Day 7 morning: Casey finishes up and Graham takes the stand

Gregory Casey was back on the stand this morning for a quick wrap up of his cross examination by Jeffrey Speiser, who eventually elicited that Casey told Nacchio after earnings guidance was “taken down” on September 10, 2001 that the use of IRUs to obtain international capacity was an “ingenious strategy”. Speiser attempted to get Casey to acknowledge that when presented with an opportunity to engage in an IRU with Enron, Nacchio killed the deal because it was bad for Qwest. However, Casey denied recalling that transaction, frustrating the line of questioning.

Casey’s redirect by Assistant US Attorney Hearty was very efficient, going point by point through the issues raised on cross. Casey emphasized that the warnings given in April 2001 about concerns over the ability to meet the targets were different than the ones given in the Fall. In April, he was “adamant” that the market for IRUs was “drying up”.

Speiser and Hearty put on an excellent display of litigation skills during the testimony of Casey. They both have very disarming and conversational styles when questioning a witness and both responded well to sustained objections made by their opponent.

Next to be questioned was Grant Graham, former Finance VP for Qwest’s Global Business Unit. The direct examination, again by Hearty, focused on a series of presentations made by Graham to Nacchio and Szeliga regarding the 2001 budget In a highly organized direct, Graham testified that he told Nacchio the 2001 revenue target for the Global Business Unit was “highly aggressive” and that the new sales targets for that year represented an “unreasonable expectation.” In order to reach the revenue target for 2001, Graham stated that the Global Business Unit would be forced to hire 800-1000 additional sales persons. The Unit would also need to experience “unnatural growth” in the later part of the year to meet the targets.

Cross examination of Graham was conducted by John Richilano, who implied that Graham agreed to testify not only to avoid facing prison time for a felony conviction, but also to avoid possible sanctions from an ongoing SEC investigation. Graham indicated that his only promised to cooperate with the DOJ and that he did not expect any benefit from his testimony in the pending SEC action.

Presumably in response to the points made by Hearty that the growth in the Global Business Unit’s recurring revenues for 2001 was supposed to more than double the prior year’s growth, he got Graham to acknowledge there were synergistic benefits that resulted from the merger of Qwest and USWest.

The cross examination of Graham will continue this afternoon. Check back later for the afternoon summary and daily wrap up.