Qwest Punished by NSA for Non-Cooperation

nightcats writes "According to a story from the Rocky Mountain news, Qwest has received retaliatory action from the NSA for refusing to cooperate in the Bush administration's domestic data-mining activity (i.e., spying on Americans). 'The [just-released government] documents indicate that likely would have been at the heart of former CEO Joe Nacchio's so-called "classified information" defense at his insider trading trial, had he been allowed to present it. The secret contracts - worth hundreds of millions of dollars - made Nacchio optimistic about Qwest's future, even as his staff was warning him the company might not make its numbers, Nacchio's defense attorneys have maintained. But Nacchio didn't present that argument at trial. '"

Comments

Nonsense

[DerekLyons]

The linked article does not support the sensationalist nonsense presented in the summary.

Re:Nonsense

[clodney]

I admit the summary is inflammatory, but strip away the hyperbole and the implication is there.

Nacchio is claiming that he expected to receive classified government contracts that would have prevented the revenue shortfall, and that therefore he was not guilty of insider trading because he believed the revenue forecasts to be accurate.

Nacchio is clearly not a disinterested party to this, so his assertions have to be examined carefully, but it is at least plausible that after Qwest declined to give the NSA access to their network, NSA decided to give the contract to someone else in retaliation.

I haven't followed the story closely enough to pretend to have an informed opinion on the merits of the argument. Of course, this is /., so I guess that doesn't matter here.

Re:Nonsense

[Anonymous Coward]

Did you bother reading the PDF court filings which are listed on the article page?

It appears that (if Nacchio was telling the truth) the NSA offered projects worth a significant amount of money to Qwest -- then, when Nacchio refused a separate NSA request on the grounds that the request was illegal, the NSA withdrew the other projects.

If this isn't punishing Qwest for non-cooperation, what is?

Re:Nonsense

[gstoddart]

The National Security Agency and other government agencies retaliated against Qwest because the Denver telco refused to go along with a phone spying program, documents released Wednesday suggest.

Well, the opening paragraph of the linked article indicates that they thought it did mean that.

Although, I don't think it's the domestic spying program that's been in the news. The article seems to infer that he had refused to participate in some unnamed program (which predated 9/11) which he said would be "was both inappropriate and illegal".

I think the summary seems valid (as it's largely direct quotes from the article).

It seems to be the article which is drawing the conclusion that there was some secret/illegal program (possibly a precursor to the current one) involving the phone system, and that Nacchio's refusal to go along with it.

If I understand it, they're saying that had he been able to cite these secret contracts with the government as to why he thought they'd do well (but couldn't release the info to shareholders) he might have had a defense against his insider trading clauses -- because he would have been prohibited by law from divulging them.

Now, as to how much you can attribute the actions of the NSA et all to retaliation for not participating in the now infamous domestic spying program -- that seems like speculation in the article. It seems like the summary is merely conflating "a" phone spying program with "the" phone spying program. The poster of the article doesn't seem to have so much sensationalized, as slightly mis-interpreted.

Cheers

Re:Nonsense

[complexmath]

Nacchio is clearly not a disinterested party to this, so his assertions have to be examined carefully, but it is at least plausible that after Qwest declined to give the NSA access to their network, NSA decided to give the contract to someone else in retaliation.

This was my interpretation as well. Basically, the government was using lucrative contracts as an incentive for cooperation with various other less palatable projects. When Qwest declined to cooperate with those, the government pulled their other contracts and gave them to someone else who was presumably more willing to cooperate. Given this, I think a case could be made for the mis-estimation of future income by Qwest. Depending on where they were in negotiations, etc, it's reasonable to assume that there was grounds for considering these contracts as valid future revenue.

While story !=summary, it's onerous

[postbigbang]

If you RTFA, the implications are there. Play ball with the NSA, and life could go better with you. Cross-connect your new fiber infrastructure with the NSA and get nice secret benefits. Don't do it, and watch yourself go down, hard, at the hands of the non-secret branches of government.

Good conspiracy stuff. Kennebunkport and B-52s, anyone?

Re:huh?

[tonyreadsnews]

because the NSA stripped out the impo

Don't like a story? Don't comment.

[Futurepower(R)]

Please don't read or comment on articles in which you have no interest.

Wait, WHEN did this happen?

[BobMcD]

I obviously need to do some research:

Nacchio planned to demonstrate at trial that he had a meeting on Feb. 27, 2001, at NSA headquarters at Fort Meade, Md., to discuss a $100 million project. According to the documents, another topic also was discussed at that meeting, one with which Nacchio refused to comply. The NSA wanted to begin its wiretapping program PRIOR to the "unforeseeable" events of September 11th, 2001???

Either I'm out of touch, or this is a tad bit of a smoking gun...

Next up for me is trying to determine when the guys who went along got their start. Either way it doesn't look good.

Interesting stuff.

Re:huh?

[gstoddart]

What? That didn't make any sense in the summary, or in TFA. I didn't bring my bad grammar decoder ring to work today, can someone translate?

The assertion is that when he was CEO he had been told by the government he would be getting big, huge contracts. He used that as a basis to express positive earnings potential. When he declined to participate in a program he felt would have been illegal, they pulled those contracts.

They seem to be implying that, had he been allowed to at is insider trading trial, he would have referenced said contracts in his defense. But, he was prevented, possibly by the government or the judge. They refer to a heavily redacted document to support the belief that he wasn't doing anything illegal, but legitimately had a reason to believe the company had good things coming in the future, and therefore wasn't doing illegal insider trading. (ie. There really was a secret program he was being courted to help with, after he refused, they hung him out to dry).

Another implication, is that before 9/11, the White House was looking at implementing a program involving phones, and the NSA, and that the individual in question felt that it would have been illegal. By inference, this is related to the now well-known but not acknowledged (but still illegal) domestic spying program. There's little evidence offered to support this link.

At least, that's my best understanding of it.

Cheers

Re:What makes you think that this "War on Terror"

[einhverfr]

"Antiterrorism and Effective Death Penalty Act" signed into law by Clinton in 1998. Some law experts have pointed to attempts to use this act to punish acts of pure speech, such as United States v. Al-Hussayen (2004). In that case, the prosecution alleged that merely providing a hyperlink and advocacy of the policies of Hamas constituted material support/expert advice under that 1998 law.

Also see the European Parliament's report on ECHELON, from July of 2001. Note that the investigation that lead to the report began in the year 2000.

The tools of this "war on terror" were being deployed well in advance of 9/11. If we are to give the government the benefit of the doubt, one would suggest it started with the 1993 bombings of US embessies, and a genuine fear that it would escallate. To be more cynical, one might think that it is about certain government agecies trying to maintain their own value after the fall of Communism. Human nature being what it is, both positions are probably true at the same time.