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Global Probe Widened To Include Qwest Link

Sep 13, 2002 | USA Today

Congressional investigators on Thursday expanded their probe of Global Crossing to include possible accounting irregularities at Qwest Communications.

The House Energy and Commerce Committee said it issued subpoenas for Global Chairman Gary Winnick and former general counsel Jim Gorton to appear at a hearing Sept. 24.

The panel also subpoenaed former Qwest executive Greg Casey. Investigators believe he has knowledge of deals that might have let Qwest inflate revenue. Casey could not be reached.

It also plans to talk to former Qwest CEO Joe Nacchio, ousted in June amid accounting woes and a sagging stock price, and Robin Szeliga, former chief financial officer and still at Qwest.

The subpoenas are the latest attempt by lawmakers to uncover details of alleged accounting mischief that have rocked telecoms.

Global, a high-speed network owner that filed for bankruptcy protection in January, also faces accounting probes by the Securities and Exchange Commission.

The panel has tried for a month to interview Winnick. Committee spokesman Ken Johnson says he won't be surprised if Winnick refuses to testify by citing his Fifth Amendment right. Winnick's attorney said he's done nothing improper and will respond ''in an appropriate manner.''

Qwest, a phone company, also faces multiple federal accounting probes. It is selling assets to avoid a bankruptcy filing and plans to restate earnings after disclosing it improperly booked $1.2 billion in network sales back to 1999.

Some of those deals involved Global, which planned to enter into a ''gentlemen's agreement'' to learn how one deal could be structured so Qwest and Global could benefit financially, according to a June 2001 internal Global e-mail released by investigators Thursday.

Panel member Jim Greenwood, R-Pa., said investigators are concerned the deals ''were merely sham transactions.''

Qwest says it continues to cooperate with the committee.

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