US Senate probes Global Crossing sale

9 Apr 2003

A US senate committee is expected to probe the forthcoming sale of international data carrier Global Crossing to two Asian companies following national security concerns over the sale amongst US businesses and politicians. Global Crossing carries all the confidential data of the US Justice Department, CIA and FBI throughout the world.

Global Crossing, which filed for Chapter 11 bankruptcy protection last year with over US$12.4bn in debt, entered into a US$126m joint venture with the Irish government in 1999 to install a fibre-optic connection point at Citywest in Dublin, in a move that was expected to link Irish firms and locally-based multinationals to the rest of the world. However, only a small number of firms eventually expressed an interest in the 200 STM-1 fibre-optic lines available, causing considerable expense and embarrassment in the Irish government.

Global Crossing plans to sell over 60pc of its company to Hong Kong-based Hutchison Whampoa and Singapore Technologies Telemedia Pte for an instant US$250m in cash.

News of the sale promoted widespread panic in US business and political circles over the handing over of a telecoms organisation that handled much of the US military’s data traffic to Hutchison Whampoa, a firm whose headquarters in Hong Kong is firmly in the hands of China. The news prompted US telco IDT Corp to launch a rival bid for US$255m. However, the sale to the Asian consortium is still expected to go ahead.

The potential sale will be investigated by the Committee on Foreign Investment in the United States (CFIUS), which includes US Defence Secretary, Donald Rumsfeld. As well as this, Global Crossing must win regulatory approval from the Federal Communications Commission before any sale can go ahead.

By John Kennedy