Qwest faulted for pension fund use
Denver telco repays $83,321 in expenses it charged to trust

By Jeff Smith, Rocky Mountain News
Tuesday, June 7, 2005

Qwest Communications improperly charged $83,321 of company expenses to the employee pension plan, according to a recently completed three-year investigation by the federal government.

The Denver telco agreed to reimburse the pension plan, plus pay interest of $16,097, for a total of $99,918.
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The results of the investigation were outlined in a letter the Department of Labor recently sent to the Association of U S West Retirees that was posted on the retirees' Web site Friday.

The retirees last year sued the Labor Department in Denver federal court for documents related to the investigation.  The retirees group has been concerned about the sharp decline in the value of Qwest's pension fund since 2000 and the lack of information about the investigation.

Qwest spokesman Robert Toevs noted regulators ultimately took issue with only a small percentage of the expenses.

"During the period the DOL has investigated, the trust has distributed billions of dollars to beneficiaries, largely to retirees and their families," Toevs said.  "The DOL investigation deals with relatively small amounts of money.  However, we've taken this finding very seriously and the funds in question were restored to the trust in February 2003, plus interest."

It was unclear why the Labor Department's investigation is being closed only now when the expense in question was repaid in February 2003.  Toevs said he didn't know the exact nature of the expense allegedly misallocated.

Labor Department spokeswoman Gloria Della in Washington declined to provide details until the department determines what is public information.

Mimi Hull, president of the Association of U S West Retirees, said she is reserving comment about the Labor Department investigation, pending the government's release later this month of 1,500 pages of previously withheld documents.

"We really won't know whether we're satisfied until we have an opportunity to examine those documents," Hull said.

Qwest's pension plan was underfunded by $314 million as of year-end 2002, after having a $4.1 billion surplus two years earlier.  But the fund has since recovered to post a surplus of $204 million at year-end 2004.

Qwest, which blamed the decline on stock-market losses, noted in its 2004 annual report to regulators that the $9 billion-asset pension plan has enough funds at this point to take care of its estimated future obligations without the company having to contribute an additional amount.

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