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Fri, Mar 01, 2002 - Page 18 News List

Global Crossing directors suspected of selling out

SUSPICIOUS LINKS Singapore-based investors in Global Crossing, which has filed for bankruptcy protection, have ties to a company that is interested in buying the company


The financial relationship between a group of Singapore investors and two Global Crossing directors became more extensive in the days after Global Crossing filed for bankruptcy protection.

The relationship of the directors with the Singapore investors, whose full scope has not been previously disclosed, is significant because the investors have links to Singapore Technologies Telemedia, which has made an offer to buy Global Crossing out of bankruptcy.

Separately, Global Crossing delayed reporting its full financial results Tuesday because it said its auditor, Arthur Andersen, had not concluded its audit for last year. But the company said it expected to report a significant loss for the quarter, including write-downs of about US$8 billion to reflect a drop in the value of some assets.

Global Crossing's chairman, Gary Winnick, and another director, Steven Green, became part owners last fall in K1 Ventures Ltd, a Singapore investment firm. K1 Ventures is ultimately controlled by another Singapore company, Temasek Holdings, which also controls Singapore Technologies.

After that relationship was reported last week, Winnick resigned from K1's board. He and Green said their involvement with K1 Ventures was not related to the effort to buy Global Crossing, which owns and operates a fiber optic network linking 27 countries.

But a closer look indicates that Winnick and Green's involvement with the Singapore investors deepened after the bankruptcy protection filing on Jan. 28.

On Feb. 7, K1 Ventures announced in Singapore that it had paid US$14.2 million for a minority stake in an American wireless company. The announcement did not mention that the wireless company, PrimeCo Personal Communications, is partly owned by Winnick's investment firm, the Pacific Capital Group.

An investment firm controlled by Singapore's government, the Government of Singapore Investment Corp, was a partner with K1 Ventures in the PrimeCo deal. The other large government-owned holding company in Singapore is Temasek, the same company that effectively controls K1 Ventures and that owns Singapore Technologies, which has submitted a US$750 million bid with Hutchison Whampoa of Hong Kong to buy Global Crossing.

K1 Ventures' investment in PrimeCo was through Winnick's investment firm and was initially approved by PrimeCo's board in late October, Winnick's spokesman said Tuesday. The spokesman, Michael Sitrick, said Pacific Capital, Winnick's company, merely advanced money to K1 Ventures on Oct. 31 so it could take part in the deal and was paid back two days later.

Undivulged information

What was announced in Singapore on Feb. 7, in a news release, was the formal completion of the deal, after the board of the Government of Singapore Investment Corp approved the transaction. Sitrick acknowledged that the Feb. 7 news release, while describing the ownership structure of PrimeCo, did not mention Winnick's role on the buying and selling side of the transaction.

The developments also reveal a broader relationship among Global Crossing, Winnick and J.P. Morgan Chase. Not only is J.P. Morgan Chase a creditor in the bankruptcy filing, but it also handled investment business for Global Crossing. Last summer, J.P. Morgan Partners, a private equity fund and a part of J.P. Morgan Chase, participated in the purchase of PrimeCo, along with Winnick's Pacific Capital.

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