FBI, SEC Probe Global Crossing

The FBI and securities regulators are investigating ailing Global Crossing Ltd., focusing primarily on an ex-employee’s allegations that the company used a variety of misleading accounting methods to pump up revenue and other key financial measures.

A spokeswoman for Global Crossing confirmed the investigation by the Securities and Exchange Commission, but would not comment on the FBI probe, which is in its initial stages, according to a source close to the situation.

The Bermuda-based telecommunications company, which has executive offices in Beverly Hills, filed for bankruptcy court protection Jan. 28, becoming the largest telecommunications firm to do so.

The Los Angeles Times first reported the SEC’s interest in the company’s accounting Feb. 1. The SEC advised Global Crossing of its formal investigation by letter Feb. 6 and served the company with a subpoena seeking documents, including “press releases and correspondents and contracts,” according to Global Crossing spokeswoman Becky Yeamans.

Both probes are focused primarily on allegations made by Roy Olofson, a former vice president of finance at Global Crossing who plans to sue the company over his firing in November.

In an Aug. 6 letter, Olofson warned the company’s top attorney that Global Crossing’s accounting practices were suspect and misleading. The company has denied the allegations.

Elizabeth Douglass