Ex-Qwest finance chief testifies in insider trading trial

27 Mar 2007
00:00

(Associated Press via NewsEdge) Former Qwest CEO Joe Nacchio told managers of the telephone company's key business units to focus on meeting internal business targets despite their concerns they would be unable to achieve the goals he set for them, a former company finance chief testified.

In a separate development, Nacchio's attorneys asked the judge presiding over his insider trading trial to declare a mistrial because of what they called 'prejudicial' testimony from a former Qwest employee who described putting all of her investments into Qwest stock based on Nacchio's promises of revenue growth.

Robin Szeliga, who joined Qwest in 1998 and became chief financial officer in April 2001, told jurors she attended several meetings where Nacchio put a top priority on meeting internal revenue targets, which were higher than those publicly released to investors.

Szeliga, who is serving two years' probation after pleading guilty to illegally selling stock in 2001, said she met with Nacchio and her boss, then-CFO Robert Woodruff, in late December 2000 or early January 2001 to discuss concerns raised by executives of Qwest's business units.

Szeliga said Nacchio told her 'he would make the decisions, not me, as to whether the business units had valid concerns.' The meeting occurred about a month before the first trades that Nacchio is accused of improperly making.

The 57-year-old Nacchio is accused of selling $101 million worth of Qwest stock in 2001 after learning internal information that the Denver-based company was at financial risk. Soon after, Qwest became mired in an accounting scandal and eventually was forced to restate $2.2 billion in revenue.

Nacchio, who resigned from Qwest under pressure in 2002, is charged with 42 counts of insider trading stemming from the stock sales. Each count carries a penalty of up to 10 years in prison and a $1 million fine.

Szeliga testified that she received a memo on Sept. 5, 2001 indicating that business unit managers believed they would fall $1.5 million short of meeting their 2001 budget revenue estimate of $22 billion.

She said that in the 2001 budget they had expected $2.6 to $2.7 billion growth.

© 2007 The Associated Press

© 2007 Dialog, a Thomson business. All rights reserved

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