suit against Qwest
The failure of a joint venture with a Dutch telecom spurred the
fraud suit, which now has to be filed in the Netherlands.
By Andrew Harris, Bloomberg News
Thursday, October 19, 2006
Trenton, N.J. -
Qwest, the fourth-largest U.S. local-phone company, has won
dismissal of a securities-fraud lawsuit filed after a joint
venture between Qwest and a Dutch telecommunications firm went
U.S. District Judge Garrett Brown threw out the case Tuesday,
ruling it should have been filed in the Netherlands. Trustees of
bankrupt KPNQwest NV sued, seeking more than $7.2 billion in
damages and claiming three former Qwest executives engaged in
"Plaintiffs can bring this action in the Netherlands, their home
jurisdiction, and do so with confidence that the local court
would entertain the action," Brown wrote.
The failed company, with 130 European affiliates, was created in
1999 by Qwest and The Hague-based Koninklijke KPN NV, Brown
The dismissal means the trustees can't seek triple damages under
the U.S. Racketeer Influenced and Corrupt Organization Act. They
claimed $2.4 billion and asked for punitive damages.
Hoofddorp, Netherlands-based KPNQwest filed for bankruptcy in
2002 in a Dutch court.
Named as defendants were Qwest and former executives Joe Nacchio,
former chairman and chief executive; Robert Woodruff, former
chief financial officer; and John McMaster, former vice
president for international business.
McMaster also served as KPNQwest's CEO. He was the sole member
of its management board, according to the lawsuit complaint,
filed in September. Nacchio and Woodruff were on KPNQwest's
supervisory board, the complaint said.
"Qwest is pleased with the court's ruling," company spokesman
Bob Toevs said in a statement.
KPNQwest's lead U.S. counsel, Rich ard McMillan of the
Washington law firm Crowell and Moring, didn't return a call
The company was launched to "build and operate a high capacity
European fiber optic Internet Protocol-base network linked to
Qwest's North American network for data, video and voice
services," court papers said.
KPNQwest went bankrupt after building a 60-city network just
before prices collapsed for such services. The company had to
sell the network piecemeal after failing to find a buyer for the
The complaint accused the trio of manipulating KPNQwest and
controlling the flow of information to the supervisory board.
Nacchio led Qwest from May 1999 to June 2002. He faces criminal
charges of selling $101 million in Qwest shares in 2001 knowing
the company's revenue targets were overstated. Nacchio has
denied any wrongdoing.