US law enforcement agencies have asked the Federal Communications
Commission (FCC) for more time to examine the implications of the
$250m (£157.6m) bankruptcy rescue of Global Crossing, while a major
labour organisation is pressing for the deal to be scrapped.
As the deal stands, Singapore Technologies Telemedia (STT) and Hong
Kong-based Hutchison Telecommunications have agreed to takes a
61.5% share in Global Crossing for $250m as part of Global
Crossing's reorganisation under Chapter 11 of the US bankruptcy
code.
The FCC is the US government body that will decide whether the deal
can go ahead, assuming the company's creditors agree to the
deal.
But the Federal Bureau of Investigation (FBI), the Department of
Defence, and the Department of Justice are asking for more time to
assess the deal from two standpoints - possible financial
wrongdoing at Global Crossing, and the security implications of
selling a large chunk of US fibre assets to foreign
companies.
In a filing late last month, the three agencies requested the FCC
to "defer dispositive actions pending notification that the
national security, law enforcement and public safety issues now
under review by the executive agencies have or have not been
resolved."
The 730,000-strong Communications Workers of America labour union
backed this call in a later filing with the FCC, saying that Global
Crossing needed to prove that the reorganisation is in the public
interest and this "is neither demonstrable nor verifiable".
US public opinion also seems to be against the deal, judging by
individual submissions to the FCC, focusing both on the legal and
security aspects of the case.
"Please do not let the Chinese purchase Global Crossing," one
submission said. "The sale to the Chinese is one of national
security."
Other submissions alleged that Global Crossing's Chapter 11
reorganisation was a ploy to defraud creditors.
"The Global Crossing bankruptcy is a joke and as long as our
antiquated bankruptcy laws permit the filing of such nonsense, the
employees, shareholders and bondholders will never be safe from the
cold, calculated and ruthless practices of greedy, arrogant and
dangerous individuals," a submission said.