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NON PROFITORG.
U.S. POSTAGE
PAID
PERMITNO. 3844
MPLS MN
NWB/U S West Retiree Association, Inc.205 Heritage Circle NorthBurnsville, MN 55337-2667
Address Service Requested
Retiree Advocates:IOWA
MINNESOTABarb Hermanson*
NEBRASKAAda Bork
NORTH DAKOTAArnie Pauls
SOUTH DAKOTAVikki Farrand605-332-3670
*Associate Ombudsman
Visit this website:Association of
U S West Retireeswww.uswestretiree.org
or www.qwestretiree.org
NWB/U S West RetireeAssociation, Inc. Directors:
Chairman Larry Smith, Fargo, ND701-235-1300
[email protected] Chairman Jim Burns, Omaha, NE
Secretary Rose Bailey, Sioux Falls, SD605-336-7771
[email protected] Albrecht, Roseville, MN
Marlyn Beaudine, St Cloud, MN320-253-6232
[email protected] Bork, Omaha, NE
Tom Burns, Papillion, NE402-597-6205
[email protected] Johnson, Blaine, MN
Eldon Ranney, Walnut, IA712-784-3900
[email protected] Retiree Guardianis the newsletter of the
Association of U S West Retirees in Iowa,Minnesota, Nebraska, North Dakota and South
Dakota. We publish on a quarterly basis.
❑ NEW ❑ RENEWAL ❑ EXTRA ❑ CHANGE OF ADDRESS Date
Name
Street Address
City, State, Zip
Tel. No. ( )
E-mail Address
Company Retired From State
I am willing to help by doing the following: (Circle one or more)
1) Calling Committee 2) Membership Committee 3) Legislative Committee
Please return this form and your check to the above address.NWB/U S West Retiree Association, Inc. is a nonprofit tax-exempt organization under Section 501(a) of the Internal
Revenue Code, however, dues are not deductible on your personal tax returns. Records are kept at 45 Jewel LaneNorth, Plymouth, MN 55447-3566. A portion of your dues goes to support the National Retiree Legislative Network
(NRLN) in Washington, D.C.
Membership ApplicationNWB/U S WEST RETIREE ASSOCIATION, INC.
45 Jewel Lane NorthPlymouth, MN 55447-3566
(Please Print)Amount Dues ($20/Yr/Person)
Amount Membership Development
Amount Other (Specify)
Total Amount Paid
NEWSLETTER OF THE ASSOCIATION OF U S WEST RETIREESNOW BRINGING YOU NEWS FROM ASSOCIATION MEMBERS IN ALL 14 U S WEST STATES!
GUARDIANRETIREETHE
FALL 2004
WE WERE THE OPERATORS AND REPAIR CLERKS, THE INSTALLERS AND LINEMEN, THE ENGINEERS AND NETWORK PLANNERS, THE CRAFT AND MANAGEMENTEMPLOYEES OF EVERY DESCRIPTION WHO BROUGHT TELECOMMUNICATIONS TO THE HOMES, BUSINESSES, AND INSTITUTIONS OF 14 STATES. NOW WE ARE UNITEDIN OUR COMMITMENT TO PRESERVE AND ENHANCE THE RETIREMENT BENEFITS PROMISED TO US AND TO THOSE WHO FOLLOW US AS TODAY’S ACTIVE EMPLOYEES.
2Chairman’s
Letter
6A View
From Washington
7In TheNews
10Qwest, Lies
and Videotape
12Phyllis Kielblock
Retires FromDatabase
Administrator’s Job
13The Spirit ofService – The
Rest of the Story
14Spirit of
Creativity
I N S I D E
Dear Friends,I wanted to dedicate my column
in this edition of our newsletter toall of you who have tirelesslyworked to make AUSWR what it istoday. In five short years we havemore than tripled our membership.Over ten years ago fledging stateorganizations such as PEC, CORE,Arizona TRA, Utah PEC and NewMexico TRA began gathering re-tirees together to protect their bene-fits. Today, we are one organizationwith members in all fifty states andseveral foreign countries. This didn’tjust happen. Over the years hundreds of retireevolunteers have given selflessly of their time andenergy to serve our retirees. Today, because of thetremendous growth of our organization, your state
leaders are spending considerabletime fulfilling their duties. Thesefolks are dedicated, responsible andcaring retirees who, like you and I,want to insure we protect thosebenefits we have earned. I appeal toeach of you as you attend our localand regional meetings to thank yourlocal leadership for their time andefforts.
More importantly, I ask each ofyou to seriously consider helping usby volunteering to serve on yourlocal state boards or to assist your
local leadership in the many tasksthat need to be accomplished.
Nelson B. Phelps, president and executive directorof the Association of U S West Retirees.
A MESSAGE FROM THE PRESIDENTPRESIDENT’S LETTER
Nelson Phelps
In five short years we have more than tripledour membership.
The Retiree Guardian / Fall 20042
I knew Bob Bossert when he and I worked for Northern States Power Company.I know the job he did for the AUSWR Guardian was extremely well respected. I am a bit
in awe of the challenges of trying to fill his shoes. With your help, I’ll try to carry on.And the next Guardian edition will have a headline LETTERS TO THE EDITOR, and
will contain your questions, comments and reactions to the publication.
Email me at [email protected].
Thanks.Jerry Miller
members receive letters about supportfor various candidates. We are a non-partisan organization. We look at whosupports our cause, not “does a partysupport our cause.” Our cause is verysimple. We believe we should receivewhat we were promised during ourworking years. We support no personbecause of party affiliation. Rather, wesupport candidates who support andvote for our issues. If anyone believesour position is wrong, please let meknow. If you would like to obtain
support for a particular candidate, please contact meand I will explain how it may be done.
Larry Smith3608 Fairway RdFargo, ND 58102Telephone no. 701-235-1300Please do not send email since I do not accept emailfrom anyone I do not recognize.
As retirees and members ofNWB/US WEST Retiree Association,we are extremely fortunate to have asource of skilled people willing tocontribute to our organization.Throughout this and other issues of theGuardian, you’ll meet people who’verecently taken on new assignments.When you run into these volunteers,please thank them for the great jobsthey are doing. Without them, ourorganization would be very short-lived.
With little recognition for theirefforts, there are also many folks who help invarious ways - contributing to the success of anannual meeting, making calls to increasemembership, helping things run smoothly behindthe scenes. When you see their involvement, tellthem you appreciate their work. And get involvedyourself. Do us all a favor and ask someone tobecome a member this month.
In this political season, I and other board
CHAIRMAN’S LETTER
When you run into these volunteers, please thankthem for the great jobs they are doing. Without them, our
organization would be very short-lived.
LETTER FROM THE EDITOR...
Fall 2004 / The Retiree Guardian 19
milestonesThe following information is also available on-line at the Qwest Human
Resources web page: www.yourhrinfo.uswest.com/touch.shtml
DECEASEDQwest has no postings
on the web in this
category at the present
time.
RETIRED
May 2004
Iowa
Belken, George D
Betts, Marcella M
Buckley, Carol J
Christensen, Duane L
Eveland, Greg K
Gilstrap, Mary
Glasnapp, Theresa S
Harrington, James K
Holman, Mary L
Kennedy, Betty L
Morris, Judith A
Ross, Austin R
Smith, Connie S
Minnesota
Chase, Verna M
Dahlen, Paul C
Durand, Linda A
Flateland, Margaret A
Haugen, Karen A
Hillman, Dorothy J
Kellermann, Gloria L
King, Linda D
McAlister, Helen
Meister, Daniel W
Olson, Gregory A
Quast, Joyce A
Rutherford, James D
Rux, Cheryl M
Smith, James R
Strom, Gregory R
Tobie, Patricia A
Walton, Norma K
Zurn, Sue E
Nebraska
Blankenship, Donna R
Brown, Patricia W
Ewert, Karla R
Francl, Carol J
Freeman, Carol J
Hallberg, John S
Hoggarth, Vicki R
Janisch, Judy L
Johnson, Douglas J
Kilgore, Dennis L
Sahulka, Helen G
Seiler, Michael S
Wismont, Debara L
South Dakota
Burns, Jo Ann L
Olson, Betty L
June, 2004
Iowa
Borts, Anne M
Gaskill, Kathryn L
Konchalski, Pamela J
Nosbisch, Bernard
Pieper, Patricia A
Ross, Laura J
Minnesota
Blocher, Bradley J
Eilefson, Nancy B
Glass, John A
Hystad, Robert G
Koenig, Wayne F
McKee, Michael J
Olmschenk-Williams,Deborah A
Paschke, Debra M
Potter, Deuel W
Richter, Carole A
Schmitz, Stephen E
Yasgar, Roger E
Nebraska
Erickson, Susan M
Henningsen, Debra S
Kays, Linda Q
McWilliams, Michael N
North Dakota
Andrews, Dale R
Muhle, Joie F
Sarkilahti, Curtis
South Dakota
Austin, Jerald A
Enger, Janet C
The Retiree Guardian / Fall 200418
CHECK IT OUT.What’s the renewal date above your name on the address label?
If it’s July 2003 – your membership has expired. This is the last issue ofThe Retiree Guardian you will receive. Plus, if you have e-mail, you’ll nolonger receive e-mail articles and Association bulletins.
If it’s July 2004 – your dues are now due.
Don’t let your membership lapse. Over 1800 members are up for renewal,so fill out the Membership Application in this issue, check the renewal box andenclose a check for $20.00. If it’s a financial hardship, we have gift member-ships available; just let us know.
Over these past few months you’ve seen how your NWB/U S West RetireeAssociation and the AUSWR has lobbied and litigated on behalf of retirees tomaintain the benefits promised. In these unstable economic times, newchallenges are certain. Your membership is vital – please continue to standwith us.
And don’t forget to ask your former work associates if they belong to “TheAssociation” whose sole purpose is to work on their behalf. Call me at 763-535-3865 or e-mail [email protected] with their name and address andI’ll be happy to send them an application and more information about benefitsof NWB/U S West Association membership.
The Membership Directory will be printed in the first quarter of 2005. Ifyour dues are current, your name will appear in the directory and you’llreceive a free copy of the directory.
Mary Ann Neuman, Membership Coordinator
STOP!
PENSION MISCHIEF
Fall 2004 / The Retiree Guardian 3
On March 4, 2004, the Kansas City DOL officeresponded. It refused the FOIA request, saying thatits investigation of the Plan was for lawenforcement purposes, and release of any relateddocuments could interfere with enforcementproceedings.
At the urging of the AUSWR board of directors,on March 16, 2004 Kennedy filed a formal appeal(of the Kansas City office’s refusal to produce) withthe Department of Labor’s Solicitor in Washington,D.C.
On June 18, 2004, 70 days beyond the statutorydeadline for the DOL Solicitor to have responded(which he had not), Kennedy filed suit against theDepartment of Labor in Denver Federal Court. Inthe complaint (Mimi Hull, AUSWR Vice Presidentis the named plaintiff) the AUSWR seeks an orderrequiring the DOL to produce its investigation fileto the Denver Court so the federal judge can decidewhether the DOL’s refusal to release its records isjustified. The complaint also asks for reimburse-ment of our legal expenses incurred in connectionwith this matter.
On June 21, 2004 Kennedy received the DOLSolicitor’s overdue response. The Solicitor said, “Ihave decided to affirm the withholding of therecords you seek . . . [because] release of the recordswould prematurely reveal the Government’s caseand impede it in any ensuing enforcement actionand, therefore, could reasonably be expected tointerfere with enforcement proceedings.”
All this brings to mind a statement by ThomasHenritze, a US West director of benefits accounting,which appeared in the June 15, 1999 issue of TheWall Street Journal. Henritze was reported to havesaid: “For years, people saw the pension as thisbucket of money you can’t touch. Companies arelooking to not leave the asset dormant, but use it todeliver better returns for the company.” Maybewe’ll learn from the DOL investigation exactly whatHenritze had in mind.
Eldon H Graham, vice-presidentWashington/Oregon Pension Equity Council
When accounting irregularities at Qwestbecame known, Association of US West Retirees(AUSWR) Executive Director Nelson Phelps beganto worry that the company’s auditor ArthurAndersen might have also been party to someshenanigans with our pension fund. His concernincreased when AUSWR board member HowardRickman discovered questionable entries in thecompany’s Form 5500 pension plan report to theUS Department of Labor (DOL) and InternalRevenue Service.
With the assistance of AUSWR attorney CurtisKennedy, Phelps began to look for ways in whichthe AUSWR might force a formal investigation ofthe plan. By March 2002, Phelps had securedcommitments from 3 Members of Congress whowere willing to ask the U.S. Secretary of Labor todo an audit. Then in June the AUSWR learned thatthe DOL had or was already doing an audit. Butwhen Phelps approached Joe Nacchio’s chiefhuman resource officer, Phelps was told the com-pany did not have a copy of the purported audit andthat Nacchio had said if there were an audit reportthe company would not share it with the AUSWR.In August 2002, Phelps learned from a member ofMinnesota U.S. Senator Paul Wellstone’s staff, thatthe audit was not complete and no informationwould be released by the DOL until a formal reporthad been written and approved.
Attorney Kennedy telephoned and wrote lettersin October 2003 and again in February 2004 to tellthe Department of Labor’s office in Kansas Citythat the AUSWR would be requesting a copy of thefinal report and asked when it would be available.Upon being told that he should check back again in2005 because no one in the Kansas City officecould predict when its investigation would be com-pleted, on March 3, 2004 Kennedy made a formalFreedom of Information Act (FOIA) request for theDepartment of Labor’s documents concerning itsinvestigation of the Qwest Pension Plan. [TheFOIA is a means to cause a federal governmentagency to reveal its records and is usually invokedby the news media.]
“For years, people saw the pension as this bucket of money youcan’t touch. Companies are looking to not leave the asset dormant,
but use it to deliver better returns for the company.”
The Retiree Guardian / Fall 20044
ADVOCACY:ADVOCACY:This issue of news about your Retiree Advocate
program is dedicated to Jim Shaw, retiringAssociate Ombudsman (for old NWB territory) andRetiree Advocate for Iowa.
Jim has been an active advocate for retirees formany years and was a charter member of the oldRetiree Voice under US West. Jim was also activein attending meetings of what is now theASSOCIATION OF US WEST RETIREES prior tothe organization of the Northwestern Bell Statesjoining the Association. Jim will be sorely missedbut has offered to be a backup contact if necessary.THANK YOU JIM FROM ALL OF THERETIREES OF QWEST!!
Jim’s replacement as Associate Ombudsman(NWB) is Barb Hermanson of Minnesota,[email protected] (BarbHermanson)
We are still looking for a replacement Advocatefor Iowa.
We continue to have some problems with theCobra vendor as well as timely distribution ofneeded information to surviving spouses. Theseproblems have been referred to Qwest Benefits andwe have been assured they are working onimproving them.
Many retirees have contacted us regarding themissing information on deceased personnel from
New York Times -- Tuesday, October 5, 2004
Tom Paulsen worked for 36 years as a truckingexecutive, and when he retired two years ago, hethought he had secured a comfortable life. He hada 12-acre farm near Sacramento and a pension of$151,000 a year, his payoff for years of working 70-hour weeks.
His company, Consolidated Freightways, filedfor bankruptcy and the federal government tookover its pension plan. Mr. Paulsen’s pension fell to$22,000.
As major airlines and old-line industrial com-panies use bankruptcy to stay alive, or simply goout of business, many workers are being thrown
the company web site. Data errors that we calledQwest’s attention to has resulted in the removal ofall listings for 2004. The major problem was listingretirees who were still living as having deceasedwhen their spouse passed away. Qwest has assuredus they have found the reasons for this and arecorrecting all data.
Another continued contact area has beenregarding the telephone concession elimination forretirees who are served by companies other thanQwest. Additionally, continued questions about theproposed need to switch to Qwest Long Distance ifyou were receiving the AT&T LD concession.(Retired prior to 1-1-1984).
The letters sent last December indicated thiswould be required in ‘early’ 2004. Qwest informsus that a resolution to this is due shortly and mayeven occur while this article is being written.
Additional information will be posted on theAssociation web site. (www.qwestretiree.org orwww.uswestretiree.org)
Questions concerning the Death Benefit versusInsurance Policies for Retiree survivors are askedfrequently. The article on page 17 explains thedifferences, who is eligible for the death benefitsand the procedures a beneficiary must follow.
Guarding Our Rights
BY HOWARD RICKMAN – OMBUDSMAN, AUSWR
RETIREE ADVOCATES KEEP BUSY
PENSION FAILURES FOIL 6-FIGURE RETIREMENTS, TOO
(continued on page 5)
Make sure your survivor is aware of this:
The death benefit is paid from the pension plan.It is a benefit, not an insurance policy and is in factseparate from any insurance payments to which youare entitled. The death benefit is paid only tosurviving dependents at the time of death. If youhave no dependents, there will be no death benefitpaid. This benefit will be paid only when thesurvivor notifies the benefit office of the retiree’sdeath. A form will be mailed to the survivor whowill then fill out the form and return it along with acopy of the death certificate to the benefit office.
If you are eligible for a sickness/accidentaldeath benefit at the time of your death, it will bepaid to your qualified beneficiaries as follows:
- 100% to your surviving spouse. If you havedependent children not living in your spouse’shousehold at the time of death, the death benefit isdivided equally between spouse and all dependentchildren. Children away at school/college will beconsidered members of the household where theynormally reside, or previously resided prior toleaving for school.
- If no surviving spouse, 100% in equal sharesto all eligible dependent children. Dependentchildren are defined as your dependent andunmarried children (natural and adopted); under the
age of 23, or if over age 23 are unmarried, disabledand dependent upon you for support. Unbornchildren at time of participant’s death are noteligible.
- If no surviving spouse or eligible dependentchildren, 100% in equal shares to dependentparents.
- If no surviving spouse, no eligible dependentchildren, or no eligible dependent parents, 100% inequal shares to other eligible dependent relatives.Dependent relatives are defined as grandchildren,brother, sister, grandparents, deceased spouse’sparents, and deceased spouse’s grandparentsdependent on you for support.
- If no surviving spouse, no eligible dependentchildren, no eligible dependent parents, or eligibledependent relatives, as described above, nosickness or accidental death benefit is paid.
NOTE: Neither the sickness death benefit northe accidental death benefit will be paid if a claimfor benefits is received more than one year follow-ing the death of an eligible participant.
To report a death: Phone 1-800-729-7526, press2 as retiree, press 3 to report a death.
Clip and save with your Will.
Fall 2004 / The Retiree Guardian 17
ABOUT THE DEATH BENEFIT
The Retiree Guardian / Fall 200416
QWEST’S SECOND QUARTER
NEW NAMES IN NWB/U S WEST LEADERSHIP
When Qwest announced on August 3 financialresults for the second quarter of 2004, the bigstories were a “one time charge” to earnings and thereversal of a federal income tax deduction takenearlier. [More about them later.]
During the second quarter operating revenuefell 1.1% from the first quarter; 4.3% below thesame quarter of 2003. The company attributed thecontinuing revenue decline primarily to its loss ofconsumer and business access lines. It lost 329,000lines, which was 2.3% of the total at the beginningof the quarter. Qwest said that it expects its accessline count to continue to fall, although perhapsmore slowly because of a recent Federal CircuitCourt decision vacating the Federal Communica-tions Commission’s rule that has been forcing thecompany to provide portions of its network tocompetitors at deeply discounted prices.
The “one time charge” and tax reversal playeda major role in Qwest’s second quarter net loss of$776 million. By comparison, the company had anet loss of $310 million during the first quarter of2004 and a much smaller $64 million net lossduring the second quarter of 2003. The “one time”charge was for a $300 million addition to an
accounting reserve set aside for future liabilitieswhich might arise from Securities and ExchangeCommission and Department of Justice investi-gations and securities related lawsuits. Thecompany said those matters pose material andsignificant risks. The company also reported a $136million tax expense (as opposed to a $76 million taxbenefit during the first quarter of the year) whichwas largely due to its reversing a previouslyclaimed tax benefit taken in connection with a taxshelter which the IRS recently declare to beabusive.
On the day of the earnings announcement,Qwest share trading volume quadrupled and theprice plunged 20.2%. The share price continued tofall each of the remaining days of the week. By theend of Friday shares were worth only two thirds ofwhat they had been the day before the earningsannouncement.
You’ve got to wonder if Joseph Nacchio and hiscohorts will ever be held accountable for the seriousharm they have done to so many.
Eldon H Graham, vice-presidentWashington/Oregon Pension Equity Council
We have a new Director and new Treasurer forour NWB/U S West Retiree Association.
Several months ago, Wally Walker notified theBoard that he intended to resign his position asDirector effective with the Annual Meeting on May20, 2004, leaving one year left of his two-year term.It was his intention to continue to serve as Treasureras provided for in our bylaws.
On June 6, 2004, Wally announced hisresignation as Treasurer effective immediately dueto health reasons. He had been diagnosed withstomach cancer and had major surgery on May 21,2004.
Wally did a great job as Director and Treasurerand we owe him our deepest thanks and best wishesfor renewed health. Cards will reach him at 4300 WRiver Pkwy - #243, Minneapolis, MN 55406-3678.
Our bylaws provide that vacancies on the Boardwill be filled by appointment by the Board ofDirectors. They met and appointed Marlyn
Beaudine to serve the second year of Wally’s term.We welcome him to our team of Directors.
Marlyn Beaudine1904 9th Ave. SESt. Cloud, MN 56304Phone: 320-253-6232E-mail: [email protected]
The Board of Directors appointed Jack Olsonto serve as Treasurer, which is not now a Directorposition. Jack has served as an Auditor of ourfinancial records for several years and will do anexcellent job.
Jack Olson45 Jewel Lane NorthPlymouth, MN 55447-3566Phone: 763-475-1091E-mail: [email protected]
Fall 2004 / The Retiree Guardian 5
On March 11, 2004, AUSWR attorney Curtis L.Kennedy of Denver filed a proposed class actionlawsuit in Otero County District Court, La Junta,Colorado concerning the loss of telephoneconcession by Qwest retirees living in areas notserved by Qwest. The named plaintiff is WesleyColvin, a telephone retiree who lives in a formerBell exchange sold to an “independent telephonecompany”. This suit, known as Colvin v. Qwest,accuses the company of breach of contract andseeks damages for loss of telephone concession forall retirees who lost their concession on January 1,2004. The suit is being financed by the Associationof U S WEST Retirees (AUSWR).
Recently, Qwest agreed to Kennedy’s sugges-tion that we attempt to settle this dispute with theassistance of a mediator. The company agreed topay for the mediation. A successful mediation washeld on September 14, 2004. Kennedy led theAUSWR’s negotiating team. Other members of theteam were Colvin, Mimi Hull (representing theAUSWR and retirees from the former MountainBell area), Jim Burns (representing retirees from theformer Northwestern Bell area) and Eldon Graham(representing retirees from the former PacificNorthwest Bell area).
The terms of the proposed class settlementagreement must still be reviewed and approved bythose retirees impacted and the trial judge willconduct a fairness hearing to consider any potentialobjections to the settlement. Once the judge makes
into a federal safety net that does not always protectthem.
Among those hard hit are commercial airlinepilots, who by law cannot fly passengers after theyturn 60. Pilots typically retire with pensions of$100,000 or more, based on their final salaries andyears of service. But the federal Pension BenefitGuaranty Corporation usually matches thepayments only for workers who retire at age 65 andearn pensions of up to $45,000 a year. The limitsare set by Congress.
Workers going through a company bankruptcyoften have little real sense of how complete theirinsurance coverage will be. In some cases, the cov-erage is linked to the amount in the dying pensionfund, which companies often do not disclose.
Thirty years ago, Congress approved legislationto ensure that when a company promised a pension,it made good. Since 1974, companies have had tofund pensions according to federal rules, and thegovernment has insured the benefits.
But tens of thousands of companies, many ofthem small businesses, have exempted themselvesfrom those requirements by terminating theirpension funds and offering other types of retirementbenefits that are not so heavily regulated. Thesebenefits are not guaranteed.
The pension agency has now taken overcompany plans for one million workers and retirees,and has been stretched to a deficit of $9.7 billion.As more pension plans fail, some retirees worryabout the security of even their insured incomes.
a final decision then the process of implementingthe agreement will begin. Kennedy has advisedus that this will not be completed this year.Hopefully, it might be accomplished by end of firstquarter 2005.
More details will be sent to the proposed class,the impacted retirees. In general, the proposed classsettlement terms are:
The “class” or impacted retirees (estimated tobe about 4,000 persons) are those who resideoutside of Qwest territory and as of December 31,2003, were receiving a reimbursement from Qwestfor their local phone service provided by anotherphone company. The impacted retirees received aletter dated December 9, 2003, advising them theywould no longer receive this reimbursement as ofJanuary 2004.
Qwest will make a single lump sum payment of$300 to each of the impacted.
Qwest will provide free unlimited interLATAand intraLATA long distance for life, upon the classmember switching to Qwest as the long distanceprovider.
Most importantly, the agreement, uponapproval by the trial court, will be binding uponQwest and all successors in interest. Again, this suitwas only for those retirees who lost their concessionon January 1, 2004.
Eldon Graham, vice-president Washington/OregonPension Equity Council
RETIREE TELEPHONE CONCESSION
PENSION FAILURES (continued from page 4)
The Retiree Guardian / Fall 20046
Nearly every day we learn ofyet another announcement fromour former employers that theywant what we have earned andbeen promised. They are in theprocess of taking away, in bits andpieces, our retirement security. It’sinsidious and progressive; everyweek we read or personally experi-ence yet another “take away” of ourpensions and health benefits.
It must stop, and it must stopnow. How, you ask? Let’s talkabout that.
As an organization, we havemade a lot of progress. We haveraised the level of awarenessamong the press and the generalpopulation of the importance ofour retiree issues. More and morewe are being asked to comment forpublication on how to deal withthe problems being presented toretirees in the form of reducedpension and health care benefits.For example, I was asked the otherday by a news reporter what Ithought would happen from aretiree standpoint if George W.Bush were reelected. And then,the same for Senator John Kerry. Iresponded by saying that I couldsee very little difference betweenthe two on issues of the retirees.Kerry’s trillion dollar, so calledplan, sounds like a wild guess atsomething they haven’t researchedvery well. In all likelihood, it willgo nowhere. Bush, on the other hand, seems tothink he has done his thing by ramming throughCongress a bill last winter called The PrescriptionDrug Amendment to Medicare. A bill, incidentally,with at least a 500 billion dollar price tag.
Based on surveys by the New York Times andWashington Post, more than 70% of those affectedretirees and older people, either don’t understand ordon’t like what they do understandabout that Act. I remind you thatwe’re not talking dummies here;we’re talking about America’s great-est generation.
Congress is in recess, butNRLN activity goes on – as youperhaps know, we joined withseveral other organizations recent-ly in a coordinated effort to per-suade the two major party presi-dential candidates to sign a pledge,that if elected, they would dowhatever they could to support theissues of retirees. We haveproduced banners, signs, and handouts to use at events where thecandidates show up and addresspotential voters. We have theirattention, but as yet, haven’t beenable to get them to sign on thedotted line. If you’d like to help inthis effort, please let us know.
In the meantime, let’s talkabout the Congressional andSenate races. This is an area ofadvocacy in which we can all takepart. We must find out in each ofour Congressional districts, all 435of them, how the incumbent andchallenger stand on our issues,especially HR 1322. Take a look atthe “Legislative Directory” on ourwebsite - WWW.NRLN.org. Writeyour Congressman, your news-paper. And have you tried callingyour local radio call in show?Believe it or not they are interestedin your views and our issues.Folks, let me emphasize that this isnot “politics.” We’re talking aboutour livelihoods, our futures, andyour family’s well being. We are a
grass roots organization – everything that meansanything takes place at your level – your neighbor-hood, your town or city, and your congressionaldistrict, and state. We are going to continue takingshots from corporate America in their efforts, so farsuccessful, campaign to enhance their bottom linesat the expense of the retirees.
All of the members of The House of Repre-sentatives are running for election, all435 of them. Many Senators are alsoinvolved in bidding for reelection aswell as challengers for a seat in
A VIEW FROM WASHINGTONNRLN PRESIDENT’S REPORT
Jim Norby
(continued on page 7)
Folks, let meemphasize that this
is not “politics.”We’re talking aboutour livelihoods, ourfutures, and your
family’s well-being.We are a grass roots
organization –everything that meansanything takes placeat your level – yourneighborhood, your
town or city, and yourcongressional district
and state.
Fall 2004 / The Retiree Guardian 15
Qwest because of the ongoing federal investiga-tions?
Walker: I think one of the accomplishments ofDick’s team was to have a (financial) restatementdone last October. That really enabled us to beginto ramp up into more positive and favorablecoverage (such as the announcement that Qwestwould be launching Internet-based telephonecalling). We couldn’t get any traction on majorcoverage of that initiative until the restatement wasdone. And I understand that.
News: Qwest and Dick, in particular, havegotten a lot of positive press from the nationalmedia recently. I’m thinking of the Forbes article(featuring Notebaert on the cover) that talked aboutQwest being on the leading edge of technology -wireless, Wi-Fi, Internet-based calling. To whatextent were you involved in that?
Walker: I can talk about the overall strategy.It’s one of many pieces that since October haveappeared and will continue to appear. The strategywas, once we were past the (financial) restatement,to then have him articulate the business vision of
the company through the products and services weknew the customers wanted. And to be out there onkind of a national stage.
News: Why don’t you disclose layoff numbersinternally and let employees know exactly what thelayoff targets are?
Walker: Yeah, we’ve been asked that questiona couple of times. We don’t have any specific lay-off target or program. What we do on a daily basisis balance workload to work force. There is notarget.
News: Have there been discussions on chang-ing the name?
Walker: Never have, never will. It’s not aboutthe name. It’s the equity, and we’ve got growingbrand equity. Conservatively, it would cost $50million plus to change out the signage because Ihave experience doing this. When I did this atNynex (created from New England Telephone andNew York Telephone), it cost $90 million.Wouldn’t it be so much better spending $50 millionbringing more products and services to customers?
SPIRIT OF CREATIVITY (continued from page 14)
To: Dick NotebaertI just want to comment on Joan Walker’s
interview with the Rocky Mountain News.This was a very up-beat article and I enjoy hercreativity with the Qwest ads of late. Joan’sidea to include a dog as “Spirit” will touchother dog lovers like me and hopefully generateadditional customers for the business.
I am sure with your background and Joan’sfamily ties to the telephone business, that youare sincere in sharing the great legacy of ouremployees and retirees in creating the business.The story of Angus McDonald is one that oneof my AUSWR board members, Hy Bradley,pointed to when corresponding with you a fewweeks ago about our retiree concerns. It’s hardto understand why our current retirees are notgiven the same respect and consideration whenit comes to our treatment with pensionincreases and other benefits.
Our retirees are concerned that this adver-tising is more hype than substance. Retireesand telephone families are being used to showoff for the public to make Qwest appear to befamily oriented and appreciative of ourcontributions when in reality, appreciation forour retirees past and continued contributions is
not given. In fact, our people are threatenedwith take aways and haven’t been given a muchneeded pension increase in 10 years. We wantto be an important, contributing part of theQwest family, but when we are only taken out ofthe cellar when company comes to show off andperform and then put back in the hole on ourrations of bread and water until the next time,then the Spirit of Service is nothing more than a“ghost” for us. Hmmmmmm now there’s aninteresting ad campaign.
Donnetta Mitchell, AUSWR President and AreaChair for Utah, Idaho and Montana
To: Donnetta MitchellOur number one goal is the continued climb
back from the very fragile situation of ourcompany. All our energy is focused on it fromthe spirit of service experience to restructuringour balance sheet. We have made progress andyet we have miles to go before the team iscompletely out of the woods. We still carry wayto much debt. As you can imagine this influ-ences every decision we consider. Thank youfor your note and support.
Dick (Notebaert)
The Retiree Guardian / Fall 200414
SPIRIT OF CREATIVITYJeff Smith of the Rocky Mountain News recently interviewed Joan Walker, Qwest’s executive
vice-president of communications. Walker, who previously worked with Qwest CEO DickNotebaert at Ameritech, joined Notebaert’s team at Qwest in 2002.
Walker enthusiastically embraced Notebaert’s vision of service through technology as opposedto the strictly technology-driven “Ride the Light” fiber-optic go-go years. She has been the movingforce behind the development of the initial “Spirit of Service” ads; the “Generation” ad seriesfeaturing telco families; the evolution of the “Spirit the Dog” concept with a stuffed dog wearing a“Spirit of Service” bandanna used by the foundation to promote children’s literacy, and morerecently, the humorous ads showing customers rushing to greet Qwest technicians.
In addition, when Notebaert wanted to quickly launch an ad campaign aimed at AT&Tresidential customers being phased out of local and long-distance service, Walker and her team wereable to respond within hours with a viable campaign.
Walker is a “telco brat.” Her parents met while working at Western Electric. Walker also chairsthe revitalized Qwest Foundation.
Excerpts of the RMN interview follow:
News: What was the genesis of the Spirit ofService campaign?
Walker: A couple weeks after Dick arrived atthe company we were looking at some of ourarchival material through the Telephone Pioneers ofAmerica. We wanted to get a flavor for the types ofwork people in this company had done over many,many years. On a Friday night, I put it in a readingfolder for Dick to take with him.
There were inspirational stories like the truelegend of Angus MacDonald (a New England Belllineman who traveled on snowshoes to maintain akey 20-mile telephone line during the GreatBlizzard of 1888).
I thought about it over the weekend andobviously he did, too. It was very early Mondaymorning (about 4:45). I had some ideas I wanted toshare with Dick. I started running from my office.He obviously felt the same way because he camerunning. We almost collided in front of the recep-tion area. He was holding a piece of paper, saying,“I have it, I have it, it’s the Spirit of Service. I wantthis out to all the employees before 7 this morning.”
News: And the subsequent Generationscampaign?
Walker: He started to receive lots of e-mailsfrom employees saying they were always proud andthey were committed to restoring that pride anddelivering that outstanding service. He sent me ane-mail from employees with well over 100 years ofcombined service, and I said, “Wouldn’t it be greatto do a campaign?” and he said, “Absolutely.” We
talked about it and shaped it and used archivalfootage from the Telephone Pioneers, then used theJohn Denver music, Follow Me. Dick really likescreative and is very good at it, so it’s terrific tocollaborate on these concepts.
News: I think it was The Wall Street Journalthat said your recent humorous campaign was acurious choice because Qwest was still amid all ofthe investigations of its accounting practices. Whatwas the reaction from viewers? They didn’t think itwas over the top?
Walker: No, I think people understood it wastongue-in-cheek. The marketing strategy there is‘big changes.’ This is not the old Qwest. This is theQwest that’s there for you, with new products, newservices, new ways to make your life easier.Customers found it very, very appealing. Regula-tors found it appealing. Community groups foundit appealing.
News: You’re still running the campaign?Walker: We’re going into the development of
our third-quarter campaign, but the concept is stillthe same. In fact, the McClures tested so very well,plus the sales results were outstanding, that we’regoing to be featuring the McClures in the third-quarter campaign. (The ad at the couple’s home inArvada was shot July 23).
News: To what extent do you get involved intrying to mitigate the public relations damage to(continued on page 15)
Fall 2004 / The Retiree Guardian 7
IN THE NEWSIN THE NEWSFrom media coverage around the region and nation.
AT&T Cuts Jobs at Call Centers as ItStruggles to Regroup -- New York Times9/25
By Matt Richtel and Ken BelsonAfter promising in July to retreat from the resi-
dential phone market, AT&T has started to dis-mantle its vast operations – by closing one telemar-keting and customer-service call center at a time.But will those moves help the struggling behemoth?
Labor union officials said Tuesday that AT&Tinformed them in recent weeks that it is in theprocess of closing call centers in Hawaii, PuertoRico and Charleston, W.Va.
At least 400 workers will be laid off from thosethree locations, and another 130 will be cut at acustomer service center in Fairhaven, Mass., whichis being reduced in size. A thousand contract work-ers were let go after Labor Day, according to anAT&T manager with direct knowledge of thoselayoffs.
Industry analysts now expect even more cuts,perhaps of up to 10,000 jobs, in the coming weeksso that the workers can be removed from the
company’s books by the end of the year.Those cuts would come on top of the company’s
plans to reduce its work force by 8 percent, to about57,000, this year. The company said in July that ithad exceeded its staff reduction goal for the yeareven before it announced plans to scale back itsconsumer business.
Lucent to reduce health care benefit --Rocky Mountain News 9/22
TRENTON, N.J. - For the second time in a year,telecommunications equipment maker Lucent Tech-nologies Inc. is reducing benefits promised tothousands of its retirees.
The Murray Hill, N.J.-based company, whichreported billions of dollars in losses during thetelecommunications industry slump, notified em-ployees by letter it will no longer provide free healthinsurance for dependents of management workersand retirees who retired on or after March 1, 1990,at a salary of $65,000 or more.
Instead, those dependents will have to pay their(continued on page 8)
Congress. The one thing these people understandabove all else is the election process. They knowthey cannot go to Washington without your vote.We can’t outspend them, but we sure as heck canmake our votes count and vote for those candidateswho support our issues. Be assured there are plentyof us still around that can affect an electionoutcome. Other issues besides HR 1322 which, ifyou didn’t know, is nothing more than legislationthat requires employers to keep their promises madeto their retirees while they were still employed, arethe Reimportation of Prescription Drugs fromEurope and Canada (S 2328) and the Cash BalanceConversion issue which tends to penalize olderworkers as they approach retirement. Again, please
refer to our Legislation Directory on our NRLNWebsite. Remember, as an organization, we do notendorse any one political party. We are issueoriented and vote for those who support our issuesand livelihoods.
This is the last “View” before the election. Wedon’t have much time. So, let’s all get involved, getorganized, and start asking the tough questions ofthose we send to Washington. As you know, theywork for us, so let’s get our money’s worth andinsist they start paying attention to the well-being ofretirees and their families.
Jim Norby, President, National Retiree LegislativeNetwork, Inc.
A VIEW FROM WASHINGTON (continued from page 6)
The Retiree Guardian / Fall 20048
own premiums.Last September, Lucent announced identical
cuts for managers who had retired during the sameperiod but had a base salary of at least $87,000.That change took effect on Jan. 1.
A Lucent spokesman said the company, whichonce had a strong presence in Colorado, employed420 here as of June 30 and has about 3,000 retireesin the state.
The latest cut affects the dependents of 5,400management retirees, a total of 7,400 dependents –spouses, disabled children and children age 23 oryounger living at home. It takes effect Jan. 1, 2005.
The prior cutback affected about 9,000 depen-dents of 7,300 retirees.
Sprint, AT&T to Pay About $1.5 Millionfor Unfair Practices
By Caroline E. MayerWashington Post Staff Writer 9/11
Sprint Corp. and AT&T Corp. have agreed topay a total of nearly $1.5 million to settle govern-ment charges that they denied or limited phoneservice to hundreds of thousands of customers theyconsidered credit risks without notifying theconsumers of their rights.
While it is permissible to deny or restrict ser-vice because of credit concerns, the Federal TradeCommission said neither company gave affectedconsumers an opportunity to obtain a free creditreport and/or challenge its accuracy.
“Most consumers don’t know they are entitledto this notice when conditions are placed on theirservice,” FTC attorney Ron Isaac said. The con-ditions included requiring deposits or limiting theamount of calls a consumer could make.
Sprint has agreed to pay a penalty of $1.1million, and AT&T will pay $365,000. The moneywill go to the government; there is no redress forconsumers.
Both firms denied any wrongdoing, saying theysettled to avoid protracted litigation. Both said theyremain committed to complying with all federal and
state fair credit laws.Isaac said the FTC learned of the phone
companies’ actions through a review of their opera-tions. There were few problems with other carriers.
Isaac said the agency found more than 546,000affected consumers who sought to sign up forSprint’s long-distance or local phone service, and175,000 consumers who wanted to use AT&T long-distance.
These consumers were either denied service orthey declined to sign up because of the added con-ditions that were imposed, he said. There may havebeen many more customers who signed up forrestricted service who did not know the restrictionswere the result of a bad credit report, Isaac added.
Two months ago, the commission reached asettlement with two casinos that allegedly failed totell applicants that they were denied jobs because ofunfavorable credit reports. The two firms agreed topay $325,000.
Judge orders Qwest to pay $25.9 millionfine -- Minneapolis Star Tribune 8/26
By Steve AlexanderQwest Communications must pay a $25.9
million fine levied by the Minnesota Public UtilitiesCommission (PUC) in a 2003 dispute over Qwest’simproper behavior toward competitors, a U.S.District Court judge ruled Wednesday.
But Judge Ann D. Montgomery said Qwestdoes not have to pay an additional $10 million inrestitution to competitors hurt by its behaviorbecause the PUC lacked the authority to levy thatfine. The restitution was to have been paid in theform of 18 months’ worth of network servicediscounts to the local phone competitors affected byits improper behavior.
The fine and restitution stem from a case inwhich Qwest was found to have undercut localtelephone competition through secret agreementswith a few local telephone competitors that hurtother competitors. Qwest was found to have violat-ed state and federal laws governing local phone
(continued from page 7)
IN THE NEWSIN THE NEWSFrom media coverage around the region and nation.
(continued on page 8)
Fall 2004 / The Retiree Guardian 13
Dear Mr Notebaert,
As you well recall, when you first came toQwest, you and your team were searching for aunifying theme to bring back pride in the organi-zation and provide a rallying point for all (employ-ees, customers and investors) to inject confidenceand health into the Corporation. Qwest had enteredinto desperate times. Something was needed andfast!
Inspiration came, and you and members of yourteam reached way back into the 100 plus yearhistory of the old Bell System and adopted the timetested and honored “SPIRIT OF SERVICE” asportrayed in the famous painting showing AngusMacdonald, a 23 year old lineman, who worked forLong Lines. He together with his crew, watchedover the only connection between New York andBoston during the great blizzard that began in NewYork before dawn on March 12, 1888.
Because of their efforts that connection neverfailed. For several days, the telephone was NewYork’s only means of communication with the restof the world. The telephone industry was in itsinfancy – Bell had invented the phone just 12 yearsearlier.
And now, here’s the “Rest of the Story.” Youmay know that Macdonald retired from the LongLines department in the ‘30s after more than 48years of service. He died in 1958 at the age of 94.He was a happy, well respected employee, alongwith thousands of others. He participated in theculture of telecommunications that you well know.This culture was founded on the “THREELEGGED STOOL.” Each leg was absolutelyessential to the success and welfare of the business.These legs were: the customer, the investor and theemployees at all levels. If any leg were damaged or
neglected the whole enterprise would fail. It workedfor over 100 years!
I think it is important to reflect that Angusworked for 48 years in this system. And, he wasretired for over 25 years in this system.
It has never been recorded, or mentioned, thatduring all of those retirement years Angus ever suf-fered a moment’s thought that his promised benefitswould be stopped or threatened. His pension, hishealth benefits, his insurance and his concessions;all were secure. He had provided his part of thebargain and there was not a shadow of a doubt thatHIS corporation would also do its part for him andhis family.
This same culture is being brought to good useby Qwest today. The rallying cry SPIRIT OFSERVICE is something that all will support. It is abed rock for all successful enterprises. When lookedupon in this fashion, and expanded a bit, it is reallythe best glue to keep society, as we know it, together.
You and your team do have great obstacles tokeep this corporate ship of state “steady as shegoes.” The challenges do equal the challenges ofold.
And, we encourage your efforts.Thought you’d appreciate this rest of the story.
It seems to apply to today as well as yesterday.
Sincerely,Hy Bradley, retiree.Fruit Heights, Utah.
PS: Because of all retirees’ great interest inthese matters, we expect to publish it in “The RetireeGuardian” soon. It goes to several thousandretirees. If you would like to add your comments,we would be happy to publish them also. Your viewswould be of compelling interest.
THE SPIRIT OF SERVICE –THE REST OF THE STORY
Following is an email sent to Dick Notebaert, CEO of Qwest Communications, Inc., and his reply:
To: Hy Bradley
We are very proud of our heritage. Angus represents what our past and our future mustbe about.
Dick (Dick Notebaert)
The Retiree Guardian / Fall 200412
PHYLLIS KIELBLOCK RETIRES FROMDATABASE ADMINISTRATOR’S JOB
After serving over three and ahalf years as Database Admin-istrator, Phyllis has retired. Priorto that assignment, Phyllis wasour Treasurer for three years. Shewill continue to be active in theAssociation and will maintain herposition as Executive Secretary.
Since no one elected to take over the DatabaseAdministrator position on a volunteer basis, theBoard of Directors decided it was now time to hirea staff person. Replacing Phyllis is Amber Bullockwho is the founder, president and owner of anindependent administrative services firm. She hasover 10 years of professional experience in Data-base Management. She uses the same database soft-ware as we do so there will be a smooth transition.
Another service Amber provides is sending e-mail messages. She has the tools and equipment tosend messages to all 2,500 of our members with e-mail in less than 10 minutes. So Phyllis will alsoretire from her job as Minnesota’s E-mail Coordi-nator.
That means the E-mail Coordinators in theother states can also retire – if they want to do so.Several of these folks have let us know that theycould no longer continue to perform these duties, so
this may be a timely change. As we go to press,some may decide to continue... so please give themall thanks for their contributions to our RetireeAssociation. They are:
- Leo Graff, Lead E-mail Coordinator for our NWB/U S West area, Omaha, NE
- Helen Brandenburg, Council Bluffs, IA- Ken Bertness, Valley Springs, SD- Charles Ballard, Fargo, ND- Judith Nichol, Estes Park, CO
Changes of addresses and e-mail addresses shouldbe directed to:
Amber Bullock, Database Administrator205 Heritage Circle NorthBurnsville, MN 55337-2667Tel - 952-426-1569E-mail - [email protected]
We welcome Amber to our team!Membership applications and checks should
continue to be mailed to Jack Olson, Treasurer, tothe address on the application form. Membershipquestions can be directed to Mary Ann Neuman,Membership Coordinator at 763-535-3865, e-mailaddress, [email protected].
We thank Phyllis for her many years of serviceto our Retiree Association.
As a retiree advocate for Nebraska, Ioccasionally get questions that are interestingand affect many of us. This information isgeneric and more specific circumstances shouldbe referred to the Qwest Service Center.
The reference for these answers is asfollows: AUSWR Advocate – SPDs, QwestCommunications International, Inc., PensionPlan, Summary Plan Description, PaymentOptions, page 34. Effective 1-2001,Distributed 9-2003.
Question: If a retiree divorces what hap-pens to survivor annuity (pension)?
Answer: If you elect a survivor annuityoption, a reduced annuity is paid to the retiree.If you divorce, the spouse to whom you aremarried on your annuity starting date, willremain eligible for survivor annuity.
Question: What happens if a survivingspouse dies prior to retiree?
Answer: If spouse precedes retiree in deathand a reduced annuity had been elected, theoriginal annuity will be restored followingmonth of death.
RETIREE ADVOCATE NOTESAda “Tic” Bork, retiree advocate for Nebraska
Fall 2004 / The Retiree Guardian 9
competition.Qwest said it was disappointed with the court’s
ruling that it must pay the $25.9 million fine but didnot say whether it planned a further appeal. Thecompany said it was pleased the court reversed the$10 million restitution penalty, and said it wouldseek a refund of the $10 million it deposited withthe court as part of its appeal of the PUC restitutionpenalty.
Qwest’s refusal to admit wrongdoing and paythe fine last year led to an acrimonious stand-offbetween state regulators and the Denver-basedtelephone company, which is the dominant localphone service provider in Minnesota and 13 otherstates.
“Either pay it or appeal it, but get off the dimewith it,” Commissioner Gregory Scott told Qwestofficials during a PUC hearing in May 2003.
In retaliation for Qwest’s decision to appeal thefine and restitution penalty rather than admitwrongdoing, a majority of PUC members urged theFCC to deny Qwest’s request to enter the long-distance market in Minnesota. They cited Qwest’srefusal to accept the PUC penalties as evidence thefirm had not opened its local telephone market tocompetition, one of the chief requirements forQwest to offer long distance.
Despite the negative recommendation fromPUC members, the Federal Communications Com-mission later granted Qwest permission to enter theMinnesota long-distance market.
Qwest CFO: ‘We Must Return CompanyTo Top-Line Growth’ -- Dow JonesNewswires 9/22
By Heather DraperDENVER (Dow Jones) - Qwest Communica-
tions International Inc. must return to revenuegrowth and continue cutting costs in order toimprove its margins, the company’s chief financialofficer said Wednesday.
The company faced a liquidity crunch in 2002,
but set the stage last year for a return to revenuegrowth this year, Oren Shaffer, Qwest vice chair-man and chief financial officer, told participants ofthe Bank of America Securities conference in SanFrancisco. The presentation was broadcast on theWorld Wide Web.
“We must return this company to...top-linegrowth,” Shaffer said.
“We’re encouraged by the progress we’ve madeso far.”
Because of the Denver company’s reduced coststructure today, he said, Qwest also has the“legitimate opportunity” to increase profitability.
Shaffer said Qwest has reduced its debt byabout $10 billion in recent quarters, so it has morefinancial flexibility than it had just two years ago.
He noted that it’s difficult for telecommunica-tions companies to increase revenue now because ofovercapacity in the sector. Qwest’s revenue hasbeen falling for the past three years, he said.
But he said Qwest has a number of products inits portfolio that are in “a growth cycle.”
Its long distance, wireless and DSL segmentsare all areas poised for growth, Shaffer said.
Shaffer, the CFO, said Qwest has increased itssales force this year, which the company calls “feeton the street” – a sales force that physically makessales pitches in the region.
He said the company has made inroads againstrival cable companies using the “feet on the street”sales approach.
The increase in sales force comes at a timewhen the company has said it plans to cut nearly4,000 jobs in 2004 to lower costs.
Shaffer said Qwest’s penetration rates in DSL,or broadband, have nearly doubled in the last yearbecause of the company’s increased capital spend-ing to “jump-start” DSL growth.
The company added about $200 million to itscapital budget this year to expand its broadbandreach, he said.
“We should end the year really near the top ofthe industry as far as (DSL) growth and penetra-tion,” Shaffer said.
IN THE NEWSIN THE NEWSFrom media coverage around the region and nation.
(continued from page 8)
The Retiree Guardian / Fall 200410
QWEST, LIES AND VIDEOTAPEBy Al Lewis, Business Columnist – Denver PostTuesday, September 14, 2004
Six months before losing his job at Qwest inJune 2002, chief executive Joe Nacchio starred in acompany video about business ethics.
“We have a reputation for honesty,” Nacchiosaid in a “Corporate Compliance Training” tape foremployees. “And we’ve earned it by making smartbusiness decisions.”
Nacchio wears a dark, pin-striped suit, his eyessheltered behind wire-rimmed glasses, his NewYork accent muted in corporate-speak. He waveshis hands emphatically. Behind him is a logo withthe old Qwest mantra “Ride the Light.”
“At Qwest, we’ve dedicated ourselves to thehighest standards of legal and ethical businessconduct,” he said. “We work hard every day to earnthe trust and confidence of our customers,shareholders, employees and peers. Their trust isour most valuable asset.”
His oratory is so persuasive, viewers will wanta thesaurus to see if “Qwest” is listed as anotherword for “honesty.”
“The code and policies have my fullest sup-port,” he continued. “But it’s up to you to take thetime to become familiar with the code and policies.”
Of course, it’s not just up to you, the employees.The Securities and Exchange Commission wants aquarter-billion dollar settlement from Qwest forfraud. Agency staff has reportedly recommendedcivil charges against Nacchio, who led the companyas it overstated revenues by $2.5 billion.
The 21-minute video also features Qwest’sformer general counsel Drake Tempest and formerpresident Afshin Mohebbi – both of whom havegone on to dramatic roles in ongoing investigationsand shareholder lawsuits, too.
These unlikely ethics gurus take turns staringstone-faced into the camera. They recite polishedscripts and refer viewers to a toll-free “CorporateCompliance Advice Line,” just in case anybody hasquestions.
A polished spokeswoman handles transitions.She has a smiling, corporate persona and wears a
suit as neon blue as the Q on the Qwest tower.“Keeping accurate books and records is always
smart business,” she said. “And it’s required by thelaw.”
Eric Adelman, Qwest’s director of internalaudits, builds on the theme: “Inaccurate reporting orfalsifying any company record ... may not only havelegal consequences but could impact Qwest’s publicaccountability.”
Other Qwest executives take turns outliningvarious topics from insider stock trading to rulesregarding relationships with government officials,customers, other employees and suppliers.
Tempest, Qwest’s former lawyer, sits as stiff asa popsicle stick, bespectacled and sporting a redpower tie.
“You may have a conflict of interest if you havea direct investment in another company that has acommercial or financial investment relationshipwith Qwest,” he warned.
Ric Padilla, procurement officer at the time,added: “Never accept any gift with a substantialvalue from a supplier.”
This rule didn’t apply to Nacchio, Qwest found-er Philip Anschutz or other top Qwest officials whoaccepted opulent gifts of stock from suppliers.
In fact, Nacchio and Anschutz settled civilcharges – without admitting guilt – that they wereallocated initial public offering shares because oftheir positions.
For his part, Tempest apparently approved ofthese stock grants – and even received stock himself.
“We are a company that will grow and succeedbased on a firm foundation of integrity and a solidcode of conduct,” Nacchio said in the video’sclosing scene.
Knowing now what happened at Qwest in 2002,I can only attribute these performances to purecomic genius. The ethical lessons presented are triedand true.
Yet, coming from these characters, the script isfull of irony.
It’s a great piece of filmmaking. Perhaps afterQwest executives finished producing this flick, theyshould have watched it a few times.
It’s a great piece of filmmaking. Perhaps after Qwest executives finishedproducing this flick, they should have watched it a few times.
Fall 2004 / The Retiree Guardian 11
By John Accola, Rocky Mountain NewsFriday, September 24, 2004
Former Qwest executive Thomas Hall pleadedguilty Thursday, September 23, to a single misde-meanor for his role in a scheme to inflate theDenver telco’s revenues by $34 million.
Hall, 52, the last of four defendants indictedover an Internet equipment sale to Arizona schools,faces up to a year in prison and a maximum fine of$100,000.
Hall’s guilty plea in Denver federal court tofalsifying documents represents a huge retreat fromthe government’s position in February 2003. Afederal grand jury initially charged the four mid-level Qwest executives with 12 counts of securitiesfraud, conspiracy and lying to securities regulators.
After a jury deadlocked in April, Hall wascharged in a superseding indictment with just fourfelony counts. His retrial was to have started inearly October.
The plea agreement, reached late last week, isnot conditioned on Hall’s having to serve jail timeor provide restitution. But it does require his coop-eration in the government’s ongoing criminalinvestigation into $2.2 billion in Qwest revenue thatwas improperly accounted for in 2000, 2001 and2002.
“There is no agreement as to the terms ofimprisonment,” Assistant U.S. Attorney WilliamLeone said. “That’s up to the judge to decide.”
On the misdemeanor charge, Hall admittedsigning a letter dated June 29, 2001, for the sale ofcomputer equipment, knowing all along he wascommitting an accounting violation. The letter,which set out a bogus payment schedule, was usedto book revenue before the equipment was actuallyinstalled or paid for.
During a 50-minute hearing, U.S. DistrictJudge Robert Blackburn repeatedly asked Hall if he
had discussed with his attorney and thoroughlyexamined the 13-page plea agreement and accom-panying charging document.
“Yes, your honor . . . I’ve had no guarantees,”said the former vice president of Qwest’s globalbusiness unit.
“This is the proverbial moment of truth, if youwill,” said Blackburn, just before Hall entered hisguilty plea. Hall, who remains free on bail, isscheduled for sentencing Jan. 14.
“Tom Hall and his family are pleased to moveon with their lives and put this behind them,” saidHall’s attorney Jeffrey Springer, making a quickexit to the courthouse elevators with Hall and hiswife.
The same jury that reached an impasse on thebroader charges against Hall in April also acquittedtwo of Hall’s Qwest associates – John Walker andBryan Treadway – and deadlocked on the third,Grant Graham.
The following month, Graham, a former seniorpresident of finance, agreed to plead guilty to afelony and receive a year’s probation.
Prosecutors are continuing to investigate otherQwest executives. The government has maintainedall along that a corporate culture at Qwest that camefrom the top pressured lower-level executives to useillegal tactics to meet financial goals that helpedprop up the telco’s stock price.
Leone said Graham’s cooperation withinvestigators has been helpful and welcomed Hall’sparticipation. “These investigations are marathons,not sprints, and we are making good progress,” hesaid.
Attorney General James Ashcroft said inFebruary 2003 that the four defendants “deceivedintentionally the investing public . . . of the truestate of the company’s financials.”
“No boardroom is beyond the reach of the law.No executive is above the law,” Ashcroft said.
“No boardroom is beyond the reach of the law.No executive is above the law.”
Attorney General James Ashcroft
EX-QWEST EXEC HALL PLEADSGUILTY, FACES UP TO YEAR IN PRISON,
FINE FOR SINGLE MISDEMEANOR
