RealTime IT News

Qwest Under Criminal Investigation

Qwest Communications , acknowledged Tuesday the U.S. Attorney's office in Denver had started a criminal investigation, though the reason for the probe wasn't given.

As with past investigations, Qwest officials said they would "fully cooperate" with any Denver office requests for information.

Jeff Dorschner, spokesperson for the Denver office of the Colorado U.S. Attorney's office, said it could only confirm an investigation was underway.

"I can't speculate on a time frame (for details)," he said. "It's normally the case that we don't even confirm or deny the existence of a criminal investigation."

It's likely Qwest came forth with the criminal investigation only because of recent events. Qwest officials derided a report in the Wall Street Journal last week that said the company was under criminal investigation, saying it was "outrageous" Qwest would find out through the media.

"We have disclosed everything asked of us and have cooperated fully with the Securities & Exchange Commission (SEC) and Congress," said Drake Tempest, Qwest general counsel.

The Denver-based incumbent local exchange carrier (ILEC) has been under mounting pressure from both the legal and financial community to disclose the full extent of its financial arrangements.

The Bell has spent the last month changing out its senior management to conduct a significant overhaul in the way it does business, starting last month with Joseph Nacchio, Qwest's outspoken chairman and chief executive officer.

Richard Notebaert, incoming chairman and chief executive officer, quickly retooled the company and installed trusted advisors from his days as Ameritech's boss.

The company's dealings during Nacchio's reign are the subject of intense scrutiny in the wake of the Enron and Global Crossing scandals. Global Crossing and Qwest reportedly dealt heavily in "swapping," a term used to describe buying bandwidth from one carrier and selling the same amount back, a legal method that lets both carriers record the transaction as revenue.

The transactions fell under Qwest's wholesale division, an area analysts expect might get sold off to shore up revenues.

Qwest officials declined to elaborate on future plans.