Four former executives at telecoms company Qwest Communications International have been indicted on 12 charges relating to corporate accounting fraud, the US Department of Justice announced yesterday.
In the latest of a line of financial reporting problems at Qwest, the four former executives allegedly "devised a scheme to falsely recognise" more than $33m (£21m) of additional revenue for the second quarter of 2001, the justice department claimed.
The defendants are accused of seeking to fill a gap in revenue by immediately reporting millions of dollars from a delayed purchase by the Arizona School Facilities Board, a violation of Securities and Exchange Commission rules. The four then allegedly tried to hide their actions by falsifying documents and engaging in securities and mail fraud, the Department of Justice said.
The four defendants are Grant Graham, former chief financial officer for the global business unit; Thomas Hall and John Walker, former vice-presidents in the government and educational solutions group; and Bryan Treadway, a former assistant controller.
In a statement Qwest said, "Qwest continues in its efforts to co-operate with the government in connection with the investigations. As a company and as individual employees, we hold ourselves to the highest ethical standards as we conduct our business."
Telecoms industry analyst Jeff Kagan said the indictments are good news for investors who are looking for someone to pay for their losses. But the news is not necessarily bad for Qwest, "as this is old news under previous leadership". Former chief executive officer Joseph Nacchio resigned last June.
In addition to the criminal charges filed by the Department of Justice, the Securities and Exchange Commission yesterday filed civil fraud charges against eight current and former officers and employees of Qwest, alleging they inflated the company's revenues by $144m (£92m) in 2000 and 2001 in order to meet earnings projections and revenue expectations.