press falls in lap of Qwest and Nacchio
By Rob Reuteman, Business Editor
Rocky Mountain News
Saturday, May 13, 2006
Qwest is suddenly the
beneficiary of the best national press it's had in at least
five years, and the company seems unable or unwilling to
capitalize on it. Meanwhile, its defrocked and indicted
ex-CEO has wisely begun spinning things to his advantage.
I'm talking, of course, about the blockbuster story this
week that Qwest was the only Baby Bell that refused to share
customers' phone records with the National Security Agency.
Verizon, AT&T and BellSouth have been backpedaling all over
the map since USA Today
reported Thursday that the companies began secretly sharing
phone records of tens of millions of their customers with
the NSA after 9/11. Sources told the newspaper that the NSA
program "is aimed at identifying and tracking suspecting
terrorists." That hasn't appeased congressmen and customers
from both political parties who are angry over what they see
as a violation of the Fourth Amendment prohibition on
"unreasonable searches and seizures."
U.S. Sen Ken Salazar, D-Colo., said Thursday, "I laud
Denver-based Qwest Communications for its decision not to
share private information with the NSA."
U.S. Sen Wayne Allard, R-Colo., also released a statement
Thursday: "According to information provided to me by the
White House, telephone customers' names, addresses and other
personal information have not been handed over to the NSA as
part of this program."
But late last year, President Bush said he authorized the
NSA to eavesdrop without warrants only on international
calls from people in the U.S. suspected of having terrorist
links. That bit of info from the White House turns out to
be only partly true.
You won't be seeing any Qwest ads declaring them the sole
defenders of truth, justice and the American Way. All press
inquiries on the matter have been met with a curt, "Qwest
doesn't comment on matters related to national security."
That's prudent, I'm sure, but you know they must be chomping
at the bit to be able to bask in the positive press they've
been getting. After all, Qwest has been lumped together in
the public mind with Tyco, Enron, WorldCom and HealthSouth
for the past five years. The company restated $3 billion in
revenues and settled massive fraud allegations.
Ex-CEO Joe Nacchio was hit last year with 42 counts of
insider trading that allegedly netted him more than $100
million in stock profits, touting Qwest shares publicly
while he knew the company was headed for a fall. It's safe
to say that, at least until Thursday, he was Public Enemy
No. 1 in Denver's business community. Then
USA Today hit
the newsstands with its account that Nacchio was "deeply
troubled by the NSA's assertion that Qwest didn't need a
court order to proceed." He and Qwest lawyers also were
concerned "about who, exactly, would have access to its
customers' information and how that information might be
The newspaper account said the NSA told Qwest the FBI, DEA
and CIA might access the data. Qwest declined and the spy
agency "punched back hard," telling Qwest its refusal "could
compromise national security."
My guess: Nacchio was the reporter's source. A clue: the
sentence saying he was "deeply troubled." I don't think Joe
was deeply troubled about anything besides saving his hide,
and I've never heard anyone suggest otherwise.
Nacchio resigned in June 2002 amid fraud allegations, and
the company reportedly continued to refuse the NSA request
under Dick Notebaert's leadership. According to the
USA Today story,
Notebaert ended negotiations with the NSA altogether in late
On Friday, Nacchio's attorney, former federal judge and
prosecutor Herbet J. Stern, issued a rare public statement
"to negate misguided attempts to relate Mr. Nacchio's
conduct (with the NSA) to present litigation."
In part, the statement continued: "Mr. Nacchio concluded
that these requests violated the privacy requirements of the
Telecommunications Act. Accordingly, Mr. Nacchio issued
instructions to refuse to comply with these requests."
For civil libertarians of all stripes, Nacchio's conduct
with the NSA, as revealed this week, is forcing a
reassessment of his entire character. Suffice to say, it
had nowhere to go but up. Apparently he was choosy about
what laws to break, I have heard some say. But his decision
about sharing the private phone records of Qwest customers
also was enforced by his successor Dick Notebaert, also in
the face of apparent pressure from the spy agency.
Will terrorists flock to Qwest's 14-state service area now
that they know their phone records will be safe here? I
don't have access to that information. But for the time
being, I feel more secure, not more threatened.
Business editor Rob
Reuteman can be reached at 303-892-5177 or
Rob Reuteman, business editor of the
Rocky Mountain News,
is a graduate of the University of Wisconsin and has a
master's degree in journalism from the University of
Colorado. He has been a