Szeliga, Woodruff central to SEC's Qwest allegations
By Rocky Mountain News
Saturday, March 26, 2005
You can't commit a "massive financial fraud" without a chief financial officer.
That's why Qwest's two former chief financial officers - Robin Szeliga and Robert Woodruff - are as central as former CEO Joe Nacchio in the Securities and Exchange Commission's 50-page allegations against former Qwest executives. The names Woodruff and Szeliga show up 232 times in the report.
The SEC claims in its civil case filed this month that the CFOs, along with Nacchio and several other executives, committed a $3 billion fraud from 1999 to 2001.
Every quarter, often in the waning moments, Qwest would hurriedly sell or swap network capacity or equipment and book millions in revenue from the one-off deals. Then, in Qwest's earnings announcements and financial statements, the revenue was portrayed as ongoing business.
Regardless of the disclosure, the accounting for the network sales was just plain wrong, the SEC says.
It was in 2001, as Woodruff resigned and Szeliga took over, that the fraud grew most desperate, the SEC says. Nacchio and his finance officers, as well as other executives, knew Qwest was significantly behind in meeting its revenue targets.
A flurry of swaps and one-time sales were combined with other tricks like the publication of extra phone books and earnings-boosting balance sheet adjustments.
All the while, investors were in the dark, according to the SEC. Required disclosures - the responsibility of Woodruff and Szeliga - were absent or false. The SEC says executives often ignored Qwest's outside auditor, Arthur Andersen, which ordered the disclosures.
Nacchio made more than $230 million in stock profits, Woodruff made $41 million and Szeliga made $1.6 million during their tenures at the Denver telecommunications company. A look at the two former Qwest executives
Robert Woodruff, 56, Cherry Hills Village
• Education: Degree in accounting from the University of Wisconsin.
• Career: Joined accounting firm Coopers & Lybrand in 1984; left in 1993. Joined Qwest in August 1994, when it was a private company, as executive vice president-finance, chief financial officer and treasurer. Remained CFO through Qwest's 1997 initial public offering and its 2000 merger with U S West.
• His "planned retirement" was announced in February 2001.
Robin Szeliga, 44, Littleton
• Education: Degree in accounting from the University of Northern Colorado.
• Career: Held various financial management positions at the cable-TV company Tele-Communications Inc. (now Comcast) from 1986-97. Joined Qwest in November 1997 as a finance executive. Became chief financial officer in April 2001. Replaced in July 2002 but remained at Qwest another year as an executive vice president focusing on debt-reduction efforts.