As scandals go, the collapse of Global Crossing has plenty of juice. Like Enron Corp., Global Crossing Ltd. sold itself as a high-flying corporate pioneer. Laden with debt, Global also engaged in creative accounting that inflated its value--to as much as $48 billion. It used the same auditing firm, Arthur Andersen. A similar freeze on Global's employee 401(k) plan briefly prevented workers from selling company stock. And, like Enron, Global Crossing used lavish political gifts to cultivate an array of influential friends that included a national party chairman, a President, and a former President.
Given the remarkable similarities, why isn't Congress paying more attention to Global Crossing? To date, no committee has scheduled hearings or launched a formal inquiry--even as the Securities & Exchange Commission and the FBI open their own investigations. Conservative activists rage that media bias against Republicans has kept Enron's political web in the klieg lights while Global Crossing's influence peddling remains in the shadows. But there's no shortage of daily stories about the telecom startup's questionable practices and political ties.
The real reasons Global Crossing isn't under the microscope on Capitol Hill--yet--have to do with the careful political calculus of both Democrats and Republicans. Dems, of course, have no interest in turning up the heat on a company that wrote them fat checks and put party fund-raisers on the payroll. A recently revised tally by the nonpartisan Center for Responsive Politics found that Global Crossing gave $3.6 million to candidates and the parties since 1997, 55% of it to Democrats.
The real embarrassment, however, is Democratic National Committee Chairman Terrence McAuliffe's $100,000 investment in 1997, when Global Crossing founder and Chairman Gary Winnick was launching his telecom upstart. McAuliffe, a onetime consultant to Winnick and close friend of then-President Bill Clinton, reaped perhaps as much as $18 million when he cashed out most of his holdings in '98 and '99. McAuliffe set up golfing dates with the Prez for his pal Winnick, who pledged $1 million to Clinton's Presidential library. "This wasn't a sweetheart deal," says DNC spokeswoman Jennifer Palmieri. "McAuliffe was a stockholder, as was former President Bush."
Therein lies a key GOP reason for treating Global gingerly. The senior Bush gave a speech on the company's behalf in Tokyo in 1998 and took stock in lieu of $80,000 for his fee. "There is a feeling that this is like grenades at close quarters--everyone can get hurt," says Ken Boehm, chairman of the National Legal & Policy Center, a conservative watchdog group.
Enron overload is partly to blame for congressional inaction. House Energy & Commerce Committee Chairman W.J. "Billy" Tauzin (R-La.), whose panel oversees telecom, has held seven Enron-related hearings in three weeks. Republicans also worry that there may be little political gain from delving into charges of favors for Global Crossing if such payoffs can't be proved. Dems, they scoff, aren't getting much traction out of allegations that the GOP did Enron's bidding.
It's too early to write off a major congressional inquiry into Global Crossing. The SEC and FBI may yet turn up wrongdoing that lawmakers can't ignore. GOP operatives are quietly researching Democrats' ties to Global in hopes of finding a political smoking gun. One target: U.S. Senate candidate, Tom Strickland of Colorado, who lobbied for Global. Judicial Watch, a right-wing group that went after the Clintons, will soon pore over reams of government documents that could uncover favors done for Global Crossing. But for now, partisans are leery of digging too deeply lest they get themselves dirty. Republicans may be holding their fire in the Global Crossing debacle, but they're rolling out the heavy artillery in the Enron scandal. Top GOP operatives, smarting from allegations that the Bushies did favors for Enron Corp., have uncovered more than a dozen examples of financial goodies the Clinton Administration gave Enron.
Senate Finance Committee documents indicate Enron got more than $650 million in loans and other backing for international projects from the U.S. Export-Import Bank in 1993-2000. That's just some of the Clinton-era support of Enron, which showered soft money on both parties. "People think getting calls returned from the Bush Administration is the only help Enron got," says a staffer to Senator Charles E. Grassley (R-Iowa), the committee's ranking Republican.
While Clintonites regularly went to bat for U.S. companies competing around the world, Enron seems to have done better than most. Enron execs took part in at least 11 trade missions with the late Commerce Secretary Ron Brown and Trade & Development Agency officials.
Republicans are scouring Enron's payroll for Clintonites who hired on there. Among them is Linda L. Robertson, a top deputy to former Treasury Secretary Robert E. Rubin. Robertson was later hired as an Enron lobbyist in Washington. Rubin, now chairman of Citigroup's Executive Committee, drew criticism for a call he made to Treasury last fall wondering if anything could be done to save the credit rating of Enron, a major client of Citi.