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10/15/2007
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Ex-Qwest Chief Nacchio Says NSA Punished The Phone Company

In a court appeal, ex-Qwest executive Joseph P. Nacchio says the company was in line to get lucrative NSA work, but was rejected after Qwest raised questions about the legality of some of the agency's work.

Meetings held before the Sept. 11, 2001, terrorist attacks between officials of the National Security Agency and executives of Qwest Communications International are taking on new significance as Qwest's former chief executive fights a conviction and as Congress debates the NSA's surveillance methods.

Ex-Qwest executive Joseph P. Nacchio, who has been convicted of insider stock trading charges, cites the meetings to back up his argument that Qwest was in line to get lucrative NSA work but was rejected after Qwest raised questions about the legality of some NSA work. If the NSA work had been awarded, as Nacchio anticipated, it would have helped the company's finances, Qwest's stock would have held up better, and Nacchio wouldn't have been criticized so intensely for selling stock.

The meetings are cited by Nacchio in his appeal to the U.S. 10th Circuit Court of Appeals that attempts to reverse a jury verdict for insider trading. Nacchio's attorney, Maureen Mahoney, argued that Nacchio was unfairly handcuffed regarding the government contracts; Nacchio has complained for several months that he couldn't discuss the contracts during the trial, because they involved classified information.

However, while much of the information remains classified, some new information was revealed in the appeal and the issue has taken on a new life as Congress examines the NSA's surveillance methods. The Washington Post reported that NSA officials have declined to discuss the case.

Naccio's appeal states that he "refused" to participate in some NSA work because he feared it was illegal; he added that the NSA expressed disappointment when Qwest declined to participate in the program.

"Nacchio said it was a legal issue and that they could not do something that their general counsel told them not to do," the filing stated. "Nacchio projected that he might do it if they could find a way to do it legally."

Prosecutors argued that Nacchio knew that the company wasn't performing well when he sold $52 million of his Qwest stock. During the trial, some of Nacchio's former colleagues at Qwest testified that they had warned him that Qwest's finances were suffering.

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