Competitor driven to succeed
By Jeff Smith, Rocky Mountain News
Saturday, March 26, 2005
Robin Szeliga liked to tell the story about the time she worked on a crucial financial report even after going into labor in the late 1990s.
"I believe she literally took (the report) with her on the way to the hospital to finish her review," said one source, recalling the story. The person remembered Szeliga joking she was lucky to get away long enough to give birth to her child.
The anecdote illustrated both the pressure-cooker atmosphere at Qwest under former CEO Joe Nacchio as well as Szeliga's workaholic tendencies. That hard-driving personality, reflected also in such hobbies as cycling, skiing, triathlons and running, served her well, as she eventually rose to the position of Qwest's chief financial officer in April 2001.
But it also may make it difficult for Szeliga to argue she wasn't aware of the alleged shenanigans at the Denver-based telecommunications company when she and Nacchio gave glowing reports to investors in early 2001 about Qwest's industry-leading growth.
"People thought this was just an accounting case," said Carr Conway, a former SEC investigator who now is at Dickerson Financial Investigation Group in Lakewood. "But it's (also) about false and inadequate disclosure."
One of Szeliga's attorneys didn't return phone calls this week.
Szeliga, whose family lives in a 3,600-square-foot home in Littleton, didn't make out nearly as well financially as either Nacchio or former CFO Robert Woodruff. The SEC claims Szeliga received "ill-gotten" gains totaling $1.6 million during the period in question, compared with Nacchio's $216.4 million and Woodruff's $41 million.
Driven to succeed
But professional ambition also may be used as a motive.
Szeliga, 44, came to Qwest in late 1997 after spending a decade as a finance executive at the cable-TV company Tele-Communications Inc., now Comcast.
By then, she already had developed a reputation for being intense and sometimes difficult, but also conscientious.
When Woodruff left Qwest as chief financial officer in February 2001, Nacchio named Szeliga "interim" CFO.
The temporary title came at a critical time - the telecommunications industry had begun to slide and yet Qwest was still trumpeting double-digit revenue growth.
A source reflecting on those days believes Nacchio kept Szeliga off balance with the interim title and suggestions she didn't really have the experience to be the permanent CFO. Another said Szeliga simply wasn't Nacchio's first choice.
In any event, "she was hellbent to prove him wrong," a source said. "Robin was so eager to get the promotion, she drank his Kool-Aid without question."
Nacchio, through his attorney, has denied he ever misled investors about Qwest's financial condition.
Szeliga was named CFO two months later, after Qwest had filed its annual report with federal regulators. The SEC alleges the report provided false and misleading information to investors by failing to disclose how much the company relied on one-time transactions to meet its targets.
Deflecting the blame
As Qwest fell under civil and criminal investigation in 2002, Szeliga was able to maneuver herself into a relatively favorable light. New Chief Executive Dick Notebaert replaced her with Oren Shaffer in July 2002, but Szeliga was retained for another year as an executive vice president.
Documents released in conjunction with the congressional hearings on Qwest in the fall of 2002 showed Szeliga almost in the role of a "whistle-blower," making efforts in the summer and fall of 2001 to rein in Qwest's dependency on questionable swaps of network capacity with other communications carriers.
Szeliga testified she had become aware of irregularities when the company's controller expressed concerns in mid-2001 and later realized sales executives had entered into secret side agreements that invalidated Qwest's accounting. In a memo on Aug. 2, 2001, Szeliga warned company officials to stop.
But not everyone believed that was the full story.
Ken Johnson, a spokesman for the House subcommittee, said after the hearings that he viewed Szeliga as competent "but perhaps in over her head."
"When she was made aware of the (side) agreements, she disapproved and attempted to make the appropriate changes to the company's policies," Johnson said at the time. "But, at the same time, we felt there were a few specific circumstances where she was not being totally forthright with us."
Such questions about Szeliga's credibility surfaced again in the spring of 2004, when federal prosecutors called on Szeliga to testify in the criminal trial against four former midlevel Qwest executives accused of inflating revenues.
Szeliga told defense attorneys she wasn't an accounting expert. Bill Carlino, editor in chief of Accounting Today, wrote that he found that to be a "rather odd statement from a woman whose biography indicated that she has her CPA (certified public accountant) credential and 15 years of experience."
SEC alleges Szeliga avoided issue
Szeliga also testified she couldn't recall ever using the SEC Web site for guidance on accounting issues.
The SEC alleges in its lawsuit that Szeliga played a key role in financial reporting long before she became CFO. Szeliga, the SEC claims, didn't want to know its view on the company's aggressive accounting.
Regulators cite an instance in which Qwest's outside auditor, Arthur Andersen, allegedly told Szeliga in August or September 2001 to ask the SEC about Qwest's accounting of capacity swaps .
Szeliga refused, allegedly saying: "F--- no. Last time I went to the SEC, I ended up writing off $3 billion" of assets.
Today, Szeliga is keeping a low profile.