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Probe of KPNQwest sought
By Jeff Smith
Rocky Mountain News
Friday, December 29, 2006

A Dutch court wants to investigate whether KPNQwest, a joint venture of Royal KPN and Qwest Communications, misled investors before spiraling into bankruptcy in 2002.  The Amsterdam-based Enterprise Court suggested that could have been the case in a ruling to probe the events surrounding the venture's precipitous decline, Reuters reported this week.

"The Enterprise Court . . . cannot rule out that KPNQwest published misleading results in 2001," the court documents stated.

At its peak, KPNQwest owned and operated a fiber-optic communications network that connected 60 European cities.

Qwest earlier this year settled a KPNQwest shareholder class-action lawsuit for $11 million.

But the Dutch court investigation, depending on the outcome, could affect other litigation involving Qwest's handling of its failed European fiber-optic venture.

Last fall, Cargill Financial Markets and Citibank filed a $278 million lawsuit in the Netherlands against Qwest and some of its former executives, including former CEO Joe Nacchio, in connection with KPNQwest.

At least two other lawsuits are pending against Qwest related to the European communications network venture, according to regulatory filings.

Dutch bankruptcy trustees alleged Qwest and Nacchio used KPNQwest as a vehicle to artificially prop up the Denver telco's stock price and eventually bled KPNQwest of its cash.

Nacchio's attorney in 2004 called the allegations baseless.

Qwest doesn't comment about pending litigation.

http://www.rockymountainnews.com/drmn/tech/article/0,2777,DRMN_23910_5243214,00.html