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Milstead: Star witness' testimony not stellar

Published March 27, 2007 at midnight

Rocky finance editor David Milstead is weighing in each day on his "Out of Order" blog at RockyMountainNews.com. Here's an excerpt:

The prospect of crisp, damaging testimony from Robin Szeliga, believed to be the government's star witness, went unfulfilled Monday.

Szeliga was Qwest's chief financial officer. She pleaded guilty to insider trading for an exercise of 10,000 options in April 2001.

This, it was believed, would be the witness closest to Joe Nacchio and his knowledge of insider information. Szeliga, as CFO, was an active participant in providing Wall Street with inaccurate projections.

The prosecution moved through her testimony in workmanlike fashion, and Szeliga, answering in a monotone, stuck to the facts. She provided less-colorful testimony than former investor-relations head Lee Wolfe, who last week provided a number of examples of Nacchio's braggadocio like "Screw 'em, just tell 'em to buy." (That comment supposedly was the reaction to the suggestion that Wall Street could make a better-informed decision with better disclosure from Qwest.)

Prosecutors ended on a high note. Szeliga said Qwest's $1 billion downward revision of its revenue guidance, made Sept. 10, 2001, reflected the too-aggressive number that Qwest executives had been warning Nacchio against for months.

Defense attorney Herbert Stern quickly made a point in introducing the idea of an internal budget presented to the Qwest board in December 2000 that differed from the internal budget approved in February 2001. Szeliga had to admit some of her testimony was about the wrong budget.

The question also highlighted another confusing numerical comparison. Now, jurors must contend with the difference between Qwest's actual numbers, its Wall Street projections and two sets of budgeted figures.

But the cross-examination got bogged down as Szeliga split hairs when Stern tried to ask her questions about her plea deal.

While there's a chance the jury will see Szeliga as flinty and evasive, today's defense questioning probably needs to score a few more hits.

Comment on David Milstead's blog at RockyMountainNews.com.

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