Top executives at the troubled telecoms firms Qwest Communications and Global Crossing have have denied 'cooking the books' to meet financial targets.

In written testimony to a Congressional investigation, both Qwest's former chief executive Joseph Nacchio and Global Crossing chairman Gary Winnick said so-called 'swap deals' at the heart of accusations of impropriety were completely legitimate.

I believe that these transactions were not done pursuant to any business plan... I believe these transactions were done in order to book revenue

James Greenwood House Energy and Commerce Committee

And Mr Winnick said he had no idea his now-bankrupt company was in such dire straits when he sold shares worth $123m last year.

He has now offered to donate $25m to employees whose investments were wiped out when the company's stock plunged.

Global Crossing filed for bankruptcy in January, and is the US' fourth largest bankruptcy filing ever.

Scratch my back...

Both companies are under investigation by the US finance watchdog the Securities and Exchange Commission (SEC) and the US Justice Department over their accounting practices.

The 'swap deals' at the heart of the investigations are agreements to exchange capacity between telecoms providers.

Both Qwest and Global Crossing are accused of entering into swaps just before financial results were due, to massage upwards their performance and meet investors' expectations.

Current and former staff at the two companies told the House Energy and Commerce subcommittee on investigations last week that they were pressured to sign unnecessary deals in order to meet sales targets, as normal sales became more difficult to land.

The committee chairman, Pennsylvania Republican James Greenwood, said the investigation backed up their contention.

"I believe that these transactions were not done pursuant to any business plan," he said.

"I believe these transactions were done in order to book revenue."

Bankruptcy 'not due to fraud'

Current and former executives at Global Crossing still insist the swap deals were legitimate.

Mr Winnick defended his share dealing

Chief financial officer Dan Cohrs defended one deal with 360networks saying that while it was "true that the deal contributed significantly to our results... that was not the only reason" for doing it.

The company's chairman Gary Winnick told the subcommittee: "The Global Crossing bankruptcy based on the facts known to me is not a result of fraud."

He said that the company's bankruptcy was caused by the downturn in the whole telecoms industry.

He was offering his former employees a $25m helping hand as a gesture of goodwill - and encouraged executives in a similar position at other firms to "step up and write a cheque".

"I'm personally, along with my family, going to guarantee $25m to the people who have lost their money in the 401(k) plan," he told the Congressional hearing.

He had no knowledge of the company's tribulations when he made the sale, he said.

Deals 'not shams'

Qwest Communications has already said that it will probably restate $950m in relation to a series of swaps of fibre-optic network capacity with other telecoms firms.

In addition, the company confirmed on Tuesday that it may have to restate up to $531m in cash sales of optical capacity.

"I think there's a high degree of probability they're going to be adjusted," Qwest's chief financial officer Oren Shaffer told the subcommittee.

In a written testimony, the company's former chief executive Joseph Nacchio, said he believed the capacity swap deals Qwest had done were genuine.

"Once budgets were in place, neither I nor to my knowledge did any senior manager ever suggest, tacitly or expressly, that the company should attempt to meet its budget by 'cooking the books' or fabricating" network swaps, he said.

Qwest's president Afshin Mohebbi also denied any wrongdoing in his written testimony.

"I did not authorize or encourage anyone to cut ethical or procedural corners," he said.

"I do not believe that these transactions were 'sham' transactions."