American Culture

Joe Nacchio and the moral pathology of a nation

In Spring and Summer of 2000, as the Qwest takeover of US West unfolded, those of us at USW saw the writing on the wall. Though billed as a merger of equals, the financial realities of the deal meant that Q was going to control the merged company.

Who was going to run things? USW had CEO Solomon Trujillo, a man who had worked his way up through the ranks in the Bell system and, despite his flaws, a guy with some actual vision. Yeah, we were supposed to be stereotypical old-economy, slow-moving monopoly while Q was the agile new economy start-up. They were the shiny new future, we were a relic of a dead past.

But go back and do a little research. Who was the first company to roll out DSL in America? US West. And we were on the verge of deploying VDSL – broadband TV and video – when the merger happened. We had some service problems and we were roundly hated for them, and maybe in another post someday I’ll explain why that rage was based on a fairly dramatic failure to understand the real complexity of the problem. (Hint – if somebody had convinced the Colorado Public Utility Commission to, you know, enforce its own goddamned rules requiring companies offering business services to also offer residential services the problem wouldn’t have existed.)

Long story short – US West was a pretty good company – far better than it was given credit for being – and I had the pleasure of working in one of the absolute best PR units in the world.

Down the street Q had former AT&T exec and future convict Joe Nacchio at the helm. Nacchio had bolted AT&T in a huff when they refused to make him CEO – score one for Ma Bell – and had presided over explosive growth at Qwest. It’s tempting to argue that given the climate at the time and Phil Anschutz’ network of railroad right-of-ways – what a perfect place to lay fiber, huh? – it may not have taken a rocket surgeon to succeed in that role, but let’s not be stingy with credit.

Unfortunately, the deciding vote was going to be cast by Anschutz, and unless something remarkable happened, there was going to be no mystery about that vote at all. So some high-level strategizing concluded that we needed to de-position Nacchio. We need to work the press in such a way that Anschutz felt public pressure to put the steady hand in charge instead of the hot-headed young punk. I was summoned and charged with the task of building the “Joe Must Go” document.

Given who Joe was, this wasn’t the hardest task of my career by a long shot. He had been openly insulting of not only USW leadership – in the press – but had also disparaged the company’s front-line employees. In the press. He was known as an abusive boss and his bullying had been conducted with the sort of public shamelessness that you only see from a man who think’s he’s untouchable. I’m not somebody who’s terribly put off by bravado and attitude, so long as it’s backed by substance. But Joe’s arrogance appalled even me.

All of these things were merely texture and framing. The core issue was far more serious. I built an extended case about the difference between building an empire and running one, giving Nacchio probably more credit than he really deserved for Qwest’s successes to that point, and noted that a certain entrepreneurial swagger was important to the task of building a company out of nothing. However, USW wasn’t that sort of task. It was an established business with 25 million customers in 14 states and almost all of the merged company’s customers and cashflow were ours. The empire had been built – we didn’t need a gunslinger, we needed a steward.

The final document was a tight, compelling 10 pages or so, and it made the case in pretty incontrovertible terms. The document was shopped around to reporters and editors and got some traction, although I’m not sure any of us really expected it to succeed. We had to try, though. Most of us knew we were going to be turfed within the first four seconds after the handover, and while there was plenty of self-interest at work, the truth was that Nacchio was going to be a disaster and good people were going to suffer. This was brutally obvious to everyone with an IQ above 60. Except Phil Anschutz, who had the only opinion that mattered.

I think the last seven years has proved us right, although it has to be said that even we never accused Nacchio of being a felon. We painted Joe as an arrogant, braying ass of the first order. We pointed up his abusiveness and bullying. And we explained how he was purely and simply a bad move organizationally – something AT&T had figured out a few years before. The consensus public opinion surrounding US West’s demise was something to the effect of “ding, dong, the witch is dead,” but I told everyone who’d listen that it wouldn’t be long before they wished they had us back.

Yesterday a jury in Denver convicted Joe of 19 counts of insider trading. While I dare not hope he’ll serve it all, he faces 190 years in prison and $19M in fines. Given the impact his actions had on so many employees at my old company, my only regret is that the possible sentence is so light. At a minimum I’d like to see him die in prison and have every penny in assets seized for distribution to those who lost so much due to his criminal greed. Maybe instead of spending his days in a nice country club prison he should be handed off on a rotating basis to work for those he hosed. That he should forfeit all of the $52M he made off his corrupt dealings goes without saying, and if the judge fails to exact that penalty at sentencing I’ll be back calling for his head, too.

Nacchio. Skilling. Lay. Ebbers. The Rigas. Kozlowski. These men are symptoms of the pathology of our generation. They’re a new, arguably even more arrogant version of Michael Milken, the poster child for Reagan Era corruption and excess, and none will ever get the full measure of the justice he deserves.

I use the term “pathology” for a reason. If boils are breaking out all over a body, a good doctor is going to begin digging for the underlying disease causing the eruption of such odious symptoms. As the Bush years mercifully draw to a close in a whirlwind of scandal, maybe we’re due for a moral check-up.

Categories: American Culture

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10 replies »

  1. I got killed on Quest stock.
    I wish they’d bring back “Drawn and Quartered” for Nacchio. He was an arrogant prick.

    I’m all for people making money, including billions of dollars, if the playing field is level. When these guys raid the pension funds, engage in sweetheart deals, and fatten their wallets at the expense of the shareholders, I say, “Let them fry.”



  2. Precisely. I’m all about competing and winning on a level playing field. Somebody takes me in a fair contest all I have is congratulations for them. But I’m not so big on cheaters, and you’re lucky – at least he didn’t wipe out your entire retirement.

  3. I worked for the Company. There were so many disgruntled employees and moral tanked. I retired early and am I glad I did. From what I learned by talking with other employees is that the Company is’nt getting better due Qwest policies. It’s OK if the old Mountain Bell, U.S. West (Bell system) had to be killed off because of their old antiquated telecom infrastructure, but don’t rip off the employees doing it. What a shame when you see another large corporation picked apart by vultures like Joe Nacchio. They say one day in prison is like a week. One week in prison is like a month. One month is like a year. One year in prison is like a decade. Joe will be an old man when he gets out. Perhaps you can devote that time to learning what it means to be an American. You forfeited you freedom for greed. Addios Joe and Good Riddens!

  4. I worked for the company too. US West – which then was swallowed up by Q. I still have PTSD episodes from it all… Joe is having an easy ride in a min sec fed penn… He is just fine, I am sure. ‘small people’ like me could only watch as he took the company and its stock down the tubes… I wish I still had a copy of that email from his corporate councilliere Drake Tempest, assuring us all that Joe had not been arrested in his office, and that he was not even guilty of a parking ticket. What a JOKE. In those last days, people were crying on elevators and in other ways simply falling apart. That man is guilty of ruining the lives of so many people he never even met, although he was ‘our fearless leader.’
    I am still reeling from my experiences under his thumb. Good riddance and good bye.

    • Hi Claire. I guess all I can say, selfish as it is, is that I’m glad I wasn’t there. I had colleagues survive the merger only to engineer their own exits within a week. In one case an extremely talented director simply said fuck you, got up and left the building without so much as asking for a separation package.

      I think what I have written about Nacchio at S&R makes clear how I feel about him. If he ever lives another free day in his life it will be an affront to justice.

  5. Yes. I agree. Do you remember that tsewq web site ? It LOOKED just like the main company site / but was filled with employee chat – and it was all just spilling over with dismay and hatred. That man turned a good company into a reign of terror… It was awful. One day I had a job, and the next, I was standing in the street with all my ‘desk stuff’ in a xerox box… He was a real piece of work…