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Qwest retirees sue for pension audit data

By SANDY SHORE
The Associated Press

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Qwest blames the plunge in value on the economy and more benefit payments, and says the pension fund is still fully funded.

But some retirees said they need more information and are skeptical because of federal investigations into Qwest's accounting.

"Our concern right now is that there is potential — potential because we don't know — misuse or not responsible fiduciary management of that pension fund, and that would be perhaps one of the primary reasons why the fund dived," said Nelson Phelps, president of the Association of US West Retirees. Qwest acquired US West in 2000.

A Labor Department spokeswoman declined to comment, citing the lawsuit and the agency's own investigation involving the telecom company that serves Washington and 13 other states.

In 1999, the pension fund totaled $14.6 billion, which included a surplus of $5.7 billion. By the end of 2002, the fund had a $314 million deficit. It improved by the end of 2003 to $9.01 billion — slightly more than fully funded, which is the level necessary to pay every participant, said Kimberly Walker, Qwest vice president of finance.

Qwest attributes much of the drop in value to a $5 billion-plus increase in benefit payments due to downsizing.

"It explains a lot, obviously, of the asset drop; in fact, almost all of it," said Walker, who is also president of Qwest Management, which handles investments of employee benefits.

She said the fund also took a hit because of the economic downturn and declining interest rates.

But the retirees aren't convinced. They contend, for example, the fund lost $67 million in a high-risk investment between October and December 2001. Qwest spokesman Steve Hammack declined comment on that claim.

In March, retiree Mimi Hull of Denver submitted a Freedom of Information Act request to get documents the Labor Department has gathered as part of an audit begun in 2001. The request was rejected a day later by agency officials who said they could not release the information because of the ongoing investigation. An appeal was denied.
 
Hull, who spent 25 years with Mountain Bell and US West before retiring in 1995, sued last month in U.S. District Court, accusing the Labor Department of "acting in bad faith."

The suit asks that a judge be allowed to review any withheld documents to determine if they can be released. Hull is seeking written and e-mail communications involving plan administrators and fiduciaries, legal counsel, accountants, orders and subpoenas.

She said she is thinking of the estimated 70,000 retirees who are counting on a Qwest pension. "They can't go back into the work force. They're too old or don't have up-to-date skills," she said.

The Labor Department opened its investigation of Qwest in 2001, about a year before the Securities and Exchange Commission started looking into Qwest's accounting practices and allegations that officials inflated revenue through fraudulent transactions. The Justice Department is also investigating.

The investigations prompted Chief Executive Joseph Nacchio to quit in 2002, and the company removed $2.5 billion in revenue from its books for 2001 and 2002.