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Tuesday, June 25, 2002

Global Crossing confirms 'isolated' shredding of documents



By BRUCE MEYERSON
AP Business Writer

        NEW YORK — Documents were shredded at Global Crossing before and after its bankruptcy filing and disclosure of a federal accounting probe, but the company asserts that no evidence related to either case has been destroyed.

        The company, which operates a global fiber-optic communications network, confirmed the shredding incidents in a court filing that was accidentally submitted and unsealed late Friday — before a related settlement with one of Global Crossing's biggest shareholder groups was finalized.

        The settlement with two Ohio state employee pensions calls for Global Crossing to actively collect and safeguard all relevant documents held by individual defendants in the assorted legal cases involving the company.

        While the filing marks the first disclosure of shredding at Global Crossing, there's no sign of the criminal behavior seen in the Enron scandal, which led to this month's conviction of accounting firm Arthur Andersen for destroying evidence.

        However, the Ohio officials whose allegations prompted the shredding disclosure complained on Monday that comments over the weekend by an outside lawyer the company hired to investigate the charges contradicted assurances it made in negotiating the settlement.

        Those remarks, paraphrased in Monday's edition of The New York Times, said the attorney “was not entirely certain” that the destroyed documents are definitely unrelated to any of the current legal proceedings.

        In a statement Friday night, Global Crossing had said, “While we have found isolated incidences of document disposal in the ordinary course of business, none of the documents involve appear to have any relevance to pending litigation or governmental investigations.”

        Joe Case, director of public affairs for Ohio attorney general's office, said Monday that his office has now referred the matter to federal officials.

        “What concerns us is that you hear the company saying out of one side of its mouth that none of the documents have relevance to the pending investigations, and then you have council for the company saying they don't know what documents were destroyed,” said Case.

        Global Crossing, whose bankruptcy is the fourth largest in U.S. history, declined to comment Monday on the attorney's comments or to elaborate on the matter beyond Friday's court filing and statement.

        That filing also disputed the validity of an allegation based on testimony by employees at the company's New Jersey headquarters that a top financial executive's documents had been shredded.

        The company did confirm that documents belonging to its senior network engineer were discarded after Jan. 9, when he left the company, but before the Jan. 28 bankruptcy filing and the Feb. 8 disclosure of an accounting investigation by the Securities and Exchange Commission.

        The departure of the network engineer, S. Wallace Dawson Jr., was not related to either of those ensuing developments, the company said Monday.

        The other shredding incidents that Global Crossing confirmed occurred at company offices in Minneapolis, Montreal, Toronto, and Rochester, N.Y.

        “There's not going to be any further court action on these allegations,” company spokeswoman Becky Yeamans said Monday in an interview.

        Most of Global Crossing's $12.4 billion debt comes from building the world's most extensive fiber-optic system, a 100,000-mile network that connects more than 200 cities in 27 countries around the world.

        The Bermuda-based firm had hoped to dominate the market for high-speed data communications, and at one point, enthusiastic investors boosted the company's value to nearly $50 billion. But before long, a glut of network capacity combined with the collapse of the Internet bubble led to a steep drop in revenues.

        Since the bankruptcy filing, the company and its top executives have been besieged by charges of deceptive accounting.

       



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