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Business Ethics - Case Study og Global Crossing and Its Owner Gary Winnick

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Gary Winnick founded Global Crossing in 1997, observing the surge in telecommunications of the 1990’s and utilising it to construct the largest fibre optic network in the world for the purposes of transmission of voice, text, video and other data between 27 countries. The Company went public in 1997, with Winnick maintaining hold of 27% of stock in the company valued at $1.4 billion, and a year later held a market value of £38 billion surpassing Ford Motors. Winnick employed the services of Salomon Smith Barney, who employed an analyst with unprecedented level sof influence of the telecoms industry, Jack Grubman. After a year of low revenues and lackluster of cash flow, Winnick sought to emulate WorldCom with its acquisition based business model. Hiring former AT&T executive Robert Annunziata as a new to lend credence to his company’s respectability he entered into negotiations to purchase long distance provider Frontier for $11.2 billion, followed in the next quarter by the announcement of a deal of $37 billion to buy US West which ultimately fell through after losing out to Qwest. The acquisitions were meant to provide cash flow and raise the awareness and respectability of Global Crossing, allowing Winnick’s stake in Global crossing to grow in excess of $4.5 billion. In 1999 Winnick abandoned his previous plan to raise capital for the company piecemeal and moved to fund the fibre network at once utilising junk bond sales set up by Jimmy Lee of JP Morgan Chase. Winnick not only benefitted as a shareholder, but also banked fees through his holding company and its subsidiaries for example 2% of the gross revenues of Global Crossing was paid in return for a long term consultancy deal with PCG Telecoms a subsidiary of Winnick’s Paci...


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...help develop an action plan to reorganise the company and make good on his pledge to donate $25million further to aid employees who had lost money in Global Crossings pension plan. Winnick has since moved on and founded a new company iCrete a firm designing precision concrete for use in projects such as the Freedom Tower, New York.



Works Cited


http://money.cnn.com/magazines/fortune/fortune_archive/2002/06/24/325183/
http://observer.com/2002/04/gary-winnick-should-go-to-jail/
http://www.fiercetelecom.com/special-reports/who-were-worst-wireline-ceos-all-time/gary-winnick-global-crossing
http://www.fraudlaw.org/Fraud/Fraud%20by%20Type/Public%20Companies/Global%20Crossing/Global%20Crossing%20settles.htm
http://www.crn.com/news/channel-programs/18820983/global-crossing-chairman-gary-winnick-to-resign-from-board.htm
http://www.forbes.com/forbes/1999/0419/6308242a.html


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