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3/18/2004

Ex-Qwest official says he cheated to push deal through

The Associated Press

DENVER — Qwest Communications officials continued to change documents weeks after a $34 million transaction to try to convince auditors that revenue from the equipment sale could be recorded, a former finance official testified Wednesday.

As late as July 12, 2001 — nearly two weeks after the deal closed — Doug Hutchins said he and other officials were trying to make it appear as if the deal had met requirements.

By then, he knew auditors were uncomfortable with the sale, which had to include a fixed delivery schedule to meet accounting requirements, said Hutchins, who received immunity in exchange for his testimony.

Hutchins said he never received an equipment delivery schedule, so he modified another schedule to make it appear as if a delivery schedule had been set. The equipment was for a $100 million deal to connect Arizona’s public schools to the Internet.

“I just cheated and said they (school officials) had approved the schedule,” Hutchins said. “There was a lot of pressure to get the transaction done, and I just took the shortcut.”

Former Qwest Communications International Inc. executives Grant Graham, Tom Hall, Bryan Treadway and John Walker are on trial over allegations they plotted to improperly record the $34 million to meet second-quarter revenue targets, then lied to auditors and regulators to cover it up.