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Global Crossing: Global Crossings
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Global Crossing was "an evenhanded giver," Dunhan wrote in 2002: "Of its total $3.6 million in contributions since 1998, Republicans pocketed 53%, Democrats got 47%. Top recipients in Congress were key figures in telecom regulation: Senator John McCain (R-Ariz.) got $31,000, and Representative Edward J. Markey (D-Mass.), $12,500. In 1999, on behalf of Global Crossing, McCain asked the Federal Communications Commission to encourage the development of undersea telecom cables."
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Global Crossing was one of the biggest casualties of the internet/telco bubble which saw its shares divebomb from $64 a share to just $.02. It filed for bankrupcy protection or Chapter 11 in January 2002 just days before the FBI and SEC made public a fraud investigation.
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Additionally, Global Crossing operated five corporate jets, including a Boeing 737, a Challenger, a Gulfstream, an Astra and a seven-seater, when, according to one former executive, it needed two jets maximum. Employees reported reckless spending in other areas as well, including the purchase of new accounting software costing $150 million when accounting department staff indicated the current software did not need updating. It was later discovered the software was never even installed.
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Ralph Ferrara, a lawyer at Debevoise & Plimpton in Washington, who represented Global Crossing's directors and officers, said he thought the recovery for the employees of Global Crossing was the largest ever under the Employee Retirement Income Security Act. And he said the securities case was a landmark result "because it's the first of these leviathan-sized cases to come to a successful close and will serve as a benchmark for all of the others of how to do it."
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The attempt to break up the consortium did not stop AT & T from leasing capacity on Global Crossing's transatlantic cable. With the tremendous demand by carriers for more bandwidth, AC-1 was proving even more popular than anticipated. The company reported it had generated $1 billion in contract sales during 1998, although most of that ($634 million) would be realized over the next three years. In the fourth quarter alone, the company had revenues of $205 million and a net income of $56 million. It ... announced it would begin developing a second transatlantic cable (AC-2) as well as a system (South American Crossing, SAC) to link the U.S. Virgin Islands, Brazil, Argentina, Chile, Peru, Columbia, and Panama.
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In district court, Global Crossing argued that Metrophones was not entitled to sue under § 201(b). The judge disagreed, and the United States Court of Appeals for the Ninth Circuit upheld the lower court’s ruling. That court held that 47 U.S.C. § 210(b) did create a private cause of action under which Metrophones could seek damages, deferring to the FCC’s interpretation of § 201(b).
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