Qwest Says U.S. Attorney Has Begun a Criminal Probe (Update1)
By Dana Cimilluca and Colleen McElroy
Denver, July 10 (Bloomberg) -- Qwest Communications International Inc. said the U.S. Attorney's office in Denver has begun a criminal investigation of the company.
The U.S. Attorney's office didn't disclose the subject matter of the investigation, the company said. Qwest plans to fully cooperate, according to a company statement. Qwest shares were halted prior to the announcement. The stock has fallen 82 percent this year. Officials were unavailable for comment.
Joseph Nacchio stepped down as chief executive officer of Qwest last month after the shares plunged amid a U.S. Securities and Exchange Commission accounting probe and doubt about the company's ability to repay debt.
In March, the SEC began investigating Qwest's accounting for so-called swaps of long-distance network capacity with rivals. Investors questioned whether Qwest and other companies used the transactions to inflate sales. Qwest has said its accounting was proper.
Under Nacchio, Qwest announced the elimination of 13,000 positions since September. The company, with $5.6 billion of debt due in the next year, must lower borrowings or raise cash to avoid violating bank-loan terms at the end of the year, analysts say. New CEO Richard Notebaert is trying to sell assets, including a phone-book business, to reduce Qwest's junk-rated debt.
Qwest's sales dropped 14 percent to $4.37 billion in the first quarter amid a glut of fiber-optic network capacity. The company has reported eight straight quarterly losses.
The newspaper said the investigation covers three areas, including how Qwest recognized revenue and accounted for sales of optical capacity, and matters relating to its sale of telecommunication equipment to customers who either purchased Internet services from Qwest or who received financing from the company.
More from 04/29/02:
Already facing a probe by the U.S. Securities and Exchange Commission into whether it misleadingly inflated revenue in 2000 and 2001, telecommunication carrier Qwest is under suspicion of striking secret deals with competitors who agreed not to oppose Qwest's rapid expansion, The Wall Street Journal reported Monday.
An example of such a deal would be where Qwest offered a smaller carrier discounts for using Qwest's infrastructure, on the understanding that the carrier would not oppose Qwest's submission to operate long-distance services in that market, according to The Journal.
Other info can be found at the main link:
I found this info while investigating Ann Bingaman, wife of Sen. Jeff Bingaman for this FR thread. Found lots of juicy stuff on Bingaman to hit the Dems with, there's dirt there on Daschle's wife as well.