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Global Crossing Collapse Sparks Investigation
CWA members in three states, now employed by Citizens Communications but who worked for Global Crossing from 1999 to 2001, have the support of a growing number of members of Congress who have pledged to investigate the bankrupt company's practices.
In Rochester, N.Y., members of CWA Local 1170 got a boost from Rep. Louise Slaughter (D-N.Y.) who held a news conference at the local’s offices to spotlight the former Global Crossing workers’ losses in 401(k) stock holdings, and to join CWA and the AFL-CIO in calling for congressional action to protect workers' retirement security.
CWA and other unions are working with various members of Congress on legislation to give workers additional pension and savings protections.
Rep. Slaughter and other lawmakers are calling for a congressional hearing into questionable business and accounting practices by Global Crossing as well as a review of the restrictions surrounding 401(k) investment and retirement programs. CWA also is looking at possible legal actions surrounding savings plan losses by the former Global Crossing workers.
The 800 workers in Rochester, along with 250 in Minnesota and about 60 in Iowa, lost much of the value of their 401(k) savings after Frontier Communications in 1999 was sold to Global Crossing — the now bankrupt company. Company 401(k) contributions were made solely in company stock, with workers prevented from selling the stock for five years.
Global Crossing sold the company to Citizens Communications in July 2001 but the savings contributions remain locked in company stock.
While CWA members in Iowa and Minnesota retain pension benefits from a plan frozen by Frontier in 1996, many were rocked by the collapse of Global Crossing stock and lost tens of thousands of dollars, or more, from their 401(k) savings accounts, said Dave Evans, president of CWA Local 7270.
“The big shots cashed in their stocks while we couldn't move our investments, because the company contribution was frozen for five years and other funds were subject to blackout periods and other restrictions,” he said.
CWA Local 7270’s political committee are meeting with Sen. Paul Wellstone, who is sponsoring legislation to better safeguard retirement savings plans. In Iowa, members of Local 7171, though covered by the frozen pension plan, also face the loss of some of their retirement security as many workers bought additional company stock, local President Dennis Dunbar said.
The Rochester workers still have a traditional pension plan to bolster their retirement — but only because they fought an 18-month battle beginning in 1995 when Frontier was formed out of the old Rochester Telephone Co. Frontier unilaterally froze the old pension plan, demanding to replace it with a 401(k).
A CWA legal battle and corporate campaign finally resulted in a new traditional pension plan jointly controlled by the company and the union. Rochester workers maintain their vested benefits from the frozen plan and pension benefits from the negotiated joint plan, along with the 401(k) savings plan.
“We knew we won a victory, but we didn’t know at the time just how important that victory was,” said Local 1170 President Linda McGrath at the Feb. 11 news conference with Slaughter. She said workers also put savings in the 401(k) plan “because they had faith in their employer,” but now they feel betrayed.
Top executives and company insiders, including some who stayed just a year, reaped big benefits and cashed in their stocks and options, leaving shareholders and workers with 401(k) investments holding the bag, analysts say, prompting comparisons to the Enron scandal in which executives did well and cashed out their investments, while small investors and employees could not.
Separately the Pension Benefit Guaranty Corp. has frozen the transfer of the jointly managed pension funds to Citizens while it reviews Global Crossing's actions. Union-represented workers who are retiring from the company currently have their pension benefits paid through Citizens.
In Rochester, N.Y., members of CWA Local 1170 got a boost from Rep. Louise Slaughter (D-N.Y.) who held a news conference at the local’s offices to spotlight the former Global Crossing workers’ losses in 401(k) stock holdings, and to join CWA and the AFL-CIO in calling for congressional action to protect workers' retirement security.
CWA and other unions are working with various members of Congress on legislation to give workers additional pension and savings protections.
Rep. Slaughter and other lawmakers are calling for a congressional hearing into questionable business and accounting practices by Global Crossing as well as a review of the restrictions surrounding 401(k) investment and retirement programs. CWA also is looking at possible legal actions surrounding savings plan losses by the former Global Crossing workers.
The 800 workers in Rochester, along with 250 in Minnesota and about 60 in Iowa, lost much of the value of their 401(k) savings after Frontier Communications in 1999 was sold to Global Crossing — the now bankrupt company. Company 401(k) contributions were made solely in company stock, with workers prevented from selling the stock for five years.
Global Crossing sold the company to Citizens Communications in July 2001 but the savings contributions remain locked in company stock.
While CWA members in Iowa and Minnesota retain pension benefits from a plan frozen by Frontier in 1996, many were rocked by the collapse of Global Crossing stock and lost tens of thousands of dollars, or more, from their 401(k) savings accounts, said Dave Evans, president of CWA Local 7270.
“The big shots cashed in their stocks while we couldn't move our investments, because the company contribution was frozen for five years and other funds were subject to blackout periods and other restrictions,” he said.
CWA Local 7270’s political committee are meeting with Sen. Paul Wellstone, who is sponsoring legislation to better safeguard retirement savings plans. In Iowa, members of Local 7171, though covered by the frozen pension plan, also face the loss of some of their retirement security as many workers bought additional company stock, local President Dennis Dunbar said.
The Rochester workers still have a traditional pension plan to bolster their retirement — but only because they fought an 18-month battle beginning in 1995 when Frontier was formed out of the old Rochester Telephone Co. Frontier unilaterally froze the old pension plan, demanding to replace it with a 401(k).
A CWA legal battle and corporate campaign finally resulted in a new traditional pension plan jointly controlled by the company and the union. Rochester workers maintain their vested benefits from the frozen plan and pension benefits from the negotiated joint plan, along with the 401(k) savings plan.
“We knew we won a victory, but we didn’t know at the time just how important that victory was,” said Local 1170 President Linda McGrath at the Feb. 11 news conference with Slaughter. She said workers also put savings in the 401(k) plan “because they had faith in their employer,” but now they feel betrayed.
Top executives and company insiders, including some who stayed just a year, reaped big benefits and cashed in their stocks and options, leaving shareholders and workers with 401(k) investments holding the bag, analysts say, prompting comparisons to the Enron scandal in which executives did well and cashed out their investments, while small investors and employees could not.
Separately the Pension Benefit Guaranty Corp. has frozen the transfer of the jointly managed pension funds to Citizens while it reviews Global Crossing's actions. Union-represented workers who are retiring from the company currently have their pension benefits paid through Citizens.