By Lucy Komisar
Oct 6, 2008
From alleged kickbacks to Aristide to a company that’s tanking.
James Courter, the former New Jersey Republican Congressman who quit as a McCain national finance co-chair after IDT, the global telecommunications company he heads, was fined $1.3 million by the Federal Communications Commission, now has much bigger problems. IDT announced Friday that Courter will quit the company. IDT‘s filing with the SEC the same day shows the company in a free fall. Its stock is tanking, and the New York Stock Exchange has threatened to delist it.
The FCC fine was first reported by the author in July. It turned out that IDT had been sending its fees to a Turks & Caicos shell company instead of to a Haiti Teleco account. A whistleblower charged kickbacks. See previous stories below.
The company said Courter would leave as CEO when his contract expires next October. In the meantime, his 2009 salary will be paid entirely in stock, which he cannot cash in till his departure. That could mean paltry pickings. IDT stock has fallen to 69 cents from more than $24 in 2004 and $1.93 in June.
The New York Stock Exchange informed the company Sept 30 that it could be delisted, because over a consecutive thirty-day trading period its average global market capitalization was below the NYSE‘s $100 million requirement and because its common stock fell below $1. The company has to provide the exchange with a business plan in 45 days that demonstrates its ability to achieve compliance with the market capitalization standard within eighteen months.
The FCC fine in July was imposed for IDT‘s failure to file its contract with Haiti. IDT‘s Haiti problem arose after an ex-employee, Michael Jewett, sued the company charging he was fired after refusing to agree to a kickback deal to pay off then Haitian President Jean-Bertrand Aristide. Jewett’s lawyer discovered that the Haiti contract had never been filed with the FCC, a violation of commission rules. The document, which IDT was forced to make public, revealed that it had been sending its Haiti Teleco fees to a secretive company called Mont Salem in the Turks & Caicos Islands instead of to a Teleco account in Haiti.
IDT could be in for some more trouble with the FCC if a new administration decides to enforce its regulations even without the public pressure of private law suits. According to FCC responses to Freedom of Information Act requests, IDT has never filed its contracts with any of the 140 major international carriers to which it claims to supply service. This violation could bring fines of $7,000 a day for each case, but the agency has given the company a pass on obeying its rules.
Since the one contract IDT was forced to file shows money funneled to an offshore shell company, one might think the FCC would be very interested in what the company‘s other contracts provide. Its lack of interest could be connected to the fact that IDT founder and chairman Howard Jonas has been a major George W. Bush financial supporter.
IDT also has problems with the IRS, which assessed it $76 million in back taxes due from 2001 to 2006, plus interest of $39.5 million. It says it’s paid $10 million. That leaves a balance that is more than its average global market capitalization.
The Komisar Scoop sought to raise these issues on IDT’s conference call for analysts and journalists today, but it was not selected to speak.
When Courter leaves in a year, Jonas will take the CEO post, which he held from 1991 until 2001. If the company is still around.