Sun, Mar 03, 2002 - Page 10 News List

The rise and fall of global dreams

GLOBAL CROSSING The chairman's reputation is in tatters and his dream of operating a worldwide fiber optic network is shattered as his company lay in ruins

NY TIMES NEWS SERVICE , NEW YORK

Gary Winnick, founder of Global Crossing, is shown outside the company's office in Beverly Hills, California, last year. The communications company has collapsed and Winnick's dream of operating a worldwide fiber optic network has failed to materialize.

PHOTO: NY TIMES

Gary Winnick knew it was a dinner fit for a king when one showed up. Constantine of Greece was among the 240 luminaries that dined on tournedos of Aberdeen Angus that November evening in 1999 at Claridge's Hotel in London.

The elaborate event, paid for by Global Crossing, the communications company founded by Winnick, included a stirring speech on the role of a late 20th-century superpower by William Cohen, then the US secretary of defense, who had flown 16 hours from Chile to dine with Winnick and his guests.

Celebrated by such figures and buoyed by Global Crossing's soaring stock, Winnick, a recently minted billionaire, seemed to have the world in his palm. Who would have guessed that a kid from Roslyn, New York, would one day rub shoulders with Margaret Thatcher? "One little idea," he once marveled to associates, "and look what's happened to me."

He may no longer want the attention.

In the last month, Global Crossing has collapsed and Winnick -- its chairman -- has troubles aplenty. His reputation has been shattered and his dream of operating a worldwide fiber optic network is in tatters. The fortune he amassed before Global Crossing filed for bankruptcy protection in late January has elicited a chorus of criticism from shareholders who have seen their investments in the company disappear.

The Securities and Exchange Commission and the FBI are investigating Global Crossing's dubious accounting. Employees, investors and corporate governance experts have blasted Winnick's management of the company. "He was the chairman and did not run the company," Winnick's spokesman responded. "The chief executive does."

Others have criticized a style that some associates describe as volatile and arrogant, although Winnick does have some supporters. Stephen Bollenbach, the chief executive of the Hilton Hotels Corp, called Winnick "a good guy." Arnold Kopelson, a Hollywood producer, cited his generosity and his warmth. Others say they have enjoyed working with him.

Still, he has many detractors. Some have criticized a style that associates describe as volatile and arrogant. Others point out that a large chunk of the US$734 million he realized from Global Crossing stock came from share sales that occurred after the company's troubles became clear.

Perhaps no one should have been surprised by his fall. To hear many of Winnick's associates tell it, excess and controversy have periodically played roles in his career since his days at Drexel Burnham Lambert, the failed investment bank famed as the home of Michael Milken.

As head of the convertible bond desk in the Los Angeles office of Drexel, where Milken ruled as the king of junk bonds, Winnick developed a reputation for being condescending and showy. He was the kind of guy who "bragged about his trades," said one co-worker, who spoke on condition of anonymity.

A spokesman for Winnick denied the portrayal.

Winnick, who is 54, left Drexel in 1985, but controversy followed him. In 1989, he received immunity after agreeing to testify against Milken, who served time in prison for securities and reporting violations. Milken, through his spokesman, declined to comment. A spokesman said Winnick had never testified against Milken.

As his affluence grew, Winnick rarely shied away from self-promotion or ostentatious displays of wealth, former associates say. He owns a palatial estate in the Bel Air section of Los Angeles said to be worth US$94 million. He has a luxurious office in Beverly Hills. His fortune has given him access to several rarefied power circles in Los Angeles and Washington. Both former President George W. Bush and the Democratic fund-raiser Terry McAuliffe reaped small fortunes from Global Crossing stock holdings.

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