Ex-Nacchio crony heads to college
Friday, September 8, 2006
Westwood College would be a great business school if the new chief executive of its parent company could teach what he knows.
George Burnett, 51, came out of scandal-ridden Qwest unscathed. He went on to become chief executive of Arapahoe County-based phone-book publisher Dex Media, where he led a leveraged buyout, an initial public offering and then a merger with rival R.H. Donnelley. After the merger, Burnett became Donnelley's chairman. But earlier this year, he cashed out $22 million in stock options and quit.
Now he is chief executive of Denver- based Alta Colleges Inc., a privately held chain of 20 schools in California, Colorado, Georgia, Illinois, Texas and Virginia. The for-profit schools - known as Westwood and Redstone colleges - prepare folks for careers in business, health care, technology, aircraft maintenance and other fields.
"We spent a heck of a lot of time getting to know George," said Scott Cousino, a senior vice president at Alta. "George has a strong passion for education. ... He's got great business experience to help us to continue to grow."
Cousino denied my request for an interview with Burnett. Alta issued a news release Aug. 29 announcing Burnett's appointment, but Cousino said Burnett would not be available for a few weeks.
Burnett, a Dartmouth graduate, worked for 14 years at D'Arcy Masius Benton and Bowles, a New York advertising agency. He eventually joined AT&T, where he managed a handful of its business units.
In 2000, Burnett got a job at Qwest, where former AT&T executive Joe Nacchio was making bold promises about the phone company's future earnings.
"He was really close to Joe," recalls Jo Lynne Whiting, an ex-Dex exec. "He would boast that he had access to Joe because they rode back and forth on the jet to New Jersey (where Nacchio lived)."
Nacchio never lived up to his financial promises and now awaits trial on insider- trading charges. But this did not slow Burnett's career trajectory one bit.
"He's probably had the most successful post-Joe career," Whiting said.
In 2001, Burnett was named president and CEO of Qwest's directory division, Dex. In 2002, Qwest sold Dex for more than $7 billion to avert bankruptcy. Two buyout firms acquired Dex - Washington, D.C.-based Carlyle Group and New York-based Welsh, Carson, Anderson & Stowe. Burnett went to work for them.
In October 2004, Qwest paid $250 million to settle charges with the Securities and Exchange Commission, which alleged "a massive financial fraud." Part of that fraud, the SEC alleged, involved secretly changing publication dates of phone books. This alleged scheme, most of which occurred when Burnett was in charge of the Dex division, loaded revenues into quarters where Qwest fell short of Nacchio's promised targets.
Burnett wasn't named in these civil allegations. He went on to help the buyout firms load Dex with debt, cut hundreds of employees, sell stock in an IPO and then sell Dex to Donnelley for a $3 billion profit. In late March, Burnett sold all his stock in Donnelley. In May, he resigned as Donnelley's chairman, which put him in line to collect a $1.7 million severance payment. He also continues to hold about $3 million worth of Donnelley stock.
"Everything he did was to get money for himself," said Laurie Hemming, 37, of Beaverton, Ore., who worked for Qwest and Dex for 14 years until she was laid off in January 2005. "He lied to our faces. He would tell us how great the company was going, and how he was so thrilled with us employees. In truth, he was getting ready to lay people off."
Hemming recalls frequently seeing Burnett in company videos with Nacchio.
"When they were shaking hands, you could see dollar signs just oozing between them," she said.
Too bad I couldn't talk to Burnett. I wish I knew why Alta hired him.
Is this for-profit chain of schools preparing for an IPO or a buyout? Or does Burnett want to educate a new generation of workers so that someday someone else can get rich slashing their jobs?
Al Lewis' column appears Sundays, Tuesdays and Fridays. Respond to him at denverpostbloghouse.com/lewis, 303-954-1967 or email@example.com.