the bankrupt telecommunications company may have engaged in the same kind of accounting practices that sank Enron Corp. and that “had the effect of increasing Global Crossing’s revenues without increasing its cash flow.” Global Crossing acknowledged it had received a congressional request for its financial records and documents. In a statement, Legere said the company is reviewing the request and intends to provide lawmakers with any necessary information. Rep. James Greenwood, R-Pa., chairman of the oversight and investigations subcommittee, joined Tauzin in the call for the telecom’s documents. The Committee requested information on Global Crossing’s loans to executives and sales of securities to company officers; a list of law firms, accounting firms, investment bankers and outside consultants that provided advice on certain service contracts or swaps; and all records “relating to any concerns or issues regarding accounting and financial reporting” from 1998 to the present, among other things. House Energy spokesman Ken Johnson said the Committee is particularly concerned that Enron auditor Andersen also is Global Crossing’s accountant. “Clearly there are differences between Global Crossing and Enron, but we’re going to look into whether there was any clever accounting hocus-pocus going on at the telecom company similar to Enron’s accounting problems,” he said. Tauzin is seeking all management correspondences between Global Crossing and Andersen, including all documents relating to audits or reviews of financial statements dating to 1998. He also wants a list of all non-audit consulting services Andersen performed for the company. Among the House panel’s other concerns are that Global Crossing engaged in “roundtripping,” effectively selling a product back and forth with a customer, and fraudulently used capacity swaps on its network to artificially inflate revenues. Bermuda-based Global Crossing, which declared bankruptcy Jan. 28, also is under investigation by the Securities and Exchange Commission. The company’s worldwide broadband network, which stretches across 27 countries, is valued at about $12 billion. Rex G. Mitchell, an analyst at BB&T Capital Markets in Richmond, Va., said the Committee’s request could be a prelude to formal congressional hearings on Global Crossing’s bankruptcy. Copyright (c)2002 TDD, LLC. All rights reserved.

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