Obama AG Pick Lobbied for Dicey Telco Deal

Eric Holder hired to close sale of bankrupt firm amid security fears.

ByABC News
November 20, 2008, 7:42 PM

November 21, 2008— -- President-elect Barack Obama's pick for Attorney General registered to lobby in 2002 for a U.S. firm whose proposed sale to foreign buyers was stalled by U.S. officials who feared a national security risk.

After months of negotiations – and over $1 million in fees for the efforts of Eric Holder and four other lobbyists from his firm – the sale of the company, Global Crossing Ltd., went through.

In 2002, national security officials balked at a proposed sale of the bankrupt telecommunications firm Global Crossing to two Asian companies: a Hong Kong firm they reportedly believed to have ties to the Chinese government, and a Singapore firm part-owned by the government of Singapore.

Officials at the Pentagon and the Justice Department believed that foreign control of Global Crossing's global fiber optic network could give other governments access to U.S. data which would travel along those lines or be kept in the company's databases, documents indicate. Those officials also thought the sale could make it harder for U.S. intelligence and law enforcement to secretly tap those lines for intelligence operations or criminal investigations.

Holder, who was publicly named Monday as Obama's likely pick for the top Justice Department post, did not reply to questions for this story. A spokesman for Obama declined to comment. Global Crossing did not respond to inquiries.

All but one of the lawyers and lobbyists involved in the push for the deal did not respond to inquiries, or would not discuss Holder's contribution. One said, on condition of anonymity, "I recall he had a very, very minor role."

Global Crossing became a household name in 2002 after its spectacular collapse. The Securities and Exchange Commission investigated the firm, eventually fining three former officials hundreds of thousands of dollars. The company was sued by investors and former employers who lost money and pensions in the collapse; in 2005 the company settled with the litigants for $325 million. Its former CEO, Gary Winnick, said through his lawyer at the time that he "does feel badly about all those who were hurt by Global Crossing's collapse."