This is a follow-up to my April 20, 2005, report regarding the
Hull v. Department of Labor (Freedom of Information Act - FOIA) lawsuit
filed in the Denver Federal Court.
The United States Attorney defending the Department of Labor's
actions has told us the Department of Labor (DOL) ‘closed’ the over 3 year
long investigation of the Qwest Pension Plan effective April 7, 2005. That
means, now, the previously withheld documents that have been requested since
March 2004 are no longer exempt from disclosure under the Freedom of
Information Act (FOIA).
Now, the DOL wants to ‘process’ those documents to get them ready
for release. The U.S. Attorney requested the DOL office in Washington, DC
be allowed until Wednesday, June 29, 2005, to complete its processing of
about 1,500 pages of documents that had been withheld from disclosure. We
agreed. Therefore, we expect to receive the previously withheld documents
near the end of this month.
Meanwhile, we obtained from the DOL a copy of the April 7, 2005,
‘closure’ letter sent to Qwest legal counsel concerning the DOL's
investigation about the Qwest Pension Plan. The letter reports that the
investigation concerned whether the pension plan had been charged expenses
that should have been paid by the company out of company revenues. The DOL
found that $83,321.00 was improperly charged to the pension
plan. Qwest reimbursed that amount, plus interest to the Qwest Pension
Department of Labor Employee Benefits Security
1100 Main Street,
Kansas City, MO
APR 07 2005
Employee Benefits Committee
c/o Karen. DuWaldt
Vice President, Deputy General Counsel
Qwest Communications International, Inc.
1801 California Street, Suite 900
Denver, CO 80202
RE: Qwest Pension Plan
Case No. 60-099723
Dear Committee Members:
The U.S. Department of Labor, Employee
Benefits Security Administration (the Department), has responsibility for
the administration and enforcement of Title I of the Employee Retirement
Income Security Act of 1974 (ERISA). Title I establishes standards governing
the operation of employee benefit plans such as the Qwest Pension Plan (the
This office has concluded its
investigation of the Plan and of the activities of the Plan fiduciaries.
Based on the facts gathered during this investigation, it appears that the
Employee Benefits Committee (the Committee), as a fiduciary to the Plan,
violated several provisions of ERISA. The purpose of this letter is to
advise you of our findings and acknowledge the corrective action taken.
We understand that the Committee is
named the Plan Administrator. In this capacity, the Committee is a fiduciary
and party-in-interest to the Plan within the meaning of ERISA Section 3(21)
and 3(14). These provisions provide in pertinent part:
Act Section 3(21)(A).--a person is a
fiduciary with respect to a plan to the extent
(i) he exercises any
discretionary authority or discretionary control respecting management of
such plan or exercises any authority or control respecting management or
disposition of its assets... or
(iii) he has any discretionary
authority or discretionary responsibility in the administration of such
Act Section 3(14) The term
“party-in-interest” means, as to an employee benefit plan. –
(A) any fiduciary (including,
but not limited to, and administrator, officer, trustee, or custodian),
counsel or employee of such employee benefit plan;. . .
(C) an employer any of whose
employees are covered by such plan; ...
Our investigation disclosed that the
Plan Trust paid expenses related to settler activities totaling $83,821. The
payment of these expenses by the Plan Trust was a violation of ERISA
Sections 403(c)(l); 404(a)(1)(A) and (B); 406(a)(1)(D); and 406(b)(2) which
state in relevant part:
ERISA Sec. 403 (c)(1) ... the assets of
a plan shall never inure to the benefit of any employer and shall be held
for the exclusive purposes of providing benefits to participants in the plan
and their beneficiaries and defraying reasonable expenses of administering
the plan: "
Act Section 404(a)(1) "...a fiduciary
shall discharge his duties with respect to a plan solely in the interest of
the participants and beneficiaries and —
(A) for the exclusive purpose
(i) providing benefits
to participants and their beneficiaries; and
(ii) defraying reasonable expenses of administering the plan;
(B) with the care, skill,
prudence, and diligence under the circumstances then prevailing that a
prudent man acting in a like capacity and familiar with such matters would
use in the conduct of an enterprise of a like character and with like aims.
Act Section 406(a)(1) “A fiduciary with
respect to a plan shall not cause the plan to engage in a transaction, if he
knows or should know that such transaction constitutes u direct or indirect.
(D) transfer to, or use by or
for the benefit of, a parry in interest, of any assets of the plan...; " and
Act Section 406(b) “A fiduciary with
respect to the plan shall not –
(2) in his individual or in any
other capacity act in any transaction involving the plan on behalf of a
party (or represent a parry) whose interests are adverse to the interests of
the plan or the interests of its participants or beneficiaries. . ."
Subsequently, we understand that
corrective action has been taken. Specifically, as a result of our
investigation, Qwest and Qwest Asset Management repaid to the Plan Trust
$83,821 to correct the prohibited transaction related to the subject expense
payments and an additional $16,097 to compensate the Plan for lost earnings.
The total amount paid to the Plan Trust was $99,918.
Because you have taken the corrective
action noted above, the Department will not take any further action with
respect to this matter. You are cautioned, however, that by agreeing to take
no further adios, the Department commits only itself and cannot in any way
restrain any other individual or governmental agency from taking any further
action it may deem appropriate with respect to these or other matters.
As you may be aware, Congress, in
enacting ERISA, added Section 4975 to the Internal Revenue Code of 1954,
which imposes an excise tax on disqualified persons (generally the same as
parties-in-interest under Title I of ERISA) who engage in prohibited
transactions with employee retirement benefit plans. The excise tax is paid
concurrently with the filing of a Form 5330 (Form and Instructions
Please be advised that pursuant to
Section 3003(e) of ERISA, the Secretary of Labor is required to transmit to
the Secretary of the Treasury information indicating that a prohibited
transaction has occurred. Accordingly, this matter will be referred to the
Internal Revenue Service.
STEVEN R. EISCHEN
Enclosures: Form 5330