Ex-Qwest Execs Indicted
Four Former Officials Accused of Improperly Booking $33M In Revenue In 2001Feb 25, 2003 | CNN/Money
Four former executives of Qwest Communications International were indicted Tuesday, charged with falsely booking $33 million in revenue.
The announcement was made by Justice Department and Securities and Exchange Commission officials. The SEC is also seeking civil penalties against a total of eight former employees, including the loss of salaries and bonuses during the time of the alleged misdeed. The alleged criminal action involved the second quarter of 2001, while the SEC action covers both 2000 and 2001.
Those indicted included Grant Graham, Qwest's former chief financial officer, as well as Thomas Hall, a former senior vice president, John Walker, the company's former vice president for its government and education unit, and Bryan Treadway, the company's former assistant controller. Unlike some other business executives who were arrested to face criminal charges during the last year, Attorney General John Ashcroft said that the four would be given the opportunity to surrender to authorities.
The criminal charges involved the improper booking of money from a contract to create a systemwide computer network for public schools in Arizona. The executives took the action to help Qwest meet its numbers in a difficult period for the company, according to government officials.
"Simply put, the defendants couldn't make the numbers work, so they cheated," said Bill Donaldson, the newly appointed chairman of the Securities and Exchange Commission.
Qwest said in July that the U.S. attorney's office in Denver had opened a criminal probe into the company. Company officials said Tuesday they would hold off on further comment until after the press conference.
U.S. regulators also have been probing accounting practices at Qwest and other telecommunications companies for about a year. The investigations focus on whether the carriers improperly inflated revenue by incorrectly booking sales and swaps of network capacity to meet Wall Street's revenue expectations.
Qwest has said it will restate about $2.2 billion in total revenue for sales of optical network capacity, equipment, and other services in 2000 and 2001. The company recently posted its first profit in 11 quarters as it cut costs to offset a drop in revenue. It also has strengthened its balance sheet through debt exchanges and asset sales, cut more than 10,000 jobs, or 17 percent of its work force, and shed unprofitable businesses.