CHICAGO TRIBUNE, DRUDGE REPORT , e-mail to the DRUDGE REPORT, DRUDGE REPORT JAN. 30, 2002 DNC chief profited, Telecom

CHICAGO TRIBUNE
DNC Chair A Troubling Pick
BY ROBERT NOVAK SUN-TIMES COLUMNIST
January 1, 2001

Washington money man Terry McAuliffe, who has never held public office or
headed a party organization, is gliding toward the national Democratic
chairmanship thanks to Bill and Hillary Clinton. That raises misgivings
among the party's state leaders, but for the wrong reasons.

They all grumble about being left out of the selection process, and some are
uncomfortable with President Clinton still exercising power.
African-American leaders are publicly opposing McAuliffe with the long-shot
candidacy of former Atlanta Mayor Maynard Jackson, also complaining that
they were not consulted. The same grievance is raised by the Teamsters
Union.

But I find no prominent Democrat who appreciates the party's vulnerability
with McAuliffe in corruption cases, virtually dormant in the Clinton
administration's Justice and Labor departments, that may be reopened under
Republican management. Democrats avoid the broader issue of whether their
new leader symbolizes big-money corruption.

Current newspaper accounts never list the prospective national chairman's
occupation, calling him a "prodigious fund-raiser" and Clinton "golfing
buddy." Actually, he is a prototypical Washington deal-maker who made a
fortune in real estate and finance. His only political skill is the ability
to raise vast sums of money, and that has endeared him to the Clintons.

Indeed, the president wanted to make McAuliffe the Democratic national
chairman after the 1996 election, but it was considered inauspicious then to
spotlight the author of money-raising White House coffees and Lincoln
bedroom sleepovers. Four years later, the lame-duck president-and the
senator-elect of New York--determined that the coast was now clear.

Joe Andrew, who proved a doughty warrior as chairman of the Democratic
National Committee the last two years following a successful hitch running
the Indiana state party, wanted another term. He seemed a good bet for a DNC
majority with support from state chairmen as well as Vice President Al Gore.
But the word was quickly passed that the Clintons emphasizing the
"s"--wanted McAuliffe. President John Sweeney quietly and effectively
mobilized the AFL-CIO behind his close ally McAuliffe.

Andrew, the quintessential party loyalist, deferred to the Clintons and
endorsed McAuliffe. In a conference call with party operatives, Sen. Joe
Lieberman (D-Conn.) and Andrew told how they had come to an agreement with
Gore that Terry McAuliffe was the man. Nobody believed it, but nobody
expressed their disbelief.

Teamsters President James Hoffa was furious. In a conference call with other
union leaders, he told Sweeney that McAuliffe is unacceptable to the
Teamsters. Hoffa deeply resents being cut out of Sweeney's back-channel
mobilization of labor behind McAuliffe.

What really worries Teamster leaders is that McAuliffe at the DNC will
generate more bad publicity for their long-troubled union. Federal
prosecutors in court papers allege that McAuliffe was an active player in
the 1996 campaign money swap between the Democratic Party and Teamsters,
which defeated Hoffa in the election that was later voided. A Republican
Justice Department might resuscitate this case to go after AFL-CIO
Secretary-Treasurer Richard Trumka--and McAuliffe.

McAuliffe also is at the center of a civil suit filed by the Labor
Department on May 5, 1999, charging that a labor union pension fund was
fleeced in making a $6 million loan that all parties knew could not be
repaid. McAuliffe was a trustee of the fund and co-owner of the development
company getting the loan. He also owned a company that the suit alleges
improperly sold a $2.5 million share to the pension fund, which then sold it
as a loss to another McAuliffe company.

The Labor Department has moved with glacial speed. After 20 months,
discovery has been concluded with no court date set and department
bureaucratskeeping their lips sealed. Could Republicans at the Labor
Department get serious about this case?

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DRUDGE REPORT - JANUARY 28 2002

GLOBAL CROSSING BANKRUPTCY:
GOP INSIDERS QUESTION DNC CHAIRMAN MCAULIFFE
PROFIT, TURNED $100,000 INTO $18,000,000

ENRON-stung GOPers are discreetly eyeing the collapse of GLOBAL CROSSING
[which on Monday became the 4th largest bankruptcy in history] and its
Chairman Gary Winnick, a top Democrat donor who helped DNC head Terry
McAuliffe turn a $100,000 stock investment -- into $18,000,000!

McAuliffe arranged for Winnick to play golf with President Clinton in 1999
after his cash windfall. Winnick then gave a million dollars to help build
Clinton's presidential library.

A top White House source noted to the DRUDGE REPORT, with irony, the direct
McAuliffe connection with Winnick and GLOBAL CROSSING.

"McAuliffe is a guy who made millions and millions and millions off this
GLOBAL CROSSING stock? And the company goes bankrupt. And he has the gonads
to criticize anyone on ENRON!" blasted the Bush insider who asked not to be
identified.

"What did Winnick get for his money? Let's have congressional hearings!
Stockholders should demand it! Will Mr. Clinton give back the money?"

McAuliffe, in his role as chairman of the Democratic National Committee, has
been a vocal opponent of the ENRON collapse, telling CNN this weekend: "The
people out there who are hurt the most are the small people, and once again
the wealthy special interests got to take their money off the table, and
that's what we need to investigate."

"The Bush administration is running fiscal policy the way folks at ENRON ran
their company," McAuliffe has said.

But with shares of GLOBAL CROSSING closing at just 30 cents on Monday, and
trading suspended after the Chapter 11 deal was announced, McAuliffe faded
from view.

For McAuliffe, GLOBAL CROSSING turned out to be a bonanza. The stock had
soared in the late 90s, when Winnick once bragged that he was the "richest
man in Los Angeles." McAuliffe operated out of an office in downtown
Washington that belonged to Winnick -- to help the mogul "work on deals."

McAuliffe told the NYT TIMES's Jeff Gerth in late '99 that his initial
$100,000 investment grew to be worth about $18 million, and he made millions
more trading GLOBAL's stock and options after it went public in '98.

Top GOP insiders were also gloating over GLOBAL CROSSING ties to other ENRON
obsessives.

A major fundraising dinner for Senator Tom Daschle was bought and paid for
by GLOBAL CROSSING.

Winnick gave thousands of dollars to top ENRON cop Rep. Henry Waxman during
the last election, according to public records.

But as everything blurs, and blurs again in the bankruptcy cycles of the
fresh century, and in a twist that will ensure GOP operatives do not ride
GLOBAL CROSSING all the way into shore: Former President George Bush once
made a smart move by accepting stock in a start-up company instead of his
usual speaking fee when he addressed an audience in Tokyo.

Bush agreed to take shares in -- GLOBAL CROSSING LTD. in lieu of an $ 80,000
fee!

McAuliffe's Winnick reportedly suggested that Bush take his fee in stock
instead of cash, and Bush agreed. The Bush stock, at its high, was worth
over $ 14 million.

It is not known if he is still holding the scraps.

Developing...

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An e-mail to the DRUDGE REPORT on Monday night:

I am a consistent reader of the Drudge Report and listen to your nationwide
radio program.

I am a shareholder of Global Crossing and I believe there is something
terribly wrong with the whole scenario - Gary Winnick's huge profits Vs
calming public statements to Shareholders, the yearly turnover of CEO's,
Gary Winnick's cronies making up the BOD and that BOD not protecting
Shareholders, the public statements of the most recent CEO, John Legere, Vs
the bankruptcy announcement on Monday, the deal with the Chinese buying the
Company for pennies - 750 million for a 22.4 BILLION dollar company - (Will
our government and other major firms use this service owned by a Chinese
Co.?), Andersen's involvement -- the confusing balance sheets - the lending
institutions being duped, and the obvious profiting and involvement of
political figures.

I hope your considerable influence will affect the bankruptcy judge, Robert
E. Gerber, to deny the petition.

Sir, I can assure you that every employee and shareholder appreciates your
involvement -- the little guy has suffered enough.

Sincerely,

xxx xx xxx

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DRUDGE REPORT JANUARY 30 2002
INTRIGUE SURROUNDS $400 MILLION GOVERNMENT AWARD TO GLOBAL CROSSING

Last summer the Bush Administration canceled a Defense Department contract
valued up to $400 million with the soon-to-be bankrupt GLOBAL CROSSING after
question were raised about the bidding process -- a process top-level GOP
insiders now suggest was sweetened by players from the previous
administration!

GLOBAL CROSSING filed the 4th largest bankruptcy in history this week.
Chairman Gary Winnick saw his stock fortune plunge to zero from a high of
more than $5 billion.

During his run Winnick showered political players with cash and options,
helping DNC head Terry McAuliffe turn a $100,000 stock investment into
$18,000,000 in the late 1990s. Winnick gave a million dollars to help build
Clinton's presidential library; hosted fundraising dinners for Senator Tom
Daschle; gifted thousands of dollars to Rep. Henry Waxman and other key
lawmakers on both sides of the aisle.

Six months before Winnick's stunning bankruptcy call -- the United States
awarded GLOBAL CROSSING a massive contract, which called for an extensive
phone and data network linking more than 6,000 scientists and engineers at
far-flung defense test centers, laboratories, universities and industry
locations.

The three-year fiber-optic contract, valued at $137 million for the initial
phase and more than $400 million if the Defense Department exercised all
options, was canceled just a month after it was awarded when serious
question were raised about the bidding process.

"We think there's something smelly here," said Ray Bjorklund, vice president
of Federal Sources Inc., a market research and consulting firm. "Something
was wrong in the award."

Protests were lodged by AT&T CORP., QWEST COMMUNICATIONS INTERNATIONAL INC.,
SPRINT CORP. and WORLDCOM INC. after a lengthy bidding window, which began
during the Clinton administration.

"Flags have been raised all over the place about GLOBAL CROSSING winning
this deal," a top congressional source told the DRUDGE REPORT late Tuesday.
"It sure looks like someone in high office wanted GLOBAL CROSSING from the
git-go."

"The U.S. taxpayers sure are fortunate the Defense Department made a quick
reversal," said the congressional source. "[However,] I sure would like to
know how a company that was on the verge of bankruptcy got the contract!
Spread a little money around? Give some cash to a presidential library, take
some folks out to fancy dinners? That's all it took? We've got to take a
look at this."

A finance executive at Winnick's CROSSING warned last August -- just weeks
after the lucrative Defense Department contract was awarded -- how the
company's financial condition was being enhanced with misleading accounting
techniques.

The five-page letter, written by the former vice president of finance,
contains a detailed analysis of deceptive accounting practices: including
inflating revenue and cash-flow figures, numbers that may have helped
convince investors and analysts that GLOBAL CROSSING was healthier than it
was, the LOS ANGELES TIMES reported in Wednesday editions.

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DNC chief profited from bankrupt firm
Ralph Z. Hallow
THE WASHINGTON TIMES
Published 1/29/2002

The chairman of the Democratic National Committee in the late 1990s
cashed in $18 million worth of stock in a company that yesterday declared
bankruptcy after a month of its stock being traded at Enron levels.
Terry McAuliffe made the profits off an initial $100,000 investment in
Global Crossing, an owner and operator of undersea fiber-optic cables.
The Bermuda-based company yesterday made the fourth-largest filing for
Chapter 11 bankruptcy protection in history, with its stock selling at 51
cents a share, down from a peak of $61.
According to profiles of Mr. McAuliffe in Worth magazine and the New
York Times, Los Angeles businessman and Democratic donor Gary Winnick gave
Mr. McAuliffe in 1997 the early opportunity to invest $100,000 in Mr.
Winnick's new company, Global Crossing.
The stock grew in value to $18 million during the dot-com bubble of the
late 1990s, and Mr. McAuliffe cashed in his stock.
"Two years later, McAuliffe arranged for Winnick to play golf with
President Clinton, and Winnick then gave a million dollars to help build
Clinton's presidential library," writes reporter Richard Blow in the
January-February issue of Worth magazine.
In the Dec. 12, 1999, New York Times profile, Jeff Gerth reported that
Mr. McAuliffe "made millions more trading Global's stock and options after
it went public last year."
Now, Global Crossing shareholders are left with worthless stock.
"That's exactly the same thing Enron was involved in," American
Conservative Union Chairman David A. Keene said last night. "What it tells
us is what anybody who knows anything about Terry McAuliffe has known all
along: He has used his political connections to make lots of money."
"Here you have Clinton contributors giving McAuliffe the inside track
to make millions of dollars while using him to reach the president and the
White House," Mr. Keene said. "This is a guy who might as well have
patterned his life on that of Ken Lay of Enron."
Mr. McAuliffe has attempted in recent days to use the collapse of Enron
and the losses suffered by its stockholders against Republicans, drawing
portraits of greedy plutocrats cashing in their stock at the expense of the
little guy.
"The people out there who are hurt the most are the small people, and
once again the wealthy special interests got to take their money off the
table, and that's what we need to investigate," he told CNN over the
weekend.
Mr. Keene last night said, "I'm sure the shareholders of Global
Crossing ... are just as appreciative of McAuliffe as Enron's shareholders
are of Ken Lay."
Global Crossing already had slashed more than 2,000 jobs, although
company officials say they have no plans for further cuts among the
remaining 8,000 employees.
Some Republicans were crowing last night that Mr. McAuliffe's windfall
spells the end of Enron as a partisan issue.
"Before [Senate Majority Leader] Tom Daschle starts asking questions
about Enron, he had better ask about Terry McAuliffe and his relations with
Global Crossing," Republican consultant Craig Shirley said.
"Here are the questions I want to see asked," said Cleta Mitchell, a
Washington-based lawyer specializing in elections law. "Are there
shareholders who lost money? Employees whose 401(k) went into the ditch? If
so, is Jesse Jackson planning to organize a motorcade to Washington of those
folks who lost money on Global Crossing's bankruptcy?"
Former President George Bush once took Global Crossing stock in lieu of
a speaker's fee, but it was not known last night whether he had cashed it in
when the stock was valuable.
Global Crossing also was a major donor to the Republican National
Convention, and a top officer at the company was a trustee of the George
Bush Presidential Library fund.

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Telecom:
The fiber-optic network company denies accusations
that it inflated its numbers.
By ELIZABETH DOUGLASS and TIM RUTTEN
Los Angeles Times Staff Writers
January 30 2002

A finance executive at ailing Global Crossing Ltd. warned the firm's top
attorney in August that the company's financial condition was being enhanced
with misleading accounting techniques, according to a letter obtained by the
Los Angeles Times.

The five-page letter, written by Roy Olofson, former vice president of
finance, contains a detailed analysis of what he called deceptive accounting
practices involving Global Crossing, its sister firm Asia Global Crossing
and its auditor, Andersen. These included inflated revenue and cash-flow
figures, numbers that may have helped convince investors and analysts that
Global Crossing was healthier than it actually was, Olofson wrote.

The contents of the letter came to light one day after Global Crossing, a
Beverly Hills telecommunications company, filed for Chapter 11 bankruptcy
protection, listing debts of $12.3 billion and assets of $22.4 billion. It
is the fifth-largest bankruptcy case in U.S. history.

The company vehemently denied Olofson's accusations.

"This is a situation we are very familiar with, has thoroughly been
investigated both internally and externally, and is without merit," the
company said in a statement. "Mr. Olofson is a former employee who is trying
to draw parallels to the Enron situation for his own personal gain. The
company believes that Mr. Olofson's threat to take this issue public through
the filing of a lawsuit unless he was paid a substantial amount of money
speaks for itself." A spokesman would not elaborate.

Andersen spokesman David Tabolt said the accounting firm doesn't yet have
enough information to comment on the letter. "We just found out about this
[late Tuesday], and we are looking into it," he said.

Olofson couldn't be reached, but his attorney, Brian C. Lysaght of O'Neill
Lysaght & Sun in Santa Monica, confirmed the existence of the letter
obtained by The Times. However, he declined to comment on its contents.

Global Crossing general counsel Jim Gorton left the company within days of
receiving Olofson's letter. He could not be reached Tuesday, but Casey
Cogut, another attorney working for Global Crossing, said Gorton's departure
"had nothing to do with the letter." Olofson was laid off three months
later.

In the letter, Olofson asked Gorton to investigate the company's accounting
practices and urged him not to involve Global Chief Financial Officer Dan
Cohrs or Joe Perrone, Olofson's boss and a recent recruit from the
now-beleaguered Andersen accounting firm. Perrone had supervised Global
Crossing's initial public stock offering and then served as the company's
lead auditor at Andersen.

Still, Olofson's letter outlines issues similar to those at the heart of the
current scandal at Enron, the Texas energy firm that collapsed amid
allegations that company executives used, and Andersen auditors blessed,
misleading accounting to hide the firm's mounting losses. Andersen is
accused of overlooking the accounting sleight of hand to maintain good
relations with Enron, which was a major customer of Andersen's consulting
business.

In addition, Enron executives allegedly sold millions of dollars in company
shares before the accounting troubles were uncovered.

In Global Crossing's case, some industry analysts were already wary of the
company's accounting methods--which are standard in the telecommunications
industry--but most ordinary investors were not.

Olofson, of La Ca¤ada Flintridge, is one of the many lesser-known executives
who have flowed through Global Crossing in recent years. In 1996 and 1997,
he was the chief financial officer at PIA Merchandising Services Inc., an
Irvine company that specialized in tracking the distribution and marketing
of branded goods sold in grocery stores. Before that, he spent more than 13
years at Santa Fe Springs-based Fedco, where he eventually became chief
executive.

Previous jobs included stints as treasurer at retailing conglomerate Carter
Hawley Hale Stores, and the accounting firm Price Waterhouse.

His Global Crossing letter takes aim at a little-known accounting policy
embraced by Global Crossing and other major communications network operators
known as "indefeasible rights of use," or IRUs. These instruments are used
to sell bandwidth on Global Crossing's fiber-optic network typically for 25
years.

Global Crossing and its competitors frequently bought space on one another's
networks in areas not covered by their own systems to offer corporate
customers a more complete data system.

But analysts have grown wary of the excessive use of IRUs and the way Global
Crossing and others were registering their sales on financial reports. In
some cases, Global Crossing would buy an IRU and book the price as a capital
expense, which would spread the expense over a number of future years. It
would then resell that capacity and book the proceeds as revenue, leaving
some investors to see the increase in revenue, but not the expense, said
Susan Kalla, a telecommunications analyst at Friedman, Billings Ramsey.

"That's perfectly legal to do, but a better way to do it so that investors
could better understand what was going on, would have been to book the IRU
as an expense and then register the revenue against the expense," said
Kalla, who has been so bearish on the industry that she gained the nickname
"Dr. Doom."

The way Global Crossing, Qwest Communications International, 360networks and
others handled the IRUs "might have made it look like the revenue was being
generated from the capacity that the [respective companies] put in, but it
was capacity that they bought and then resold to another carrier," Kalla
said. "They were selling stuff to each other. . . . I would sell you an IRU,
and then you would sell it back to me."

Most industry analysts ultimately became somewhat familiar with the IRU
accounting technique, but ordinary investors--to their detriment--were
focusing on the income and revenue figures, and probably didn't notice the
IRU purchase expenses listed elsewhere in the financial statements, Kalla
said.

Olofson's letter contends that the IRU accounting practice was a sly way for
Global Crossing and other young telecommunications companies to report
better results.

The letter, dated Aug. 6, 2001, makes no mention of any criminal behavior,
such as document shredding or insider trading.

Federal regulatory filings show that Gary Winnick, the influential chairman
and founder of Global Crossing, sold no shares after May 23 of that year, 2«
months before Olofson submitted his letter.

It is unclear whether Winnick knew about Olofson's letter or its
accusations, but two outside attorneys working for the company said they had
reviewed the letter several months ago.

Winnick and most other Global Crossing executives sold large amounts of
shares over time, but only a few did so after Olofson wrote his letter.
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