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Global Crossing Became a Top Contributor Fast

Politics: The telecom firm gave to both parties as it focused on its undersea cable.

January 31, 2002|JUBE SHIVER Jr. and P.J. HUFFSTUTTER | TIMES STAFF WRITERS

WASHINGTON — Financially troubled Global Crossing Ltd. catapulted from nowhere four years ago to become one of Washington's biggest political givers, although its lobbying focus was far narrower than most other corporate giants.

Barely a player in 1998, Global Crossing grew to No. 23 on the list of top donors to federal parties and candidates in the 1999-2000 election cycle, according to a study released Wednesday by the Center for Responsive Politics, a Washington watchdog group.

The telecommunications company gave more than $2.8 million in soft money, political action committee money and individual contributions--84 times what it gave during the 1997-98 election cycle.

"They just came out of nowhere and ... began flashing a lot of money all over town," said Holly Bailey, a researcher for the center.

The top recipient was Sen. John McCain (R-Ariz.), the ranking member of the Senate Commerce Committee, which oversees the telecom industry. McCain received $31,000 in 1999, according to the study. He was followed by Sen. Conrad R. Burns (R-Mont.), another member of the Commerce Committee who received $30,750.

As prolific fund-raisers and veterans of Washington's political scene, Global Crossing co-chairmen, Gary Winnick and Lodwrick Cook, tapped into their political network when the company was still privately held.

Former President George Bush made a speech on behalf of Global Crossing in 1998, and accepted an estimated 230,000 shares instead of an $80,000 speaking fee. At the company's stock peak, the shares were worth $14 million.

Terry McAuliffe, now the chairman of the Democratic National Committee, was an early investor in the company, netting a windfall of just under $18 million when he sold most of his shares in 1999.

Though a wide spectrum of politicians were beneficiaries, Global Crossing cited less than a dozen legislative issues of interest on its federal lobbying disclosure forms.

"It was kind of unusual in that you would expect a company spending like that to have a long laundry list of things they wanted" to influence, Bailey said.

Global Crossing spokeswoman Becky Yeaman, declined to directly address why Global Crossing's political donations skyrocketed. She noted the Bermuda-based company, which has its corporate offices in Beverly Hills, was started in 1997 and said: "The senior executives

In 2001, Global Crossing doled out $724,000, placing it No. 29 among the biggest political donors.

Global Crossing has had an almost singular policy focus: protecting its massive investment in a 13,000-mile undersea optical cable linking the U.S. and Japan.

Global Crossing boasted in 1999 it was the first to take the huge financial risk of building a privately owned and operated cable system across the Pacific Ocean.

That same year, however, rivals AT&T Corp., WorldCom Inc. and Sprint Communications Co. announced they would jointly build an undersea cable that would compete with Global Crossing's link.

Faced with the challenge from three of the world's largest telecommunications firms, Global Crossing filed an antitrust complaint with the U.S. Justice Department and asked the Federal Communications Commission to block the three long-distance carriers from building the undersea link.

It also signed up Anne Bingaman, a former assistant attorney general at the Justice Department, as their chief lobbyist on the issue. Between January and June 1999, Global Crossing paid Bingaman $2.5 million, according to the company's lobbying records. At the same time, Global Crossing solicited letters of support from several lawmakers, including McCain.

However, the undersea project of Sprint and its partners was completed after the FCC gave its approval and the Justice Department closed its antitrust inquiry.

In recent months, Global Crossing also has used its lobbying muscle to protect its huge investment in NextWave Telecom Inc., a bankrupt wireless telecommunications company, whose principal asset--cellular phone licenses--were seized by the FCC and resold in a government auction to rival carriers last year for $16 billion.

In 1999, Global Crossing was among a group of four key investors that pledged a $1.6-billion investment in NextWave.

A federal judge ruled that the FCC's license seizure was illegal, and in the fall NextWave and the FCC entered a controversial deal. NextWave was to be paid $6 billion in cash if it gave back its licenses. Congress had to sign off on the settlement before the end of 2001, but Congress adjourned in December without endorsing the accord.

Despite Global Crossing's contributions, McCain opposed the deal as a bad deal for taxpayers. The dispute is now before the Supreme Court, where a final resolution, and any investment gain for Global Crossing, remains months, if not years away.

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