Businessweek has just published, The Qwest case starts to boil, which says that the feds are focussing on whether former execs pressured suppliers to give them shares. Despite the hush hush quality of the story, there is nothing new or surprising. Avici, Sonus, Tellium….blah blah blah! I had linked some of the better coverage on this topic, in Rocky Mountain News and New Jersey newspapers. The article fails to name names. Here is a completely clueless quote form former Tellium President Richard Barcus. “The companies that didn’t give out stock were at a clear disadvantage.”
No shit! I had this covered extensively in Broadbandits and you can get a better lowdown on this by reading the book. I think there is a whole pay-to-play concept which the Feds had overlooked and I have it outlined in the WorldCom, Qwest, and Billion Dollar Pay Day chapters.
In case someone is looking for legal proof, read this Denver Post story.
bq. Hamid Ansari of Plano, Texas, filed a claim in U.S. District Court in Denver accusing Qwest of fraud, breach of contract, unjust enrichment and breaking federal communications laws.Ansari alleges that Qwest executives persuaded him to buy $20 million of transmission capacity on Qwest’s global fiber-optic network in June 2001. In exchange, Qwest ordered $33.6 million of telecom gear from Ansari’s employer, Sonus Networks, according to the lawsuit.
Here is my own coverage and links on the subject.
bq. Some sources have hinted that the Securities & Exchange Commission is all set to indict some key former officials at the company, mostly in relation to shares-for-order deals. While this is not new, the word is that SEC might be getting tough on these kinds of shenanigans and is looking to conduct a “perp-walk.” As you might already know companies like CoSine and RedBack are under the microscope for giving stock options and other benefits to some Qwest executives in exchange of hefty equipment orders. I see it as a bribe; others see it as spreading the butter. Potato, Poatato… same difference.And then there is the serious overhang of the Tellium case where most senior executives including Joe Nacchio got stock and ordered optical gear.
If you look at it one, way I think I scooped the BusinessWeek.