Anschutz, the Teflon executive
By Al Lewis, Business Columnist
Sunday, March 5, 2005
financier Philip Anschutz is stepping away from Qwest
virtually unscathed by the scandals at the
Despite a $2.5 billion accounting restatement at the
enterprise he founded, Anschutz has escaped the wrath of the
Justice Department, the Securities and Exchange Commission,
Congress and even -- to a large extent -- New York Attorney
General Eliot Spitzer.
The worst thing that happened to Anschutz at Qwest was
damage to his reputation as a smart and ethical businessman.
The best thing that happened was that Anschutz sold $1.5
billion in Qwest stock in 2001 before its value nosedived.
He still owns about 16 percent of Qwest.
Anschutz, 66, announced plans last week to depart from the
boards of three public companies he helped build, including
There's plenty of speculation as to why. I think Anschutz
has wanted out of Qwest since June 2002, when Qwest's board
fired then-CEO Joseph Nacchio. Anschutz's abrupt departure
at that time might have been construed as an indication of
culpability, given the pending federal investigations and
shareholder lawsuits. That's how Nacchio's departure was
Another way of looking at it: Anschutz deserves credit for
staying and for hiring CEO Richard Notebaert, who has
skillfully averted the bankruptcy toward which Nacchio was
so clearly heading.
Nacchio still awaits trial on insider trading charges. He's
pleaded not guilty. But now that most of Qwest's issues are
resolved, Anschutz can safely step down.
To some, it's disappointing that Anschutz hasn't suffered
harsher consequences. Anschutz was the one who hired
Nacchio. Anschutz also served as non-executive co-chairman
of Qwest's board. And two of Anschutz's employees sat on
This is why it has been difficult for me to believe
Anschutz's claims that he was simply a hands-off investor
who was not the least bit aware of malfeasance at Qwest.
Nelson Phelps, who represents retirees of Qwest's
predecessor U S West, told me Anschutz should have been
dragged before a grand jury. Phelps, of course, realizes
the likelihood of that is now nil.
"No sane person is going to reach a judgment on the basis of
the facts that are present," Phelps said. "There are very
few. That's one of his defenses: He's so secretive and
Anschutz has not commented publicly about Qwest. When a
congressional panel dragged failing telecom executives into
embarrassing public hearings in 2002, Anschutz was not among
But as the final chapters of the Qwest scandal are written,
the story has to go where the few available facts go. And
here are the key facts, as I see them:
Some of the most motivated people in the world have tried
their best for years to nail Anschutz -- from the infamous
Spitzer to the dreaded shareholders' attorney Bill Lerach --
and what they've come up with is next to nothing.
Anschutz' stock sales appear clean. The bulk was sold to
Anschutz lost at least $10 billion, on paper anyway -- more
than any other Qwest shareholder -- as the company's
Anschutz's alleged knowledge of the accounting problems at
Qwest has never been demonstrated. Perhaps he should have
known, but there's no known paper trail or testimony showing
that he did.
Anschutz agreed to donate $4.4 million to New York charities
to get Spitzer off his back for allegedly not disclosing
some IPO stock trades. This is chump change, considering
that Spitzer initially was gunning for more than $1
billion. Anschutz said then and now he did nothing wrong.
In my view, Anschutz is primarily guilty of three things:
1) Trusting Nacchio for too long. 2) Allowing Qwest to
take on too much debt. 3) Believing salesmen like Solomon
Smith Barney telecom analyst Jack Grubman, who introduced
Anschutz to Nacchio and preached that telecommunications
networks could keep growing forever.
This should be embarrassing to a man as brilliant as
Anschutz. It's enraging to Qwest shareholders who lost
money. But it's not enough to call a grand jury.
Al Lewis' column appears
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