AUSWR
The Association of U S West Retirees
 

 

 

Unbridled ambition got the best of Nacchio
By Al Lewis, Staff Columnist
Denver Post
Friday, April 20, 2007


Joe Nacchio looked prepared for whatever the jury would have to say.

The former Qwest chief executive came to court looking composed, even optimistic.

He shot me a smile from across the courtroom in the minutes before the jury was seated.  He tipped his rectangular eyeglasses, the way one would tip a hat.

He was jesting about the way I'd described him in a previous column as wearing "stylish" glasses.  He had ribbed me about this adjective before, saying he'd take any compliment he could get from me, even if it was just one word.

When he had made his initial appearance on 42 counts of insider trading in December 2005, I described him as wearing handcuffs -- not exactly stylish for a former Fortune 500 executive.

If Nacchio was nervous on Thursday, he wasn't showing it.  During his trial, I'd watched his emotions range from anxiety to near giddiness, depending on the day.  He looked good on Thursday.  Confident.

His wife and son broke into tears of relief as the judge read verdicts on the first 23 counts.  "Not Guilty.  Not Guilty.  Not Guilty ..." Until the 24th count:  "Guilty."

It was like a gunshot.  Nacchio's eyes dampened.  His attorneys fell somber.  The room went silent, except for the judge reading the remaining verdicts, all guilty.  Few observers expected such a devastating result.  Certainly, not Nacchio's highly paid legal team.

"We will certainly appeal" was all I heard from Nacchio's storied lead counsel, Herbert Stern, on Thursday.

The government called 21 witnesses, one after the next, and each day's testimony appeared weak on its own.  But in masterful closing and rebuttal arguments, prosecutors stitched all of these pieces together into an incriminating patchwork.

Nacchio knew Qwest was sinking.  He knew he was cooking the books.  He knew he was lying to Wall Street.  He knew he was not disclosing material information to his investors.  And he knew he was dumping his stock on the unsuspecting public as fast as he could unload it.

There is no shortage of gleeful Qwest retirees, employees and investors.  "I'm delighted and surprised," said Jim Rippey of Omaha, who retired from Qwest's predecessor US West in 1982.

"I believed in business and free enterprise when I saw how it was being worked then," said Rippey, 81.  "But I am really disgusted with how the business has become so obsessed with the bottom line.  Managers blame it on having to please the stockholders, but I think there's more to it than that.  The managers are an ingrown group, and they see to it that they make so much money that they can afford to say, 'Hell, I don't have to work anymore.' ... Doesn't anybody have any pride?  What if our ministers and our teachers did that?"

His style made enemies

Denver billionaire Phil Anschutz started Qwest using rights of way from his railroad.  He then hired Nacchio from AT&T to build it.  The promise of technology and the information age sent Qwest's stock soaring so high, it could use its shares as currency to buy US West.  And once that merger was complete in 2000, Qwest's top executives began dumping stock and resigning in droves.

I don't believe that Nacchio started out with bad intentions.  He was a hard-driving CEO in a fast-money culture.  His braggadocio was as endearing as it was alienating.  When I first wrote critical articles about Nacchio, plenty of folks in this town defended him.  But over time, his style made more enemies than friends in a town that values honest relationships.

Anschutz, who testified for Nacchio's defense, promised great fortunes to lure Nacchio from AT&T.  Those fortunes came in the form of growth stock and stock options.

Shareholders paid price

Once the merger with US West was complete, it would be anyone unlucky enough to buy Qwest shares who would deliver the pay that Nacchio expected.

I think Nacchio got carried away with his mission.  He built a telecommunications company from the ground up.  He was, for a time, a great corporate leader intent on improving a shoddy old Baby Bell.

And for this he expected to be paid.  Even when the telecom market, and all that he had built, was collapsing, he expected to be paid.  And his unbridled ambition at a time of seemingly limitless possibilities got the better of him.

Al Lewis' column appears Sundays, Tuesdays and Fridays. Respond to Lewis at denverpostbloghouse.com/lewis, 303-954-1967 or alewis@denverpost.com.

http://www.denverpost.com/allewis