Winnick under investigation

By Christina Jenkins
Daily Bruin Contributor

Last year’s recipient of UCLA’s Jacoby International
Award is now at the center of a congressional investigation into
claims of false business practices.

Gary Winnick, founder and chair of Global Crossings, Ltd., a
fiber optic network provider, was recognized by the university for
his dedication to cross-cultural understanding and world peace, and
was keynote speaker at The Anderson School’s June 2001
commencement ceremony.

Global Crossings filed for bankruptcy in January and is now
under investigation by the Securities and Exchange Commission and
the Federal Bureau of Investigation amidst allegations that it
concealed its true financial condition, thus misleading
stockholders.

Meanwhile, Winnick and other executives escaped bankruptcy by
selling off their stocks before the company folded.

Winnick has sold $734 million in stock since he founded the firm
in 1997. In all, senior executives cashed in $1.3 billion in stock
in the three years before the company filed for bankruptcy.

Lawmakers said they want to determine whether Global Crossings
concealed its true financial condition, similar to the way Enron
has had to acknowledge misstating earnings, revenue and debt.

“Was Global Crossings a corporate giant toppled by a
recession in the telecommunications industry or was it instead a
paper tiger created by questionable bookkeeping?” asked Ken
Johnson, spokesman for Rep. W.J. “Billy” Tauzen,
R”“La., the SEC chair.

Lawmakers also noted that Enron and Global Crossings used Arthur
Andersen as their auditor.

The UCLA Dashew International Center, sponsor of the
international award, named Winnick a recipient in April 2001. Past
winners include Tom Bradley and Ted Turner.

Jacoby award recipients contribute to the center through
personal donations, and they designate their associates to raise
money through their network of contacts.

Rick Tuttle, who began working as executive director on July 1
and was not involved with the selection process, said the
center’s namesake, Stan Dashew, recommended Winnick for the
award. The decision was discussed and confirmed by the
center’s board of directors.

Global Crossings’ contribution of $506,000 was about
double what the center would have normally raised, Tuttle’s
office said.

“We were very grateful for this generosity,” Tuttle
said, noting Global Crossings set a fund-raising record.

Global Crossings has been asked to turn over records relating to
last year’s change in the administrator for the
company’s 401(k) retirement plan.

Global Crossings spokeswoman Becky Yeamans said the Chapter 11
filing is primarily related to the downturn in the telecom industry
and said that though employees’ accounts were temporarily
frozen, the workers were informed beforehand.

The Labor Department is investigating Enron’s actions in
banning employees ““ who lost their retirement savings ““
from selling company stock in their 401(k) plans for about three
weeks.

The Dashew Center recently named its 2002 Jacoby award winner.
Former UCLA Vice Chancellor of Student Affairs Winston Doby will be
honored at a ceremony May 8.

With reports from Daily Bruin wire services.