The FBI has launched an investigation of Hamilton, Bermuda-based high-speed communications network operator Global Crossing Ltd., including its accounting practices, a federal law enforcement official said on Friday. The company disclosed earlier this week that it was co-operating in a separate US Securities and Exchange Commission probe of allegations of improper accounting at the company.
Hamilton, Bermuda-based Global Crossing filed for bankruptcy last month in the fourth-largest corporate insolvency in US history. Like fallen idol Enron, Global Crossing's auditor is number five US accounting firm Andersen, and as with Enron, a former employee's allegations have set light to a powder trail of investigations surrounded by suspicion of fraud and criminality. It emerged late last week that Global Crossing had kept its auditors in the dark about the letter, from a former vice-president of finance, received as long ago as last August claiming that the company had misled investors.
Dan Cohrs, Global Crossing's chief financial officer, last week denied that the company had accounted for these transactions improperly, and said it had followed US accounting rules; but the company said it would open its own probe to review the allegations. It also said the panel would retain independent counsel and an accounting firm other than Andersen, the company's regular accountants, to review the matter.
"It's a matter of serious concern that we were not informed in a timely manner," Andersen said. The audit firm added that it had insisted that Global Crossing appoint a special independent committee to review the accounting issues.
An FBI spokesman had no comment when asked about the Global Crossing investigation and added, "As a policy, we do not confirm or deny investigations."
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