Global Crossing suspected of destroying key documents

Two US House of Representatives committees have insisted that telecommunications company Global Crossings Holdings explain its...

Two US House of Representatives committees have insisted that telecommunications company Global Crossings Holdings explain its document retention policy, as the company is suspected of destroying key documents demanded during an investigation.

The House Committee on Energy and Commerce and the House Subcommittee on Oversight and Investigations sent a detailed letter to John Legere, chief executive officer of Global Crossing, demanding company documents and access to employees.

In March the Energy and Commerce Committee launched an investigation to determine whether the bankrupt telecommunications company engaged in questionable accounting practices.

The US Security and Exchange Commission (SEC) is also looking into Global Crossing's accounting practices.

The chairmen of the two committees demanded that the company forward all records related to Global Crossing's document retention policy and the names of the policy's authors; describe where any paper shredders are housed in its offices; name all employees who kept documents in that office's storage room; name any outside companies hired to shred documents and collect rubbish at that office, and make five additional employees available for interviews with the committees.

A former Global Crossing employee alleged that the company has shredded documents since the SEC launched its probe into the company, according to a letter.

The Energy and Commerce Committee is concerned that such practices would affect its inquiry since it requested accounting records as well as documents belonging to key company executives in its investigation.

The chairmen also asked if documents belonging to Joseph Perrone, Global Crossing's executive vice-president of finance and a former Arthur Andersen employee who was involved in developing the telecommunications company's accounting treatments, have been destroyed. The chairmen learned from bankruptcy filings that among the employees who destroyed documents after the SEC launched its investigation was Perrone's assistant, the letter said.

Among the matters being investigated by the committee is how Global Crossing accounted for capacity swaps or deals with other carriers to trade fibre-optic capacity on each others' networks.

It is considered improper, under US accounting standard, for companies to report such sales as revenue and purchases as a capital expenditure and not an operating cost.

Global Crossing has until 23 July to comply with the committees' requests.

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