Dutch Pension Fund Sues Qwest Over Fraudulent Accounting

Dutch Pension Fund Sues Qwest Over Fraudulent Accounting


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DENVER (AP) -- One of the largest pension funds in the Netherlands filed a federal lawsuit Monday claiming it lost more than $100 million because of fraudulent accounting at Qwest Communications.

The Dutch fund, Stichting Pensioenfonds ABP, purchased more than 5.6 million shares of Qwest common stock between July 2000 and March 2002, the same period Qwest allegedly inflated its revenue by almost $2.9 billion, according to a 300-page lawsuit filed in U.S. District Court in Denver.

Stichting represents 2.2 million government and education employees, such as police officers, firefighters and teachers.

The fund purchased Qwest stock based on public statements issued by the Denver-based telecommunications company that would lead reasonable investors to misjudge stock value, the suit says. Company executives concealed fraudulent accounting and vehemently denied accounting problems, even after a federal investigation into its accounting practices was launched, the suit says.

Qwest spokesman Tyler Gronbach said the company had not seen the suit and could not comment.

The Securities and Exchange Commission began investigating Qwest in 2002 for allegedly inflating revenue through fraudulent transactions with other telecommunications companies. Since then, the SEC has sued eight former and current employees, and the company restated its financial results for 2001 and 2002 to lower revenue by about $2.5 billion.

Four former executives -- Grant Graham, Thomas Hall, Bryan Treadway and John Walker -- face criminal charges for their alleged roles in seeking to create more than $33 million in revenue by wrongly reporting the timing of a purchase order from the Arizona School Facilities Board in 2001. All have pleaded innocent. Their trial is scheduled to begin this month.

The SEC lawsuit has been put on hold while the criminal case proceeds.

Stichting's lawsuit names 26 former and current Qwest executives, including those facing criminal charges and named in the SEC lawsuit.

Also named are Arthur Andersen LLP, which worked as Qwest's independent auditor from 1999 through 2001; two of Arthur Andersen's audit partners; securities broker Citigroup Global Capital Markets, formerly Salomon Smith Barney Inc.; and Jack Grubman, one of Citigroup's top telecommunications industry analysts.

The lawsuit accuses the companies and individuals of fraud, conspiracy, and violations of securities exchange law. Stichting seeks unspecified money damages.

(Copyright 2004 by The Associated Press. All Rights Reserved.)

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