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American Morning

Interview of Andy Serwer, "Fortune"

Aired March 01, 2002 - 09:33   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JACK CAFFERTY, CNN ANCHOR: Word of another huge corporate bankruptcy, not Enron, this one may have a lot of the same problems as Enron, though. The company is Global Crossing, which was trying to provide high-speed connectivity through fiberoptic cables to much of the world.

And my pal, Andy Serwer, from "Fortune" magazine is here with more on that.

Worse than Enron in some ways.

ANDY SERWER, EDITOR AT LARGE, "FORTUNE": In some ways it is, Jack. You know, all the attention focussed on Enron. Jeff Skilling is going to be on LARRY KING tonight, that should be interesting. But Global Crossing has a lot of elements -- in my mind, if some things are more outrageous than Enron, the personal excess in particular, this is the fourth largest bankruptcy in the history of the United States, as opposed to the first, which was the Enron.

CAFFERTY: I like the part about personal excess.

SERWER: Yeah, we're going to get into that a little bit. There is a guy named Gary Winnick. He is the mastermind behind Global Crossing, the guy that founded this company. He -- there he is. He started off as a furniture salesmen in Long Island, and learned about the business world sitting next to Michael Milken, you may remember that name, the disgraced...

CAFFERTY: Yeah, he was inmate number 743.

SERWER: Yes, former junk bond king. That's where Mr. Winnick learned the trade, I guess. And the thing that's interesting about Global Crossing, like Enron, incredible connections that Gary Winnick had. If you look here, George Bush Senior was a shareholder, of course. You may remember Terry McAuliffe, the Democratic National Committee chairman made $18 million. Really sad, John McCain, if you are a John McCain fan here, Mr. Campaign Reform -- finance reform himself took $30,000 and William Cohen, former defense secretary, is on the board, so all kinds of personal connections there.

And then when you get into excesses that this guy had, Gary Winnick. The thing we're really focusing on here is his house, Jack. This house in Bel Air is truly amazing, 92 million -- this is the largest amount of money ever paid for a private residence in the United States. $92 million, 43 rooms, 15 bedrooms, and only 17 baths. Of course, the requisite tennis court, swimming pool.

And this is interesting. While all the scandal is going on, the guy is remodeling his house for $15 million. While the company is going down the tubes, apparently he sold stock worth $730 million. Needless to say, there are numerous investigations, and if it wasn't for Enron, this company would be the scandal du jour. I mean, in a way, it is being protected by the fact that Enron...

CAFFERTY: Enron has got the front page all to themselves.

SERWER: Exactly. But this thing -- I see this thing bubbling over and bubbling forth and coming to the head as well.

CAFFERTY: Well, and eventually, maybe out of all of this will come some meaningful reforms and changes about the way companies keep their books and report their activities so that down the road investors will be a little better protected than they have been.

SERWER: Absolutely.

CAFFERTY: Good to see you. Have a nice weekend.

SERWER: You too.

CAFFERTY: Talk to you later. Andy Serwer, "Fortune" magazine.

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