Nacchio Live Blog: Greg Casey Cross- Examination

March 27 2007, 3:31 PM
[Note: This is not a transcript. It is just my notes of the testimony as fast as I can type them. Spelling errors will be corrected tonight. I will update every fifteen minutes or so, so either check back or refresh the page.] Cross examination of Qwest's former Executive VP of the Wholesale Division, Greg Casey by defense attorney Jeff Speiser: Has met about 8 times with the Government. The last time was last night. The time before that was a week ago. He hasn't met with any reps for Nacchio. Re: the SEC settlement. Were you aware the SEC wanted $35 million back from you? Yes. His final settlement was for 2.1 million. He got to keep the rest. When did he negotiate immunity protection? 2005 How did that happen? My attorneys met with a U.S. Attorney and they worked out a deal. Before the deal, he was not willing to be a witness in the case. After speaking with counsel, he felt immunity was the wise way to go. Did you feel you committed a crime? No. Who determines what the truth is? The jury. Do you recall a conference in New York City in October, 2000 at the Waldorf? It was the first major conference after the merger. All the business unit heads and chief executives were there. About 300 people attended, including brokers from the leading brokerage houses. Lawyer plays recording of what Casey said at a breakout session at that conference.
"I want to give you an overview of the wholesale market. Qwest wholesale from my perspective is both a regulated and unregulated business. The main sweet spot and area of growth is the high margin optical broadband. I'm the intel part of Qwest. Our demand for optical broadband has never been better. There's a lot of noise in the marketplace. There's been questions about pricing and price erosion over the past few years. There has been some, but we've kept pace with the technology and it's a healthy vibrant business."
He doesn't remember saying that. He says IRU's were a subset of what he was talking about. **** ( I missed a discussion of IRU's and fiber. The point I think was there was another kind of fiberoptic product Qwest had loads of to sell.) 4:16 pm His first contract called for a salary of $175k and he received at least 20,000 options. He acknowledges that Nacchio took a chance on him when hiring him. He also got a bonus. When he left there were 1200 to 1300 employees in his unit. How did they grow from three to five employees to 1200 to 1300? Part was organic, from within, and part was due to their acquiring other companies. Who led that growth? Nacchio. His salary in 2000 was $400k a year. Plus he got a bonus that was 100% of his salary, provided he met his target. If he made his target, he would receive $400k salary and $400 k bonus. What did he have to do earn the $400k bonus? "Make our budget. " Bonuses were paid quarterly. He was judged on whether he made the targets quarterly. "The bonus was an incentive for us to meet our numbers." Did he ever not make the numbers? For the most part, he made the bonus, but maybe not the whole thing, each time. Stock options: On 7/21/2000 he sold 480,000 shares for a net of $24 million. 4:36 pm Clandestine contracts: He doesn't know what kind of contracts there were or what kind of conversations Nacchio had with government officials about them. He does know Qwest did have some classified contracts in the past. Casey did not have a security clearance. 4:44 pm. I'm heading out. Casey held up very well on cross-examination. At times, it seemed like he was trying to be very fair to Nacchio. He certainly isn't trying to bury him. He's a very credible witness in my opinion. I'm going to be out of town from Weds. until next week. I hope you've found the live blogging helpful. Let us know in the comments or by email.