Qwest’s Joseph Nacchio: Hero or “Clever” Villain?
UPDATE, May 17: It appears that the USA Today report referred to by the linked NY Times story at this post is bogus. All three other major carriers have denied giving call information to the NSA. Qwest is no different from the other three majors. That isn’t to say that Mr. Nacchio did not have the additional motivation described herein, but it does mean that the other telcos ultimately made the same decision that Qwest made. Thanks, USAT (/sarcasm).
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If I’m to believe The New York Times, former Qwest CEO Joseph Nacchio is a hero for not allowing the National Security Agency to have records of phone calls:
Mr. Nacchio learned that no warrant had been granted and that there was a “disinclination on the part of the authorities to use any legal process,” said the lawyer, Herbert J. Stern. As a result, the statement said, Mr. Nacchio concluded that “the requests violated the privacy requirements of the Telecommunications Act.”
….. Qwest was the only phone company to turn down requests from the security agency for phone records as part of a program to compile a vast database of numbers and other information on virtually all domestic calls. The program’s scope was first described in an article published on Thursday by USA Today that led to an outpouring of demands for information from Congressional Republicans and Democrats. The article said that AT&T, BellSouth and Verizon had agreed to provide the information to the security agency.
Incredibly, the article makes no mention of a “little” problem Mr. Nacchio is facing these days:
Former Qwest CEO Joseph Nacchio has been indicted on 42 counts of insider trading. Prosecutors say Nacchio knew at the time what the public did not: that Qwest was using accounting gimmicks to artificially prop up its finances. If convicted, Nacchio could face 10 years in prison for each count of insider trading.
Though it’s not a good idea to predict outcomes, this link indicates that a number of Nacchio’s underlings have pleaded out in return for cooperation (the article is about the conviction of Marc Weisberg, but also indicates that “only one unresolved criminal case” remains, i.e., Nacchio’s). That ordinarily does not bode well for the guy at the top.
Nacchio’s indictment is relevant, not just because it could go to his character, but it could very well go to the real reason behind Qwest’s refusal to cooperate with the NSA. After all, if Nacchio really was engaged in insider trading, isn’t it at least possible that he refused to hand over Qwest’s phone records because, by doing so, he would be handing future insider-trading investigators the road map to an expeditious prosecution?
Clarification: Though the date is at the link, I should make it clear that Mr. Nacchio has been under indictment since December 2005, and that Qwest’s decision not to turn over call info would have occurred in late 2001 or early 2002, roughly the same time as the agreement to do so by the other three major carriers occurred.
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May 15 Update: Qwest has in the eyes of many gone from being a goat for its awful customer service to a hero for resisting the NSA (link may require registration). If my theory is correct, the people lionizing Qwest at the moment are complete fools. If I’m wrong, and Qwest didn’t cooperate with the government for other reasons, you would have to ask why its three major better-run competitors didn’t have a problem with providing call info. I think the burden of proof is on Qwest.
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Cross-posted at NewsBusters.org.
You’re last question/point is my nomination as one of this year’s best blog-based provacative questions!
MSM…asleep again at the helm.
Comment by Porkopolis — May 14, 2006 @ 11:20 am
#2, Thanks, you would think beat and business reporters might occasionally talk to each other.
Comment by TBlumer — May 14, 2006 @ 11:26 am
Maybe the Qwest CEO also realized that, like AT&T and Verizon, Qwest could face a massive suit.
Comment by Kevin irwin — May 15, 2006 @ 12:07 am
#4, don’t burst my bubble. :–>
Seriously, Qwest was never a well-run company, and giving Nacchio credit for having more smarts than the other guys would be a real stretch.
Comment by TBlumer — May 15, 2006 @ 12:49 am
I have to agree with the previous comment by Kevin. Corporations are what they are: entities that exist to maximize their profit at the expense of all else. The refusal to cooperate has little to do with heroism or altruism. They simply saw the potential for future financial liability. The inside trading activity seems like an unrelated sideshow (and if we are going to use that as a barometer of character then a fair number of our elected representatives in Washington may be similarly judged).
Comment by JH — May 15, 2006 @ 9:29 am
#5, upon further reflection, the post assumes that SEC would have access to what NSA has, which I would not be so sure of (though a court order would probably remedy that).
That said, I have to wonder why Qwest, by most observers seen as the worst-run of the big telcos, made a decision different from the other biggies, who would have been expected to be just as concerned about liability.
And the staffs of our elected representatives (as opposed to the reps themselves, who for the most part are quite aware of the microscope they are under) have a HUGE issue of trading on or leaking inside information that someday needs to be exposed, and prosecuted. I’m not saying all reps are clean; I’m saying the much bigger problem is those who work for them.
Comment by TBlumer — May 15, 2006 @ 9:59 am