SEC opens inquiry into Global Crossing’s accounting
The Securities and Exchange Commission is investigating the accounting practices of bankrupt sub-sea carrier Global Crossing.
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At issue are bandwidth contracts known as Indefeasible Rights of Use (IRUs), under which two carriers swap bandwidth in chunks generally up to 20 years. Carriers can count the bandwidth gained as revenue and the bandwidth given as a capital expense separate from operating results.
The issues apparently were first raised to Global Crossing in a letter by former vice president-finance of the company, Ron Olofson. But Global Crossing linked his letter to a seven-figure wrongful termination lawsuit the carrier says was instigated before he was fired.
Global Crossing provided a copy of the letter to the SEC and the commission has requested additional information regarding the issues raised by Olofson. The company is complying with the Commission’s request.
--Toby Weber, staff writer
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© 2012 Penton Media Inc.
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