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Feds: No act existed against Qwest
The U.S. denies defense claims of retaliation over Qwest's refusal to aid warrantless spying. 
By Kelly Yamanouchi 
Denver Post 
Tuesday, October 23, 2007


Qwest was not retaliated against after former chief executive Joe Nacchio refused to participate in the government's warrantless-wiretapping program in 2001, federal prosecutors argued in court documents unsealed Monday.

In the filing of heavily redacted documents, the U.S. government called into question Qwest's expectation of winning government contracts and noted that Qwest was named a strategic vendor for a contract called "Groundbreaker."

Nacchio had alleged that the National Security Agency asked Qwest in February 2001, more than six months before the terrorist attacks of 9/11, to participate in a wiretapping program Qwest thought was illegal.

That revelation could affect President Bush's efforts to grant legal immunity to large telecommunications companies that argued they were acting in good faith to work with the government to fight terrorists after the attacks.  Congress is looking into the wiretapping and debating an immunity grant.

While Qwest refused to participate, other telecoms, including AT&T, have been sued in connection with their alleged involvement in the surveillance program.

U.S. District Judge Edward Nottingham rejected multiple requests from Nacchio to introduce information about the government's phone-tapping program as part of his defense against insider-trading charges.

The judge said the connection between Nacchio's refusal to cooperate with the government and Qwest's not getting a federal contract was "extremely weak."

Nacchio wanted to show that he didn't sell Qwest stock illegally in early 2001 and that he was upbeat about Qwest's stock because he had top-secret information that the company would win lucrative government contracts.  Nacchio at the time sat on a number of key government telecommunications committees.

Nacchio was convicted on 19 counts of illegal insider trading in April.  Nacchio, who was sentenced to six years in prison, is appealing.

But in a document released Monday and dated April 2, 2001, Qwest is shown as one of more than 30 strategic vendors that were part of the "Eagle Alliance" team awarded a contract for the Groundbreaker project, though Qwest was not included as one of three alliance strategic partners.

Groundbreaker was the NSA's contract to outsource certain telecom work after a fire destroyed one of its large data centers.

The government also sought to discredit the idea that Nacchio could expect to win a contract, objecting to a claim by Nacchio that a government agency whose name was redacted in the documents "understood that only Qwest could deliver the network it desired."

Nacchio's attorney, Herb Stern, could not be reached for comment late Monday.

The sealed documents involving closed-door discussions before and during Nacchio's trial were released at the request of The Denver Post.

The documents released Monday include a memorandum of an interview of James Payne, a former Qwest senior vice president and general manager of the government- services division, who described a meeting with a customer as one of the meetings Nacchio called "howdy calls," and "not a meeting to discuss Groundbreaker."

The Payne-interview memo gives insight into the high-pressure culture at Qwest under Nacchio.

"Qwest management in Denver would tell him to 'go get this' and to 'make it happen.' ... Payne reminded them frequently that it was not that easy," the memorandum reads.  "It was frustrating.  The government procurement process took years.  Qwest management was dealing in 'minutes' and Payne was dealing in 'decades."'

Another section reads, "Payne said, 'hope is not a strategy' and he would not talk about it."

Payne left Qwest in May 2006 when he was told "they no longer had confidence in his guidance and let him go," according to the filing.

Kelly Yamanouchi: 303-954-1488 or kyamanouchi@denverpost.com

http://www.denverpost.com/business/ci_7252995