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Winnick's Pledge a $25-Million Surprise

October 03, 2002|ELIZABETH DOUGLASS | TIMES STAFF WRITER

It was after Gary Winnick heard an employee tell a congressional panel that she had lost her retirement savings--all $86,000 of it--that the chairman of Global Crossing Ltd. resolved to shore up his company's sagging employee retirement fund with his own money.

At least that's what a Winnick aide said Wednesday, a day after his surprise promise to contribute $25 million to Global Crossing's 401(k) plan.

The move caught even his own attorneys off guard, and many unanswered questions remained Wednesday as Winnick tried to make good on the vow.

"He didn't have a plan, but he was just so moved by the woman's testimony," the Winnick aide said. "I think he surprised himself."

Winnick told the House Energy and Commerce Committee's oversight and investigations panel that he intended to write a check to the administrator of the company's retirement plan, which lost more than $250 million of its value as the telecommunications company buckled under an industrywide slump. Global Crossing filed for bankruptcy protection in January.

The money is to be divided among the employee participants based on the amount they invested in the plan after 1999. How many employees that would affect was unclear. Winnick says 14,000. A law firm suing on behalf of 401(k) participants says it could be as high as 16,000 or 18,000.

Also unclear is whether any of Global Crossing's executives will get any of the money.

Winnick's spokeswoman said those and other details are being worked out and that the Bel-Air resident wants his promise "to be acted on as soon as possible."

Winnick's attorneys and others say the contribution was first discussed several months ago, but the idea was tabled after advisors warned that it could be taken as a tacit admission of guilt or be dismissed as a public relations stunt.

But something changed during Tuesday's hearing, where Winnick and others were set to discuss allegations that Global Crossing used sham transactions to help hide the company's deteriorating condition while executives sold shares.

Winnick hadn't expected to hear about Lenette Crumpler, who is single with two children. Testifying in the presence of Winnick and other current and former Global Crossing executives, Crumpler said she spent 31 years in the phone business but now has little to show for it. Her $86,000 401(k) fund, largely invested in Global Crossing stock, was wiped out.

Many current and former workers have welcomed Winnick's move, his spokeswoman said. Critics have reacted with contempt.

"Here's a guy who is worth a billion dollars, and he has just agreed to pay less than 1% of what he's worth," said Lynn Sarko, an attorney handling several lawsuits over Global Crossing's retirement plan. "He's off by a magnitude of 10."

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