Opposition grows to Global Crossing rescue plan

US law enforcement agencies have asked the Federal Communications Commission (FCC) for more time to examine the implications of...

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.

Read more on IT risk management