Please Redistribute

June 3, 2005
 
 
Mimi Hull, President
ASSOCIATION OF U S WEST RETIREES
Board Members and general membership
 

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 Plan.
 

I have reproduced below the entire text of the DOL's April 7, 2005, ‘closure’ letter sent to Qwest.  Also, you can go the AUSWR website http://www.uswestretiree.org/legal2.htm and under the heading Freedom of Information Act – Hull v. DOL view the June 3 update, when posted, and view the attachment, a true copy of the DOL's April 7, 2005, letter to Qwest.
 

Curtis
CurtisLKennedy@aol.com
303-770-0440
 
 
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U.S. Department of Labor          Employee Benefits Security Administration
                                                        1100 Main Street,  Suite 1200
                                                        Kansas City, MO  64105
                                                        816-426-5131   FAX  816-426-5511
 
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    
         EIN/PN 84-1339282/005
 

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 Plan).
 

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 plan-
 

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 of:
 
            (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 enclosed).
 

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.
 
Sincerely,
 
s/ signature
STEVEN R. EISCHEN
Regional Director
 
Enclosures:    Form 5330
                        Instructions