Enron and Qwest struck a $500M deal last fall to swap fiber optic network capacity and services at exaggerated prices in an effort to improve each company's financial picture. ... analysts said the timing and the valuation would be hard to justify ...

Qwest, the dominant telephone company in 14 Western states, has said publicly that its swaps are based solely on the needs of its network operations. ...

"Qwest said we will overpay for the assets, and you will overpay me on the contract," one former Enron executive said. "They had a pinch in the third quarter and needed a deal."

"It's totally irrational [for Qwest] to buy capacity from Enron. This is clearly a swap for accounting purposes."

On Sept. 30, a Sunday and the final day of the third quarter, Qwest signed a deal to pay Enron $308 million for assets that included so-called dark fiber along a route from Salt Lake City to New Orleans. In exchange, Enron agreed to pay Qwest $195.5 million for "lit wavelength" over a 25-year period; each company exchanged checks for about $112 million around the close of the deal.

"I can't conceive of any reason [Qwest] would need more dark fiber in the U.S.," said one analyst.