These transactions were entirely lawful, were reported in a manner in accordance with applicable accounting principles and were fully disclosed

Global Crossing

Congress is already investigating energy giant Enron, whose collapse was triggered by concern over its accounting methods.

"We're interested in potential accounting irregularities, potential securities irregularities and how they contributed to the collapse of the company," financial services committee spokeswoman Peggy Peterson said.

Transaction trouble

Investigators are concerned that the firm engaged in unnecessary capacity swaps, transactions intended to bolster its balance sheet where no real business has been conducted.

But Mr Legere and the company's chief financial officer Dan Cohrs said in a written testimony submitted to the panel that the transactions in question "were entirely lawful, were reported in a manner in accordance with applicable accounting principles and were fully disclosed".

Mr Hey said the transactions were "not common", but accounted to "fewer than two dozens in 2000 and 2001".

The company said it the Securities and Exchange Commission was reviewing sales of stock by the Global Crossing's employees.

FBI investigation

Global Crossing filed for bankruptcy and protection from its creditors on 28 January with liabilities totalling $12bn and assets worth $22.4bn.

It is under investigation by securities regulators and the FBI over accounting practices.

"We think these two huge bankruptcies [Enron and Global Crossing] have revealed some areas of the markets that need to be strengthened," said Ms Peterson.

"We're going to try to get that accomplished."

Overcapacity

The House panel is developing legislation designed to reform corporate responsibility, the accounting industry and the transparency of information provided to investors.

Global Crossing was one of a rash of "carriers' carriers" - new telecoms companies building fibre-optic capacity around the world with the aim of selling usage rights on.

The rapid rollout of its 27-country network covering more than 200 cities gave it a huge debt burden, and it was hit by overcapacity in bandwidth and lack of demand.

Its problems were made worse by the post-Enron concerns over its accounting practices.