News Summary
Gary Winnick's $25 million pledge to Global Crossing Ltd.'s former employees overshadowed the rest of his Congressional testimony last week, and some experts believe the gesture may help Winnick avert some culpability in the bankrupt telecom firm's downfall.
But Winnick -- who still chairs the firm that's said to be under investigation by the Securities and Exchange Commission and the U.S. Department of Justice -- has a ways to go before his legal problems end.
Winnick's pledge temporarily stunned lawmakers on a subcommittee of the House Committee on Energy and Commerce, which has been holding hearings on capacity swaps between Global Crossing and Qwest Communications International Inc. and others. The pledge also garnered the bulk of the next-day press coverage.
Winnick's answers to substantive questions about whether he knew of the company's flagging financial performance when he sold $123 million of stock in May 2001 drew less attention, but in the end, they may turn out to be more telling.
"(Committee Chairman W.J. "Billy") Tauzin did not find his story entirely credible," said Ken Johnson, the Energy and Commerce committee's spokesman. "We believe in our heart of hearts that he knew a lot more than what he was willing to admit under oath."
The subcommittee, which has heard from Roy Olofson, the former Global Crossing financial executive whose allegations of revenue-boosting transactions are at the heart of the probes, plans to wrap up its activities by the end of the year. After follow-up interviews and the gathering of additional documents, the committee will prepare a "summary of findings" that it will pass on to the SEC and the Justice Department, Johnson said.
"We'd love to be able to deliver Mr. Winnick a Christmas present," Johnson said.
Capitalizing on pledge
Winnick's handlers said the $25 million pledge, which will be given to the administrators of Global Crossing's employee retirement fund, wasn't planned. A spokesman for Winnick said he has directed his attorneys to work out details to fulfill the pledge "as soon as possible." Winnick isn't thinking about how the pledge will affect his legal plight, the spokesman said.
"I view (the pledge) to be pretty much of a publicity stunt," said Paul Murphy. He represents Olofson, and also is involved in Global Crossing retirement fund and securities litigation.
"Where's he been for the past year?" Murphy said. "He's done nothing to settle these cases."
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