Winnick Puts Cash in Fund for Workers

Making good on a pledge to Congress last summer, Global Crossing Ltd. founder Gary Winnick put $25 million into an escrow account Thursday to repay employees for company stock they bought for their pension plan -- shares that became worthless when the fiber-optic network builder filed for bankruptcy protection in January.

But his donation didn’t sit so well with some, and the payout may not be so simple to accomplish, according to current and former employees.

“If Gary Winnick really wants to do us justice, tell him to write a check for all the money we lost: our severance and our 401(k),” said Irene DiNolfo of Rochester, N.Y., a former executive who took a voluntary severance package 15 months ago.

“It still hurts,” DiNolfo added. “People think it goes away, but it doesn’t. I have to save for retirement again.”

Global Crossing doesn’t know how the money will be distributed, who will get it or how it will be allocated, a spokeswoman said.

She referred questions to Winnick, the Los Angeles financier who built the company’s worldwide system, cashed in more than $575 million of the company’s stock and oversaw Global’s crash.

Union Bank of California is waiting for instructions on what to do with the money wired from Winnick.

“We’re just holding the funds in an interest-bearing account,” bank spokeswoman Joanne Curran said.

But Winnick’s handlers say he has nothing more to do with the matter. He simply turned the money over to Union Bank for deposit in an irrevocable escrow account and left the bank and the company to work out the details of who gets what and when.

“The intent is for the payout to occur as soon as possible,” said Winnick’s chief spokesman, Howard J. Rubenstein. But neither Rubenstein nor aide Scott Tagliarino could say when that would be, and they couldn’t provide further details.

It is unclear whether Winnick will get a tax benefit from the donation. Generally, only contributions made to registered charities are deductible, but there can be exceptions.

The money is aimed at repaying current and former employees the amount they put into the pension plan to buy Global Crossing stock between October 1999, when the company merged with Frontier Telephone of Rochester Inc., and the company’s bankruptcy filing Jan. 28. Winnick told a congressional committee that he got the $25 million figure from Global Crossing’s human resources department.

Global Crossing can’t say how many employees might be eligible for a refund. The company had about 9,000 U.S. workers at its peak after the merger, but not all of them contributed to the 401(k) or put all of their pension contributions into company stock.

DiNolfo, for instance, allocated only 20% of her contributions to company stock. But she had been an employee for 14 years, working for Frontier and its predecessor firm, Rochester Telephone Co., since 1987. The stock she and others bought for their pension plans rolled over with each acquisition.

Winnick’s money “doesn’t cover all the stock I bought in Frontier and Rochester Telephone,” she said. She would not disclose how much money she had lost.

Global Crossing won Bankruptcy Court approval Tuesday of a plan to sell a majority stake to two Asian companies, repay creditors pennies on the dollar and emerge from bankruptcy sometime in the next four months.