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Good press falls in lap of Qwest and Nacchio
By Rob Reuteman, Business Editor
Rocky Mountain News
Saturday, May 13, 2006

Qwest is suddenly the beneficiary of the best national press it's had in at least five years, and the company seems unable or unwilling to capitalize on it.  Meanwhile, its defrocked and indicted ex-CEO has wisely begun spinning things to his advantage.  I'm talking, of course, about the blockbuster story this week that Qwest was the only Baby Bell that refused to share customers' phone records with the National Security Agency.

Verizon, AT&T and BellSouth have been backpedaling all over the map since USA Today reported Thursday that the companies began secretly sharing phone records of tens of millions of their customers with the NSA after 9/11.  Sources told the newspaper that the NSA program "is aimed at identifying and tracking suspecting terrorists."  That hasn't appeased congressmen and customers from both political parties who are angry over what they see as a violation of the Fourth Amendment prohibition on "unreasonable searches and seizures."

U.S. Sen Ken Salazar, D-Colo., said Thursday, "I laud Denver-based Qwest Communications for its decision not to share private information with the NSA."

U.S. Sen Wayne Allard, R-Colo., also released a statement Thursday:  "According to information provided to me by the White House, telephone customers' names, addresses and other personal information have not been handed over to the NSA as part of this program."

But late last year, President Bush said he authorized the NSA to eavesdrop without warrants only on international calls from people in the U.S. suspected of having terrorist links.  That bit of info from the White House turns out to be only partly true.

You won't be seeing any Qwest ads declaring them the sole defenders of truth, justice and the American Way.  All press inquiries on the matter have been met with a curt, "Qwest doesn't comment on matters related to national security."

That's prudent, I'm sure, but you know they must be chomping at the bit to be able to bask in the positive press they've been getting.  After all, Qwest has been lumped together in the public mind with Tyco, Enron, WorldCom and HealthSouth for the past five years.  The company restated $3 billion in revenues and settled massive fraud allegations.

Ex-CEO Joe Nacchio was hit last year with 42 counts of insider trading that allegedly netted him more than $100 million in stock profits, touting Qwest shares publicly while he knew the company was headed for a fall.  It's safe to say that, at least until Thursday, he was Public Enemy No. 1 in Denver's business community.  Then USA Today hit the newsstands with its account that Nacchio was "deeply troubled by the NSA's assertion that Qwest didn't need a court order to proceed."  He and Qwest lawyers also were concerned "about who, exactly, would have access to its customers' information and how that information might be used."

The newspaper account said the NSA told Qwest the FBI, DEA and CIA might access the data.  Qwest declined and the spy agency "punched back hard," telling Qwest its refusal "could compromise national security." 

My guess:  Nacchio was the reporter's source.  A clue:  the sentence saying he was "deeply troubled."  I don't think Joe was deeply troubled about anything besides saving his hide, and I've never heard anyone suggest otherwise.

Nacchio resigned in June 2002 amid fraud allegations, and the company reportedly continued to refuse the NSA request under Dick Notebaert's leadership.  According to the USA Today story, Notebaert ended negotiations with the NSA altogether in late 2004.

On Friday, Nacchio's attorney, former federal judge and prosecutor Herbet J. Stern, issued a rare public statement "to negate misguided attempts to relate Mr. Nacchio's conduct (with the NSA) to present litigation."

In part, the statement continued:  "Mr. Nacchio concluded that these requests violated the privacy requirements of the Telecommunications Act.  Accordingly, Mr. Nacchio issued instructions to refuse to comply with these requests." 

For civil libertarians of all stripes, Nacchio's conduct with the NSA, as revealed this week, is forcing a reassessment of his entire character.  Suffice to say, it had nowhere to go but up.  Apparently he was choosy about what laws to break, I have heard some say.  But his decision about sharing the private phone records of Qwest customers also was enforced by his successor Dick Notebaert, also in the face of apparent pressure from the spy agency.

Will terrorists flock to Qwest's 14-state service area now that they know their phone records will be safe here?  I don't have access to that information.  But for the time being, I feel more secure, not more threatened.

Business editor Rob Reuteman can be reached at 303-892-5177 or reutemanr@RockyMountainNews.com.

About Rob Reuteman
Rob Reuteman, business editor of the Rocky Mountain News, is a graduate of the University of Wisconsin and has a master's degree in journalism from the University of Colorado.  He has been a News editor since 1983.

http://www.rockymountainnews.com/drmn/business_columnists/article/0,1299,DRMN_82_4695475,00.html