Day 5: Testimony from Robin Szeliga, Former CFO of Qwest

The morning began where it left off on Thursday with Ms. Oneth, director of Legal Affairs, concerning Qwest’s internal policies on insider trading and the trading windows.  Mr. Nacchio was a Section 16 employee, and as such was subject to Qwest insider trading policy, including the prohibition against selling or purchasing securities while in possession of material non-public information. It was Ms. Oneth testimony that Mr. Nacchio was fully aware of his status as Section 16 employee.  Ms. Oneth walked the jury through the complicated paperwork filed, either by her or by outside counsel, on behalf of Mr. Nacchio with the SEC to show any transactions of securities and their dollar amounts.

On cross examination, John Richilano started to bring out that these policies were only internal and did not carry with them the force of law. Judge Nottingham, taking the cue from the cross examination, gave a limiting instruction to the jury that the testimony concerning issues of Qwest’s internal policies, particularly the insider trading windows, were not legal principles, but rather, went to establishing “such issues as Mr. Nacchio’s state of mind” concerning his trading activity.

Next to the witness stand was Ms. Robin Szeliga who was appointed by Mr. Nacchio as CFO of Qwest, despite admitting that Mr. Nacchio at one point viewed her as too inexperienced for the postion.  Her testimony surrounded the time frame prior to her appointment as CFO when she was part of the planning team creating Qwest’s 5-year plan for the merger between USWest and Qwest in 2000-2001. During that period she reported to the CFO, Robert Woodruff. 

The prosecution used her testimony to introduce some video clips to Qwest employees where Mr. Nacchio repeated the substantial importance of meeting Qwest's numbers to the "Street."  One topic of considerable importance was Szeliga's testimony of Qwest's internal budgeting process, particularly 2001.  As part of the process Mr. Nacchio met with the heads of the principle business units in October 2000 to discuss their internal budget numbers.  Szeligia testified, that during these meetings, the heads of some individual business units expressed concerns that they would be unable to meet their budgeted targets.  Ultimately, most submitted budgets that purported to meet these targets but continued to express concern about doing so.  Also, an internal memo from an official within Ms. Szeliga's office stated that the budget contained a billion dollars of "risk," amounts that the business units might not be able to meet.  Ms. Szeliga further testified that Mr. Nacchio was told the contents of this memo in mid to late December 2000, or early January 2001. 

The government is apparently trying to show that Mr. Nacchio knew in late 2000 or early 2001 that there was uncertainty about meeting Qwests internal numbers and, ultimately, uncertainty about Qwest meeting the numbers given to the street.

Mrs. Szeligia will be back on the stand following the lunch at 1:10pm