CyberAlert -- 02/12/2002 -- NBC Found Global Crossing

NBC Found Global Crossing; CBS Buried Preference for Democrats; ABC Rued "Huge" Budget Cuts; Bill Clinton Still "Honest" to Rather -- Extra Edition

1) Global Crossing discovered. On Monday night NBC became the first broadcast network to note the political parallels with Enron as Lisa Myers pointed out how Terry McAuliffe and George H.W. Bush were early investors. But unlike the Washington Times, she failed to report how most of Global Crossing's money went to Democrats and that its founder "was a White House guest at President Clinton's Millennium New Year's Eve party, golfed with Mr. Clinton and pledged $1 million to the Clinton library."

2) In the midst of a story pushing campaign finance reform, CBS's Bob Orr squeezed in a mention of how "Global Crossing contributed nearly $3 million in the past four years, more than half of it to Democrats." But, he added, "the largest contribution, $31,000, went to Republican Senator John McCain."

3) ABC Carole Simpson anchor decried how states are being "forced to make huge cuts in services." Ron Claiborne lamented how the Governor of Massachusetts wants to eliminate a dental program, leaving recipients "to bear the cost of a balanced budget." But as Boston Globe columnist Jeff Jacoby pointed out, the Bay State's Governor is proposing a $900 million budget hike.

4) Dan Rather reaffirmed to Don Imus that he stands by his assessment last year to FNC's Bill O'Reilly that Bill Clinton is "an honest man." Rather stuck to his guns: "I think he is an honest person....I think the fact that someone has told a lie, even a big lie or maybe several big lies over a lifetime, does not mean that they're an inherently dishonest person."

>>> Now online, a Media Reality Check on the media's record of promoting campaign finance reform. "Will Congress Reward Media's Advocacy? Establishment Journalists Discarded Objectivity for Activism In Pushing for Campaign Finance 'Reform.'" To read the report compiled by the MRC's Rich Noyes, go to:
http://www.mediaresearch.org/realitycheck/2002/20020211.asp
To view the two-page document as fax recipients saw it, access the Adobe Acrobat PDF version: http://www.mediaresearch.org/realitycheck/2002/pdf/fax0211.pdf <<<

1

On Monday night NBC News became the first broadcast network to realize the political parallels between the bankruptcies of Enron and of Global Crossing, which also features accusations insiders who made out well while the little guy suffered and that it hid losses. Both had Andersen as its accountant. NBC's Lisa Myers noted: "Like Enron, Global Crossing carefully cultivated its political connections. Democratic National Chairman Terry McAuliffe turned a $100,000 investment into almost $18 million" and "former President Bush was given $80,000 worth of shares for a speech, stock at one point worth $14 million."

Two weeks ago, on January 29, the day of the State of the Union address, the CBS Evening News ran a full story on the downfall of Global Crossing, but reporter Anthony Mason didn't utter a syllable about the company's political connections, including McAuliffe's dealings with the company, even though they were detailed that morning by the Washington Times. (Both CNN's Inside Politics and FNC's Special Report with Brit Hume ran stories on Global Crossing's ties to McAuliffe and Bush.)

The broadcast networks failed to show any interest in the topic even though in a January 29 New York Times front page story reporter Simon Romero offered a strong hint of larger political ties, the very type of connections which journalists see as justification for their focus on Enron: "The company had attracted many notable business and political figures as investors, including Terry McAuliffe, Chairman of the Democratic National Committee, who profited by selling Global Crossing stock before it declined. Another early investor was former President George Bush, who accepted stock in lieu of an $80,000 fee for speaking to Global Crossing customers in Tokyo in 1999, although it is not known whether Mr. Bush sold his stock."

(A February 9 story by Romero cited Global Crossing founder Gary Winnick, but failed to mention his links to President Clinton, on the golf course and off, and also ignored McAuliffe. But Romero managed to again cite how "among the shareholders of Global Crossing at one point was former President George Bush, who took an $80,000 speaking fee in stock that at the peak was worth $14 million. It is not known when, or if, he sold his position.")

A Monday Washington Times story outlined the similarities between the two big downfalls, as reporter Frank Murray detailed three points not touched by NBC: How most of Global Crossing's money went to Democrats, Global Crossing founder Gary "Winnick was a White House guest at President Clinton's Millennium New Year's Eve party, golfed with Mr. Clinton and pledged $1 million to the Clinton library," and the reorganization plan centers on Hutchison Whampoa, believed to have ties to China's communist regime. (See item #2 below for how CBS broached the subject of donations favoring Democrats.)

An excerpt from Murray's February 11 story:

Global Crossing -- the telecommunications company whose Jan. 28 bankruptcy court filing has been eclipsed by the growing battles over Enron -- remains an enigma to the public even after joining Enron under the FBI microscope.

While Global Crossing lacks the star power to rank higher on the scandal scale, similarities are uncanny between two bankruptcy filings 57 days apart, with Enron ranked the largest-ever and Global in fourth place:

-- Both high-flying firms were politically hyperactive, with Enron more heavily invested in Republican causes while Democrats dominate Global's gift lists. Top brass at both firms had ready access to the lawmakers they supported.

-- Each stands accused by a former top executive of accounting tactics that inflated its apparent worth on balance sheets and produced enormous profits for shareholders who somehow knew just when to sell.

-- The corporate auditor that vouched for bookkeeping at both firms was Arthur Andersen LLP, which fired or demoted more than a half-dozen senior partners after the Enron debacle but says accusations about Global were hidden from them until Jan. 29.

-- Employee 401(k) plans at both companies blocked trading while changing administrators, a freeze during which employees could not dispose of remaining shares shortly before they became worthless when companies sought bankruptcy-court protection....

But except in stockbrokers' offices, the words "Global Crossing" still draw blank stares because its grim news has largely been relegated to financial pages; meanwhile, Enron has dominated Page One and television like no story unrelated to the war on terrorism since September 11....

Despite obvious national-security concerns about control of Global Crossing's 100,000-mile fiber-optic network on which government offices -- including the U.S. Navy and British Foreign Office -- rely for sensitive communications, Congress shows no interest....

The dearth of reporting by TV news operations -- and virtual blackout of Global's political connections to President Clinton, Democratic National Committee Chairman Terry McAuliffe and former President George Bush -- continued over the weekend even after separate probes were started Friday by the Securities and Exchange Commission and the FBI....

The core of Global's plan involves two Asian suitors to invest $750 million in a bargain deal -- Hutchison Whampoa Ltd. of Hong Kong, and Singapore Technologies Telemedia Pte. Ltd. Both have long been active in joint ventures with Global Crossing, and the separate Asia Global Crossing, which is not part of the bankruptcy....

Hutchison Whampoa's role troubles Rep. Dana Rohrabacher, California Republican, because that firm is owned by billionaire Li Ka-shing, who has close ties to China's communist government and whose companies comprise 15 percent of the entire value of Hong Kong's stock market. Before the bottom dropped out, insiders sold some $1.3 billion in stock, with Global founder Gary Winnick accounting for an estimated $800 million. Among the others is Lodwrick Cook, retired ARCO chairman and longtime Republican financial angel....

Mr. Winnick was a White House guest at President Clinton's Millennium New Year's Eve party, golfed with Mr. Clinton and pledged $1 million to the Clinton library. DNC spokeswoman Jennifer Palmieri said Mr. Winnick fulfilled just $100,000 of his $1 million pledge, but she confirmed that Mr. McAuliffe, the chief party fund-raiser in the Clinton years, did well on his $100,000 investment in Global.

"He definitely made millions of dollars. He did very well. His profit was clearly in the millions, but it was somewhere less than the $18 million that is reported," she said....

Global gave $3.6 million since its 1997 startup compared to $3.9 million for Enron in the same period. But Global outspent Enron in the 2000 election cycle, giving 55 percent of donations to Democrats, while Enron gave 72 percent of its share to Republicans.

END of Excerpt

To read the entire article: http://www.washtimes.com/national/20020211-393691.htm

Tom Brokaw introduced the February 11 NBC Nightly News story:
"And in Washington, as Congress prepares to finally see former Enron CEO Ken Lay tomorrow at a hearing, where he is expected to take the fifth and refuse to answer questions, another huge bankruptcy is getting intense scrutiny. The company is called Global Crossing, and it closely resembles Enron in so many ways."

Myers explained, as transcribed by the MRC's Brad Wilmouth: "Today a federal criminal investigation is intensifying into why Global Crossing, a high flying telecommunications company with swank offices in Beverly Hills, suddenly went bankrupt two weeks ago, a collapse many see as eerily familiar to the debacle at Enron."
Nell Minow, The Corporate Library: "The people at the top profited while the employees and the investors suffered. There are problems with the accounting and whether we can really believe in it, and there seem to be a lot of political ties."
Myers elaborated: "Like Enron, Global Crossing had a grand vision: Build a fiberoptic network under the ocean linking 27 countries. Now a company whistle-blower, whom NBC News has learned was contacted by the FBI last week, alleges Global Crossing used misleading accounting to inflate profits. He warned superiors in a five-page letter in August he was very disturbed that investors and commercial bankers may have been intentionally misled. The key question for the FBI: Were certain transactions made simply to create phony profits?"
Lynn Turner, Colorado State University Center for Quality Financial Reporting: "Did that lead to artificial inflation of stock prices in the market place that ultimately led a lot of investors to lose a lot of money?"
Myers: "The company's accountant? Andersen, also the auditor for Enron. Andersen now says Global Crossing failed to inform it of key issues. Though Global Crossing made almost no money, insiders pocketed staggering amounts. Founder Gary Winnick sold shares worth $734 million before the company's collapse. Also like Enron, Global Crossing carefully cultivated its political connections. Democratic National Chairman Terry McAuliffe turned a $100,000 investment into almost $18 million. He says he didn't benefit from inside information. Former President Bush was given $80,000 worth of shares for a speech, stock at one point worth $14 million. Bush won't say at what price he sold the stock. Who got hurt? The little guys. Bill Goodness (sp?) lost his job and most of his 401 (K)."
Bill Goodness: "We are just left basically holding the bag."
Myers concluded: "So far, the company insists there is no wrongdoing. But, as authorities broaden their investigation, investors are left to wonder which high flying corporation will be next?"

The Washington Times story showed there's a lot more for NBC to get into, but NBC is way ahead of ABC and CBS in at least realizing that by the standards the networks have applied to justify their focus on Enron, they must also tell viewers about Global Crossing.

The Enron/Global Crossing coverage disparity is the subject of MRC President L. Brent Bozell's February 8 column, "Crossing Out Global Crossing." Go to:
http://www.mediaresearch.org/bozellcolumns/newscolumn/2002/col20020208.asp

2

Global Crossing's preference for Democrats buried by CBS, which focused again on Enron and then stressed how a Republican was Global Crossing's biggest beneficiary.

"The shame and taint of Enron is fueling the apparent sudden revival of long-blocked legislation for serious campaign finance reform. The House could vote on the bill Wednesday," Dan Rather announced Monday night before a story in which Bob Orr asserted: "Some of the former Enron executives now stonewalling Congress spent the '90s lining the pockets of their interrogators."

Orr listed Enron contributions to members of both parties, insisting: "Enron's investments earned a favorable regulatory climate until the company collapsed."

Near the end of his February 11 story, however, Orr observed: "Enron is not the only bankrupt firm with big political investments. Telecommunications upstart Global Crossing contributed nearly $3 million in the past four years, more than half of it to Democrats. But the largest contribution, $31,000, went to Republican Senator John McCain, former Commerce Committee Chairman and a champion of campaign finance reform."
Orr then concluded: "Despite their millions, neither company has any clout left on Capitol Hill. Now the question is, will their high-profile failures give backers of campaign finance reform enough political cover to change a system awash in cash?"

An assumption that money in politics is a bad thing.

3

Once a government giveaway program is established it's impossible to reduce it in any way without invoking the media's wrath as reporters deliver emotional anecdotes, portraying recipients as helpless victims, without any regard to the burden on taxpayers or whether the service was a legitimate one for the government to provide.

The latest example: An ABC News look at what World News Tonight/Sunday anchor Carole Simpson described as how states are being "forced to make huge cuts in services." Reporter Ron Claiborne lamented how, for instance, the Governor of Massachusetts wants to eliminate a dental program and "one of the state's most popular and innovative programs" -- anti-smoking ads. Concluding with the case of a woman who would lose her government-provided dental service, Claiborne bemoaned: "As states cut programs to save money, people such as Ilena Vintresca may have to bear the cost of a balanced budget."

But in whining about budget cuts ABC failed to convey a very relevant fact: As Boston Globe columnist Jeff Jacoby pointed out, the Bay State's Governor is proposing a $900 million overall budget hike, spending growth which exceeds the inflation rate.

Simpson set up ABC's one-sided February 10 polemic, as tracked down by MRC analyst Jessica Anderson: "Across the nation, states are facing $40 billion in deficits, an unprecedented figure. That is posing serious problems for officials forced to make huge cuts in services. Here's ABC's Ron Claiborne."
Claiborne began with a victim: "Ilena Vintresca is unable to work because of a rare kidney disease. With no income, she qualifies for free dental care from the state, but that may change. The Governor of Massachusetts is proposing to eliminate preventative dental care for poor adults like Vintresca to save money."
Ilena Vintresca: "Without this insurance, I will be forced, or at a great risk, of losing my teeth."
Claiborne: "Governor Jane Swift says the state's billion-dollar deficit has forced her to make painful choices."
Gov. Swift: "We're having to prioritize, we're having to be creative, and in some cases, we're having to be unpopular by making tough decisions."
Claiborne: "Unlike the federal government, every state except Vermont is required by law to balance its budget, so states with budget deficits have to raise taxes or cut spending or both. In Massachusetts that means possibly cutting one of the state's most popular and innovative programs."
Clip of anti-smoking ad: "Too many people have been hooked."
Claiborne: "An acclaimed anti-smoking campaign that is credited with reducing cigarette smoking by 25 percent."
William Corr, Campaign for Tobacco-Free Kids: "If she cuts this program by a fraction of what she's proposing, much less by two-thirds, she will devastate the program."

So what? How many other states spend money on such ads?

But it's not only in Massachusetts that awful cuts may occur. Claiborne warned: "Wisconsin, with a billion-dollar deficit, is considering ending all assistance to local governments. The city of Beloit would be unable unable to pay for such essential services as the police and fire departments."
Jane Wood, Beloit, Wisconsin, city manager: "The reality is you can't expect us to deliver basic services with only $4.6 million for a community of 36,000 people. Do the math; it doesn't work."

Gee, maybe they could re-prioritize their spending allocations.

Claiborne moved West: "In California, which has the nation's largest deficit, $12 billion, this free health clinic in Burbank may be forced to close because of deep cuts in Medicaid funding."
Dr. Elise Pomeranz: "A lot of them would not receive their routine care because they have no transportation, and so what happens is they wait until they are so sick that they have no alternative, and they end up in the emergency rooms."

Without one second for the concerns of those paying for all these wonderful "free" services, Claiborne concluded: "It is a similar story across the country. As states cut programs to save money, people such as Ilena Vintresca may have to bear the cost of a balanced budget."

I don't have specifics about Wisconsin or California, but I caught a Jeff Jacoby column in the January 27 Boston Globe which undermines ABC's premise. An excerpt:

We interrupt the screaming and howling over Acting Governor Jane Swift's drastically slashed state budget to bring you this timely fact: The budget hasn't been slashed.

The budget hasn't even been trimmed. Or shaved. Or nicked.

The $23.5 billion spending plan proposed by Swift for fiscal 2003 would increase spending by $900 million over the budget the Legislature very belatedly passed last year. For all the talk of how "spare" and "austere" her blueprint is, Swift is trying to push expenditures up, not down. That's the outrage. Tax revenues have been dropping since last summer, we are well into a recession, and Swift thinks the time has come to spend even more?....

By any standard this side of the Socialist Workers Party, the public sector in Massachusetts is large and well-fed. With a $23 billion budget, it will continue to involve itself in everything from auto insurance to manicurists to zoos. There was wailing last week because Swift's budget didn't include free dental care for poor adults. Since when is free dental care a function of the state? Where is it written that every conceivable good idea must be effected by government and paid for with money withheld from people's earnings?...

END of Excerpt

A good question, but don't expect many reporters to take it up.

For Jacoby's column in full:
http://www.boston.com/dailyglobe2/027/oped/Hands_off_the_tax_cut+.shtml

4

While Dan Rather concedes Bill Clinton did lie, he re-affirmed last week to Don Imus that he stands by his assessment last year to FNC's Bill O'Reilly that Clinton is "an honest man" because "I think you can be an honest person and lie about any number of things." Last Thursday morning, Rather stuck to his guns: "I think he is an honest person....I think the fact that someone has told a lie, even a big lie or maybe several big lies over a lifetime, does not mean that they're an inherently dishonest person."

In a February 7 appearance by phone on the Imus in the Morning radio show simulcast by MSNBC, which slipped by us but which the MRC's Liz Swasey learned was reported by Newsmax.com, Imus asked Rather about his trust in Bill Clinton's honesty.

Imus inquired, as taken down by MRC analyst Ken Shepherd: "Bill O'Reilly, whom I happen to like, by the way -- not that we don't chastise him on occasion -- has been making a lot out of you telling him when you were on his show that you thought Bill Clinton was an honest man. And I, it's not my job to defend you, you can defend yourself but I did think and took away from that, that's not exactly what you meant. I mean, you didn't mean that he doesn't lie or didn't lie he just-"
Rather jumped in: "No, I thought I made that plain and let me say right straight out, I don't have any argument with Bill. Then I went on his program to promote the book and you know, from his view, he chewed me up pretty well, well he's entitled. I don't have any problem with that he was, in the interview he was trying to get me to say that, you know, that I didn't think Bill Clinton was an honest man."

Rather proceeded to repeat what he had said on O'Reilly's show: "Look, he lied. He lied but he shouldn't have lied. He lied and tried to cover it up. My point to Bill, and I have no apology for it, it's the rare person -- Bill may be that person -- but it's the rare person who can say, you know, 'Never in my life have I ever told a lie. Particularly, I've never told a lie when, you know, my whole career might rest on it.'

"Now, there are plenty of people who have argued with it, but I think the fact that someone has told a lie, even a big lie or maybe several big lies over a lifetime, does not mean that they're an inherently dishonest person. But, you know, this may mark me as one of those people -- I believe in redemption and that Bill Clinton -- is he an honest person? I think he is an honest person. Did he lie? Yes, he lied, and on those occasions he was dishonest."

Rather then seemed to impugn conservatives as he rued "them," complaining bout how "anybody who says anything good about him [Bill Clinton] is gonna be castigated by them." Rather also added insult to injury as he also maintained that his reporting is "down the middle." Rather contended:
"A lot of this is just dancing on the head of a pin. Well, I think we understand, Imus, that, you know, people like O'Reilly, they are never gonna say anything good about Bill Clinton. And anybody who says anything good about him is gonna be castigated by them and maybe that's fair enough. My own view is that, though I'm a reporter and I try to report deep down the middle and try to allow for, you know, human mistakes. And from Richard Nixon right on through Bill Clinton, you know, politicians at the top when they make mistakes they pay big prices and they should pay big prices. And so that's sort of the context in which that was said. But I don't have any argument with anyone who wants to say, 'Well, Dan, I think you've made a mistake.' My answer to that is, 'Man, I've made a lot of mistakes over my lifetime.'"

And this is one of the many.

On the May 15, 2001 O'Reilly Factor on FNC, this exchange occurred:

Bill O'Reilly: "I want to ask you flat out, do you think President Clinton's an honest man?"
Dan Rather: "Yes, I think he's an honest man."
O'Reilly: "Do you, really?"
Rather: "I do."
O'Reilly: "Even though he lied to Jim Lehrer's face about the Lewinsky case?"
Rather: "Who among us has not lied about something?"
O'Reilly: "Well, I didn't lie to anybody's face on national television. I don't think you have, have you?"
Rather: "I don't think I ever have. I hope I never have. But, look, it's one thing-"
O'Reilly: "How can you say he's an honest guy then?"
Rather: "Well, because I think he is. I think at core he's an honest person. I know that you have a different view. I know that you consider it sort of astonishing anybody would say so, but I think you can be an honest person and lie about any number of things."

For that quote, at the MRC's Dishonor Awards on January 17, Rather won the MRC's "Gilligan Award (for the Flakiest Comment of the Year)" and the audience selected it as the Quote of the Year. To view a RealPlayer clip of the above exchange, go to:
http://www.mediaresearch.org/news/nq/dishonor2002/dishonor2002c.html#quote of year

If you can lie "about any number of things" and still be honest in Dan Rather's mind, then I guess you can be biased in any number of stories and still be a "down the middle" reporter. -- Brent Baker

>>> Support the MRC, an educational foundation dependent upon contributions which make CyberAlert possible, by providing a tax-deductible donation. Use the secure donations page set up for CyberAlert readers and subscribers:
http://www.mrc.org/donate

>>>To subscribe to CyberAlert, send a blank e-mail to: mrccyberalert-subscribe
@topica.com. Or, you can go to: http://www.mrc.org/newsletters. Either way you will receive a confirmation message titled: "RESPONSE REQUIRED: Confirm your subscription to mrccyberalert@topica.com." After you reply, either by going to the listed Web page link or by simply hitting reply, you will receive a message confirming that you have been added to the MRC CyberAlert list. If you confirm by using the Web page link you will be given a chance to "register" with Topica. You DO NOT have to do this; at that point you are already subscribed to CyberAlert.
To unsubscribe, send a blank e-mail to: cybercomment@mrc.org.
Send problems and comments to: cybercomment@mrc.org.

>>>You can learn what has been posted each day on the MRC's Web site by subscribing to the "MRC Web Site News" distributed every weekday afternoon. To subscribe, send a blank e-mail to: cybercomment@mrc.org. Or, go to: http://www.mrc.org/newsletters.<<<