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Committee Probes Shredding Claims

Telecom: House energy panel is looking into allegations that Global Crossing employees destroyed evidence.

July 19, 2002|JUBE SHIVER Jr. | TIMES STAFF WRITER

WASHINGTON — The House Energy and Commerce Committee, in a probe similar to one launched this month by the Justice Department, is looking into claims of document shredding at Global Crossing Ltd.

Committee Chairman W.J. "Billy" Tauzin (R-La.) and James C. Greenwood (R-Pa.), chairman of the House subcommittee on oversight and investigations, sent a four-page letter to Global Crossing Chief Executive John Legere this week demanding information about Global's "document retention policy" as well as a list of employees who had access to key company financial documents.

"It is the committee's understanding that ... individuals employed by Global Crossing ... are alleged to have destroyed documents," Tauzin and Greenwood wrote.

The letter indicates that Congress has not depleted its investigative resources despite a growing list of corporate financial scandals, including Enron Corp., WorldCom Inc. and ImClone Systems Inc.

"We take allegations of document destruction very seriously, and we are going to get to the bottom of this one way or another," said committee spokesman Ken Johnson.

Document shredding at Global first surfaced in a lawsuit brought this year by the Ohio State Retirement Systems pension fund, which lost more than $100 million from its investments in the fiber-optic giant, which filed the fourth-largest bankruptcy in U.S. history in late January.

Company receptionist Cathleen Kicak said in a sworn affidavit filed in the pension fund suit that she saw two employees leave a storage room that contained a shredding machine at the Madison, N.J., headquarters.

Kicak said she did not see the employees shredding documents but heard the machine operating just before they left.

In its letter to Global Crossing, the Commerce Committee identified the employees as the son-in-law and the administrative assistant of Joseph P. Perrone Sr., the company's executive vice president of finance.

The committee has been looking into allegations that Global engaged in questionable accounting practices similar to those of Enron.

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