15 February 2002
Global Crossing, which collapsed with debts of $12bn last month, is a major player in the 'Sirius' consortium, which has a ten-year £350m contract with the Home Office for IT and telephone services.
GC also runs major projects for the Land Registry and the Crown Prosecution Service. As recently as last September, it announced it was expanding its contract with the Foreign Office to put British embassies on-line, a deal now thought to be worth £40m.
Last week, the US Securities and Exchange Commission and the Federal Bureau of Investigation both launched inquiries into allegations that the company had manipulated its accounts to conceal its financial position.
The US government has put a $137m project for the Pentagon on ice during the investigations, but Global Crossing confirmed it was still looking for business in Whitehall.
A spokesman for the firm said: 'We are still bidding for government projects. We are looking at a certain amount of financial restructuring but essentially we are functioning the same as we were.' The firm said it had contacted its Whitehall customers to 'reassure' them that its ongoing projects would continue.
Global Crossing's accounts were audited by Arthur Andersen, the accountancy firm at the centre of the collapse of US energy giant Enron, which is also heavily involved in Whitehall private finance projects.
In a further parallel with the Enron collapse, the British government faced questions about its links with GC following revelations that ministers, including Defence Secretary Geoff Hoon, had attended parties hosted by the firm. The prime minister's official spokesman dismissed as 'so much hot air' Liberal Democrat allegations that the firm might have influenced government policy. 'It is perfectly legitimate for government ministers to meet businessmen,' he said.
But Liberal Democrat Treasury spokesman Matthew Taylor demanded that MPs should be given details of ministers' meetings with Global Crossing executives.
'The concern would be if they had bought unfair access to ministers and their advisers through dinners and lobbying,' he said.
PFfeb2002
