The intention

The ambitious telecom company was launched in the spring of 1999 set up. The owners – KPN and Qwest – wanted to link their cable networks through the company and expand them further in order to create more competitiveness.

The approach

KPNQwest established its headquarters in Denver, hot. The approach included. to use an Internet protocol-based- optical fiber network in Europe with a total length of 13.000 kilometer.

The result

A substantial part of the planned fiber optic network was ready in 2000. At the end of that year, it was estimated that 50% of European IP traffic via KPNQwest! A huge achievement in itself.

However, the high-performing telecom company collapsed in a spectacular bankruptcy 2002. Management claims the collapse is a direct result of the bursting of the internet bubble. This suddenly resulted in an enormous overcapacity of the fiber optic networks. Like the competitors UPC and Versatel, people said that this was misanticipated and revenues lagged far behind expectations..

The lessons

KPNQwest left a debt of 1 billion euros behind…

“Duped shareholders indicate that KPNQwest is good for one of the largest turnover frauds ever in the Netherlands. A civil complaint from the trustees relates to extensive defrauding of investors and intimidation of staff by a
'conspiracy’ from Qwest drivers. That is the conclusion from the mind-boggling content of the New Jersey District Court complaint filed by the KPNQwest trustees. (KQ), Eddy Meijer from Houthoff Buruma and Jan van Apeldoorn from Levenbach Advocaten in Amsterdam.” (Source: Houthoff)

If it turns out that the board of KPNQwest has deliberately released incorrect information, can they be held jointly and severally liable for the damage caused by the bankruptcy.

The VEB is also in 2005 initiated legal action against KPNQwest.
”The VEB is in August 2005 initiated legal action against KPNQwest. The association has, also on behalf of shareholders with approx 700.000 shares, submitted a request to the Enterprise Section to order an investigation into the policy and affairs of KPNQwest NV. The VEB is of the opinion that there has been mismanagement and mismanagement at KPNQwest, what in 2002 led to the bankruptcy of this company.” (source: WEB, January 2007)

Further:
The judge's verdict is still pending….

Author: Bruno Goudsmit

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