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Another Name at Global Stands Out

Former Chief Executive Thomas Casey was at the helm during the period that is of most interest to investigators.

October 27, 2002|Elizabeth Douglass | Times Staff Writer

As federal investigators intensify their scrutiny of Global Crossing Ltd. and its chairman, Gary Winnick, one name keeps popping up: Thomas J. Casey, a former chief executive and onetime Winnick intimate who is too ill to speak for himself.

Casey, who is undergoing treatment for colon cancer, ran Global Crossing out of its Beverly Hills offices for most of 2001, a year during which executives and employees were scrambling to bolster faltering sales, preserve cash and stave off a showdown with the company's banks.

It's also the year that most interests investigators from the Justice Department and the Securities and Exchange Commission, who are probing whether Global Crossing used misleading accounting to mask crumbling finances. They want to know, as well, whether Winnick and other Global Crossing executives were aware of the company's problems when they sold more than $100 million of stock in 2001.

Under questioning about those issues by a congressional panel this month, the usually hands-on Winnick distanced himself from day-to-day operations of the company and instead invoked Casey's name more than 50 times -- or about once every eight minutes. None of the other four chief executives who have run Global Crossing since its founding in 1997 was mentioned even close to the same number of times.

A sampling of Winnick's responses: "Tom Casey, who was the CEO at this time." And "I think it's important to recognize that Tom was the CEO of the company during this period of time." And "Tom reported to me as chairman. He ran the business. He was the CEO." And later: "I had to rely on Tom Casey."

A person who has worked with both men and listened to the hearing said he felt as though "Tom Casey was becoming Gary's personal scapegoat."

But it may not be that simple.

Casey's name also appears in a series of e-mails that discuss the need to land big network capacity swaps with other telecommunications companies to meet financial targets. The legitimacy of some of those deals has been called into question.

Other e-mails where Casey was either mentioned or sent a copy express varying degrees of concern about Global Crossing's cash position and its ability to meet performance requirements set by the company's banks.

And it was Casey who reiterated the company's financial guidance to Wall Street analysts just weeks before Global Crossing reversed course. The company filed for bankruptcy protection in January, four months after Casey left.

As CEO, Casey was ultimately responsible for whatever happened inside Global Crossing. But former Global Crossing employees who know Casey and Winnick said it's unlikely that he acted without the knowledge and consent of his chairman, a friend who once gave him an Aston Martin convertible.

"If you heard it from Tom, you were hearing it from Gary," said one former employee.

Even outsiders knew of Winnick's control within Global Crossing. "It's probably naive to think [Winnick] wasn't deeply involved," said analyst Patrick Comack of Guzman & Co. "It seemed like he was very hands-on ... and he was firing these CEOs left and right."

Citing the government's investigations, Global Crossing declined to discuss -- or make current executives available to discuss -- the details of Winnick's congressional testimony, the issues behind it or Casey's tenure at the company.

However, Winnick's longtime attorney Terry Christensen stressed that his client wasn't trying to blame Casey for anything. In fact, Christensen said, "Gary's belief is that Tom did everything right.... These fellows are not dumping on each other because they don't think they did anything wrong."

'A Different Job'

At the same time, Christensen said, Winnick wanted to make sure that lawmakers understood "that as chairman of the company, he had a different job than the CEO."

"If he had said repeatedly, 'It's not my job' or 'That's not my job' " without mentioning specifically who held the CEO post, "that would have sounded terrible," Christensen added. "He was just trying to make a distinction between what Tom was doing and what he was doing."

Casey's version of events has not been -- and may never be -- publicly aired.

He has been interviewed by investigators from the SEC and from the House Energy and Commerce Committee's Oversight and Investigations panel.

Casey had planned to testify with Winnick and other former and current Global Crossing executives at the committee's Oct. 1 hearing. But several weeks ago, the 50-year-old was diagnosed with cancer and underwent surgery, making him too sick to travel to Washington. His attorney, Patrick Sharkey, declined an interview request.

At the hearing, Winnick and Chief Financial Officer Dan Cohrs said Casey's alarm over looming budget shortfalls, which is evident in some e-mails, does not point to a motive for any inappropriate activity, but merely reflects the financial stresses that are common within a young company like Global Crossing.

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