Ex-CEO likely to foot most of bill for appeal
Jeff Smith, Rocky Mountain News
Published July 31, 2007 at midnight
Qwest Communications is getting some relief from former CEO Joe Nacchio's hefty legal bills, estimated at tens of millions of dollars and counting.
The Denver telco won't be required to pay for the work of Nacchio's criminal appellate team led by Maureen Mahoney.
But Qwest has agreed to continue to pay Nacchio's civil fees and the outstanding bills for Nacchio's criminal defense. It also will pay an undisclosed amount to lead defense attorney Herbert Stern's law firm during Nacchio's appeal.
The conditions were part of a settlement Monday to a lawsuit filed in the Delaware State Court of Chancery in May by Nacchio's attorneys. Nacchio claimed at the time that Qwest was balking at its obligation to pay legal fees.
Nacchio was sentenced last Friday to six years in prison after being convicted in April of 19 counts of insider trading.
Qwest spokesman Bob Toevs characterized the settlement as "fair and reasonable" and one that protects the interests of Qwest.
Toevs noted Qwest is reserving the right to go after certain legal expenses later. He said Qwest also is receiving a $6.5 million letter of credit from Nacchio that provides guarantees in the event Qwest successfully recoups expenses later.
The $6.5 million apparently pertains to amounts in dispute in the Delaware case, not Nacchio's entire legal bill.
Stern, Nacchio's lead attorney, characterized the settlement as "temporarily" postponing final resolution of the matter until after Nacchio's criminal appeal is heard. Stern emphasized that Qwest is paying all of Nacchio's past criminal bills and his civil bills "according to (Nacchio's) contractual right to indemnification."
How the legal bills are resolved will depend partly on whether Nacchio is successful appealing his conviction.
Qwest, incorporated in Delaware, has been in a tough position, because of contractual obligations, corporate bylaws and Delaware law.
smithje@RockyMountainNews.com or 303-954-5155
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