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Secretaries Say Enron Had Them Pose As Traders In 1998 Dow Jones Energy Service, 02/06/2002 Substantial illegal Enron activity found-Tauzin. Reuters English News Service, 02/06/2002 FASB To Discuss Off-Balance-Sheet Entities Next Week Dow Jones News Service, 02/06/2002 US Rep Tauzin says Congress has learned 'of theft by insiders' at Enron AFX News, 02/06/2002 UBS to Start Energy Trading Soon After Hiring Enron Workers Bloomberg, 02/06/2002 Enron's Lay Told Investigators He Felt 'Betrayed' Bloomberg, 02/06/2002 Labor secretary testifies at Enron hearings=20 Associated Press, 02/06/2002 Chao: US Pension Laws Need Reform; Warns Of Going Too Far Dow Jones International News, 02/06/2002 UK: No quick sale for Enron's UK power station stake. Reuters English News Service, 02/06/2002 Enron's Creditors' Group Setting Stage for Lawsuit Against Andersen Dow Jones Business News, 02/06/2002 US lawmakers, SEC's Pitt to unveil binding new rules for Wall St analysts AFX News, 02/06/2002 Enron's Baxter Died From Self-Inflicted Wound, Examiner Says Bloomberg, 02/06/2002 Tragedy Ripple Effect ; In the wake of the Enron collapse ex-exec Cliff Baxter take= s his life People Magazine, 02/11/2002 Ignorant & Poor?; His family says Ken Lay was misled about Enron and now is= broke. Why Congress isn't likely to buy it Time Magazine, 02/11/2002 Lay's Sister Had A Sweet Deal Too Time Magazine, 02/11/2002 One cozy bunch U.S. News & World Report, 02/11/2002 Washington vs. Wall Street, again U.S. News & World Report, 02/11/2002 Steve Forbes on Enron fallout Forbes Magazine, 02/18/2002 Premonitions; Why the Enron story may be a case of history repeating itself= . Forbes Magazine, 02/18/2002 A question of values U.S. News & World Report, 02/11/2002 The Wives First Club U.S. News & World Report, 02/11/2002 Between the Lines; The inside scoop on the book world Entertainment Weekly, 02/08/2002 ______________________________________________________________________ Secretaries Say Enron Had Them Pose As Traders In 1998 By Jason Leopold 02/06/2002 Dow Jones Energy Service (Copyright © 2002, Dow Jones & Company, Inc.) Of DOW JONES NEWSWIRES=20 LOS ANGELES -(Dow Jones)- Some current and former employees of Enron Energy= Services, the retail energy unit of Enron Corp. (ENRNQ), say the company a= sked them to pose as busy electricity and natural gas sales representatives= one day in 1998 so the Enron unit could impress Wall Street analysts visit= ing its Houston headquarters. More than a dozen former and current Enron Energy Services staff who spoke = to Dow Jones Newswires said Enron executives rushed about 75 employees, inc= luding secretaries and actual sales representatives, down to an empty tradi= ng floor on the sixth floor and told them to act as if they were trying to = sell energy contracts to businesses over the phone.=20 "When we went down to the sixth floor, I remember we had to take the stairs= so the analysts wouldn't see us," said Kim Garcia, who at the time was an = administrative assistant for Enron Energy Services and was laid off last De= cember. "We brought some of our personal stuff, like pictures, to make it l= ook like the area was lived in. There were a bunch of trading desks on the = sixth floor, but the desks were totally empty. Some of the computers didn't= even work, so we worked off of our laptops. When the analysts arrived, we = had to make believe we were on the phone buying and selling electricity and= natural gas. The whole thing took like 10 minutes."=20 Penny Marksberry - who also worked as an Enron Energy Services administrati= ve assistant in 1998 and was laid off last December - and two employees who= still work at the unit also said they were told to act as if they were try= ing to sell contracts.=20 "They actually brought in computers and phones and they told us to act like= we were typing or talking on the phone when the analysts were walking thro= ugh," Marksberry said. "They told us it was very important for us to make a= good impression and if the analysts saw that the operation was disorganize= d, they wouldn't give the company a good rating."=20 Enron Confirms Employees Moved=20 Peggy Mahoney, Enron Energy Services' spokeswoman, confirmed that some empl= oyees were told to move to sixth floor so it would appear to be occupied an= d busy for a visit by 150 analysts from Wall Street firms who were in town = for a convention.=20 But she said it was just a handful of employees who went down to the sixth = floor, not 75, and that the company didn't ask anyone to pose as traders or= sales representatives.=20 "We weren't trying to mislead anyone," Mahoney said. "There were some emplo= yees who were moved down there. They were told to just sit there. I don't k= now why. Analysts were brought in, and we showed them our operation. We wer= e just showing them how we structured deals and contracts."=20 Mahoney couldn't confirm the exact date of the analyst visit, but said it h= appened as the unit was in the middle of signing a contract with General Ca= ble. Enron announced that deal on June 30, 1998.=20 One analyst based in Houston recalled the visit to Enron's headquarters, wh= ere analysts were bused following a meeting at the Four Seasons hotel in Ju= ne 1998. Analysts were led around by Ken Lay, then Enron's chairman and chi= ef executive, and the EES floor appeared busy with actual work, he said.=20 "The big push then was EES and retail electricity in California," the analy= st said, asking that his name be withheld because his bank still conducts b= usiness with Enron. "The trading floor looked fully staffed. There was a pr= esentation in a little auditorium right where EES was operating. It looked = like people were very busy. We didn't interact with any of the employees on= the floor."=20 A number of the other analysts currently covering Enron weren't following t= he company in 1998. Of those that were, some didn't recall the specific com= pany visit or weren't available for comment.=20 Need To Show 'Warm Bodies Working'=20 Enron Energy Services was set up in late 1997 to sell energy and advisory s= ervices to large consumers that had been freed or were expected to be freed= from their local utilities by newly minted deregulation laws.=20 The unit was still small in 1998. Some of its employees shared space with o= ther units on the ninth floor, and others were spread throughout the buildi= ng while the sixth floor was being fashioned as a permanent home, employees= said.=20 Enron executives including Lay escorted the analysts through the floor and = returned later to tell the employees that they had done a good job, said Ga= rcia, the administrative assistant.=20 "I think a bunch of us asked him why did we just do this, and he said the a= nalysts needed to see a bunch of warm bodies working so Enron could get a g= ood credit rating," Garcia said. "He said the trading part of Enron was the= company's bread and butter."=20 Earl Silbert, a lawyer representing Lay, declined to comment specifically o= n the employees' claims, saying they didn't deserve a response.=20 Last week, the House Energy and Commerce Committee released a memo e-mailed= to Lay in August 2001 warning that Enron Energy Services' financial result= s were being misrepresented. The memo was sent by Margaret Ceconi, who work= ed for the unit for nine months.=20 Mahoney said at the time the memo "does not represent all the facts."=20 A bankruptcy court judge allowed Enron to drop hundreds of Energy Service c= ontracts, but the company has taken extraordinary measures to keep many of = the remaining deals alive, an indication many of the unit's contracts remai= n profitable.=20 -By Jason Leopold, Dow Jones Newswires; 323-658-3874; jason.leopold@dowjone= s.com Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 USA: Substantial illegal Enron activity found-Tauzin. 02/06/2002 Reuters English News Service (C) Reuters Limited 2002. WASHINGTON, Feb 6 (Reuters) - Congressional investigators have uncovered "s= ubstantial evidence of illegal activity" by the now-bankrupt Enron Corp. an= d its management, Rep. Billy Tauzin, chairman of the House Energy and Comme= rce Committee, said on Wednesday.=20 "This activity served to deceive the public about Enron's financial conditi= on," Tauzin, a Louisiana Republican, said in prepared remarks opening a hea= ring to probe the collapse of the former energy giant and the actions by it= s auditor Andersen. Enron's auditor "knew or should have discovered the fraudulent nature" of c= ertain transactions with outside partnerships managed by former Enron Chief= Financial Officer Andrew Fastow, he said.=20 "We have found that Enron's financial statements violated numerous existing= accounting rules," Tauzin said. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 FASB To Discuss Off-Balance-Sheet Entities Next Week 02/06/2002 Dow Jones News Service (Copyright © 2002, Dow Jones & Company, Inc.) NEW YORK -(Dow Jones)- The Financial Accounting Standards Board plans to di= scuss the issue of accounting for a controversial type of off-balance-sheet= entity at its Feb. 13 meeting, the board said Wednesday.=20 In the schedule for the meeting, the accounting rulemaker said it will disc= uss issues related to identifying and accounting for "special-purpose entit= ies," or SPEs - partnerships which currently don't have to be consolidated = with the rest of a company's balance sheet even though the company may have= effective control over them. The board said it "will consider various approaches to dealing with SPE sit= uations" and will consider expanding its work to address accounting and dis= closure by "the issuer of guarantees of the indebtedness of others."=20 The issue of accounting for SPEs has come to the fore because of their prom= inent role in the Enron Corp. (ENRNQ) scandal. Enron used SPEs, some contro= lled by its own executives, to move assets and debt off its balance sheet a= nd thus improve its financial results; the now-bankrupt company later recon= solidated some of the SPEs into its balance sheet, which reduced its previo= usly reported earnings by $586 million.=20 Companies can form non-consolidated SPEs apart from their balance sheets ev= en though outside investors might provide as little as 3% of the entities' = capitalization. The FASB has tried for years to tighten the requirements fo= r when such entities should be consolidated with the rest of companies' ope= rations, but in the past companies have successfully fought any changes.=20 The FASB has said it hopes to release new draft rules for accounting for SP= Es this spring.=20 -By Michael Rapoport, Dow Jones Newswires; 201-938-5976; michael.rapoport@d= owjones.com Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 US Rep Tauzin says Congress has learned 'of theft by insiders' at Enron 02/06/2002 AFX News © 2002 by AFP-Extel News Ltd WASHINGTON (AFX) - House Energy and Commerce Committee chairman Billy Tauzi= n said his committee's investigation of Enron Corp has now uncovered "self-= dealing transactions" by senior Enron management, violations of securities = laws as well as "theft by insiders".=20 Tauzin revealed the findings in a committee hearing which is investigating = Enron's collapse. "In the end, it turns out that the Enron debacle is an old-fashioned exampl= e of theft by insiders, and a failure by those responsible for them to prev= ent that theft," Tauzin said.=20 In a list of new findings, the committee has found that senior Enron execut= ives engaged in self-dealing transactions.=20 The committe said that company executives reported "fictitious gains" on pa= rtnerships controlled by former chief financial officer Andrew Fastow and o= thers associated with the company, which helped to artificially pump up Enr= on's stock price and "allowed the same executives to enrich themselves with= sales of Enron stock."=20 The committee findings also levelled significant criticism at former Enron = auditor Arthur Andersen LLP.=20 "We have also found that Enron's auditor, Andersen, knew or should have dis= covered the fraudulent nature of the Fastow transactions," Tauzin said, add= ing that these transactions "clearly violated existing law and the most bas= ic norms of corporate behaviour."=20 The committee has subpoenaed Fastow to appear tomorrow to give evidence on = his role in Enron's collapse. But committee staff said they expect the form= er Enron executive to plead the fifth amendment, which would prevent him fr= om answering questions that could incriminate himself.=20 jjc/blms/gc Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 UBS to Start Energy Trading Soon After Hiring Enron Workers 2002-02-06 13:32 (New York) New York, Feb. 6 (Bloomberg) -- UBS AG said it expects to complete thi= s week its purchase of Enron Corp.'s energy trading business, which will re= sume electricity and natural gas transactions that all but dried up after E= nron's bankruptcy. About 625 Enron traders, technicians and back-office workers are prepa= ring to buy and sell energy contracts for UBS, though no date has been set,= UBS spokesman David Walker said. Enron traders have been contacting former= customers and lining up credit agreements that UBS will need to complete t= ransactions. The energy-trading business won't come close to equaling the $43.4 bil= lion in revenue it generated for Enron in the third quarter, before its col= lapse, Enron traders said. Many customers were burned by the Dec. 2 bankrup= tcy and have since taken their business to competitors such as Intercontine= ntal Exchange Inc. "It's going to be an uphill battle to build confidence,'' said Jim Wal= ker, a senior analyst at Forrester Research, a consulting firm in Cambridge= , Massachusetts. "The market's already operating fairly efficiently. It wil= l be a challenge to offer better deals (than Intercontinental) and still ma= ke a living.'' The move to UBS has revived morale for the Enron traders, who watched = as 4,500 of their fellow employees at the company's Houston headquarters lo= st their jobs shortly after the bankruptcy filing, which was the largest ev= er. "We're all excited about moving on from the whole Enron thing, and tha= t we'll be back trading soon,'' said Tom Martin, director of Texas natural = gas trading at Enron. "It'll take some time for people to get used to doing= business with us. I'm sure there will be some residual effects of what hap= pened at Enron.'' Bankruptcy Sale UBS won a bankruptcy auction for Enron's dormant trading business in J= anuary. Under the bid, which was approved by a U.S. bankruptcy judge on Jan= . 18, UBS would pay Enron a royalty of 33 percent of pretax profit from the= trading business. UBS also agreed to pay $5 million of the $11 million in = retention bonuses promised to Enron's gas and power employees. "We expect the deal to close by the end of the week,'' said David Walk= er, the UBS spokesman. The energy-trading business, which will be based in = Houston and called UBS Warburg Energy, "should be up and running soon after= ward.'' Shares of UBS, a Switzerland's largest banks, fell 1.85 Swiss francs t= o 73 francs ($43.10). The stock is down 12 percent since Jan. 11, when UBS = submitted the highest bid for Enron's energy- trading business. The royalties may be worth $1 billion to $2 billion to Enron over the = next several years, according to Blackstone Group LP, a private merchant-ba= nking firm hired to help Enron restructure while it tries to emerge from ba= nkruptcy. The liquidation value of the business would have been less than $= 50 million, the firm estimated. Enron Obligations Some creditors' groups had argued that UBS's bid would force Enron to = bear a disproportionate share of the cost and risk of getting the trading b= usiness going again. There was no guarantee that other energy-trading firms would want to d= o business with the new entity, Dallas-based bankruptcy lawyer David M. Ben= nett, who represents a group of creditors, said at the bankruptcy hearing. As of Sept. 30, banks, utilities and power companies were owed more th= an $19 billion by Enron in past trades and contracts for future commodity d= eliveries, according to Standard & Poor's. With so much money still owed them, some companies may be reluctant to= do business with Enron's successor, even with a new name and the backing o= f UBS, said Jim Walker, the analyst at Forrester Research. Enron's former trading partners also have gotten used to trading elsew= here. Rivals Gain Officials at the Intercontinental Exchange say trading has doubled in = its markets to a nominal value of $4 billion a day in the past three months= , fueled partly by transactions from former Enron customers. Intercontinent= al, based in Atlanta, is owned by companies such as BP Plc, Morgan Stanley = Dean Witter & Co. and American Electric Power Co. To convince traders to return, UBS will have to offer higher prices fo= r sellers and lower prices for buyers than its rivals, which would keep pro= fits thin, Forrester's Walker said. In some ways, UBS will be starting with a fresh slate. Enron's book of= energy contracts, many of which have been canceled and written off as loss= es by its trading partners, belongs to the Enron estate, said Martin, the f= ormer Enron trader who will be moving to UBS. Martin has been spending some of his time in the past week contacting = former customers about setting up credit agreements with UBS. No Enron Link "After a short period of time people will realize we have nothing to d= o with Enron,'' he said. "We won't be as big a player as we were, but I thi= nk we can get to be a pretty significant player'' during the next six month= s to a year. Enron's energy-trading unit was profitable before the bankruptcy and w= asn't responsible for the company's downfall, Martin said. Enron used special partnerships controlled by its executives to keep d= ebt off its books, which helped hide losses in other businesses, according = to company officials, government documents and congressional investigators. -- Bradley Keoun in the New York newsroom (212) 318-2310 or at bkeoun@bloo= mberg.net.=20 Enron's Lay Told Investigators He Felt 'Betrayed' 2002-02-06 14:45 (New York) Washington, Feb. 6 (Bloomberg) -- Former Enron Chairman Kenneth Lay to= ld investigators for the company's board that senior executives had "betray= ed'' him in setting up partnerships that hid the energy trader's debt. Lay, who denied to investigators any criminal wrongdoing, said he gave= former Chief Financial Officer Andrew Fastow too much leeway in creating t= he partnerships, said William Powers, head of the board committee that on S= aturday released a report about Enron's collapse. "He felt he had not been watching carefully enough,'' Powers told a su= bcommittee of the House Energy and Commerce Committee yesterday. "He felt h= e had been betrayed.'' Lawmakers questioned Powers in an attempt to piece together who contri= buted to Enron's Dec. 2 filing of the largest bankruptcy in U.S. history an= d wiping out the retirement savings of thousands of employees. Power repeat= ed the conclusions of his report, which blamed everyone from Lay to the boa= rd of directors and Arthur Andersen LLP for not questioning partnerships th= at concealed more than $1 billion in losses. "The tragic consequences of the related-party transactions and account= ing errors were the result of failures at many levels and by many people,''= according to a summary of the report. The Enron culture "appears to have e= ncouraged pushing the limits.'' Aggressive Style In his testimony, Powers said Fastow's aggressive style cowed other ex= ecutives into approving partnerships from which he made $30 million. "They were unwilling to stand up to Andy Fastow,'' he said. Powers was appointed as an Enron director in November to lead an inves= tigation at the board's request. He told the committee he expects to leave = the board. The House Energy and Commerce Committee is subpoenaing Fastow and Mich= ael Kopper, a former Enron executive involved in the partnerships, to appea= r tomorrow on Capitol Hill, said Ken Johnson, a spokesman for the panel, wh= ich is overseeing one of 10 congressional investigations. Fastow and Kopper= are expected to invoke their Fifth Amendment rights against self-incrimina= tion and not testify, he said. Jeffrey Skilling, who resigned as chief executive in August, is expect= ed to answer the panel's questions, Johnson said. The committee is seeking to have Lay testify before the end of the mon= th, Johnson said. Two other congressional panels have issued subpoenas to L= ay after he canceled an appearance set for Monday, citing prejudicial comme= nts from lawmakers. The commerce panel voted today to give its chairman, Representative Bi= lly Tauzin, broad authority to subpoena any other executive of Enron or And= ersen during the investigation into Enron's collapse. The Securities and Exchange Commission and the Justice Department also= are looking into what happened at Enron as more lawmakers said that execut= ives probably broke the law. "It's an old story,'' Tauzin, a Louisiana Republican, said yesterday. = ``It's a story of inside theft.'' -- Jeff Bliss in Washington (202) 624-1975 or jbliss@bloomberg.net with rep= orting by Alex Canizares. Labor secretary testifies at Enron hearings=20 By MARCY GORDON=20 Associated Press=20 Feb. 6, 2002, 11:24AM WASHINGTON -- Responding to the Enron collapse, Labor Secretary Elaine Chao= today told Congress that President Bush's proposal to revamp pension laws = would strengthen retirement account protections for millions of workers.=20 Bush is asking Congress give workers greater flexibility to diversify their= company savings accounts, aiming to prevent another Enron-style meltdown. = Thousands of Enron employees lost their retirement savings as the company s= tock plummeted and they were barred from selling it from their investment a= ccounts.=20 "We must strengthen the confidence of the American workforce that their ret= irement savings are secure," Chao testified at a hearing by the House Commi= ttee on Education and the Workforce. "We must accomplish this without unnec= essarily limiting employers' willingness to establish and maintain plans fo= r their workers or employees' freedom to direct their own savings."=20 Although some changes in pension laws are needed, the system is not irrepar= ably broken and is in fact a great success story, Chao said.=20 The president's plan also would require employers to give workers quarterly= statements with detailed information on their accounts and their rights to= diversify holdings, Chao noted.=20 Chao spoke as subpoenas multiplied and hearings mushroomed in Congress' inv= estigation into the collapse of Enron Corp., a once-powerful company transf= ormed into a symbol of corporate failure.=20 Across the Capitol, the Senate Judiciary Committee heard testimony from leg= al and labor experts on how to prevent similar future scandals. Proposals i= ncluded requiring more disclosure from accountants and capping the amount o= f money that bankrupt corporations can shield from creditors.=20 Such changes would require vast revisions to bankruptcy and other laws, and= there was disagreement early in the hearing over how best to do that. "You= can't legislate against greed, but you can stop greed from succeeding," sa= id Sen. Patrick Leahy, D-Vt., the panel's chairman.=20 Washington state Attorney General Christine Gregoire told the panel that En= ron's conduct amounted to "a perfect storm" that rained financial loss and = fraud on thousands of investors.=20 "They assumed the seventh largest company in America was playing by the rul= es," Gregoire said. "In the end, they found themselves ripped off just like= the naive person who lost money in a pyramid scheme."=20 At the hearing on pension law changes, Rep. George Miller of California, th= e committee's senior Democrat, said the Enron case shows how workers' retir= ement savings can be jeopardized if employees' rights and protections are i= nadequate. "Today's outdated pension rules are putting employee nest eggs a= t risk," he said.=20 Enron's human resources executives have said employees were frozen out of t= heir accounts for 11 trading days while the company switched 401(k) plan ad= ministrators.=20 As the lockout period approached and Enron's stock continued to plummet, En= ron managers considered delaying the switch and the lockout period so emplo= yees would not be frozen out of their accounts.=20 "We considered postponing, but found it was not feasible to notify more tha= n 20,000 participants in a timely fashion," Mikie Rath, Enron's benefits ma= nager, told the Senate Governmental Affairs Committee on Tuesday.=20 An employee "told me my timing was horrible, which I agreed with," Rath sai= d.=20 Enron's stock peaked at $82 a share on Jan. 26, 2001. It was selling for $1= 5.40 at the close of trading on Oct. 26, the day the lockout began, and had= fallen to $9.98 on Nov. 13, the day it ended.=20 A dozen committees are investigating Enron, along with the Justice Departme= nt and Securities and Exchange Commission. The energy-trading company has d= eep political ties in Washington, and politicians in both parties have scra= mbled to distance themselves from Enron.=20 Chao: US Pension Laws Need Reform; Warns Of Going Too Far By Jennifer Corbett Dooren 02/06/2002 Dow Jones International News (Copyright © 2002, Dow Jones & Company, Inc.) OF DOW JONES NEWSWIRES=20 WASHINGTON -(Dow Jones)- Labor Secretary Elaine Chao Wednesday told Congres= s the collapse of Enron highlights the need to update the nation's pension = laws but warned of going too far. In testimony before the House Education and Workforce Committee, Chao said = Enron's collapse has "revealed the need for stronger safeguards to protect = workers."=20 Enron's stock price sharply fell last year before the firm filed for bankru= ptcy protection in December, wiping out much of the retirement savings of t= he company's workers.=20 But, Chao said, approving legislation that would limit the amount of employ= er stock that can be placed in workers' 401(k) and other retirement account= s was a bad idea.=20 "While it may be tempting to go down this road in the wake of recent busine= ss failures, this would actually take away from workers the right to choose= , which they deserve," she said. "Arbitrary limits on workers' investment c= hoices would not be progress; it would be turning back the clock."=20 Instead, Chao urged Congress to approve legislation incorporating the plan = outlined last week by President George W. Bush designed to update the 1974 = Employee Retirement Income Security Act.=20 The Bush administration and lawmakers agree the law known as ERISA needs up= dating because it was primarily designed to cover pension plans in which th= e employer controlled the investments. While some firms still offer such tr= aditional pension plans, most companies offer workers 401(k) and other reti= rement plans in which the employee is primarily responsible for investment = decisions. More than 42 million Americans have 401(k) retirement plans.=20 The Bush plan would require employers to offer their employees impartial in= vestment advice, allow employers to sell company stock after three years, s= ubject company executives to the same so-called blackout periods as employe= es, and require companies to give employees quarterly statements of retirem= ent plan performances.=20 Most lawmakers agree that employees need better access to investment advice= , which would highlight the need to ensure that retirement assets are diver= sified. More than 60% of Enron's 401(k) assets were invested in Enron stock= as is common for many large companies. Enron, like many companies, gave em= ployees matching contributions in the form of stock. However, Enron employe= es were required to hold on to the stock until age 50. Many Enron executive= s had a different arrangement, allowing them to sell their stock sooner.=20 However, lawmakers are divided on whether to cap the amount of employer sto= ck that can be placed in retirement plans.=20 A bill by Sens. Barbara Boxer, D-Calif., and Jon Corzine, D-N.J., for examp= le, would place a 20% cap on the amount of employer stock that can be place= d in employee retirement plans.=20 Rep. George Miller, of California, the top Democrat on the House Education = panel, said it was imperative that Congress act to update pension laws in o= rder to restore investor confidence, noting the recent turmoil in the stock= market over company accounting practices.=20 "We've told millions of Americans that this is the road to security," Mille= r said of 401(k) plans. "We've just hit a huge bump in the road."=20 Miller has introduced legislation similar to the Bush plan but it would onl= y require employees to hold company stock for one year before they could se= ll it rather than three years as Bush suggested.=20 -By Jennifer Corbett Dooren, Dow Jones Newswires; 202-862-9294; Jennifer.Co= rbett@dowjones.com Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 UK: No quick sale for Enron's UK power station stake. By Matthew Jones 02/06/2002 Reuters English News Service (C) Reuters Limited 2002. LONDON, Feb 6 (Reuters) - Future ownership of Enron's most valuable physica= l asset in Europe, the UK Teesside power station, remained in the balance o= n Wednesday as its co-owners struggled to unravel contractual issues surrou= nding the bankrupt U.S. energy company's 250 million pound ($353.5 million)= stake.=20 Enron's partners in the 1,875 megawatt power station are in talks with thei= r banks in an effort to clarify the complex supply contract and ownership i= ssues left when Enron, which operated the plant, went bankrupt in late Nove= mber. "It could take months before the situation is resolved," said a spokeswoman= for GPU Power, one of Enron's partners in Teesside, the first independent = power station built in the UK after electricity privatisation in the early = 1990s.=20 "We are currently in talks with the other partners and with the banks," she= said.=20 Enron Europe went into administration in November as a financial scandal ov= erwhelmed its Houston-based parent and administrators PricewaterhouseCooper= s (PwC) this week said Enron Europe owed "billions" of dollars in losing po= sitions on power and gas trading contracts.=20 Enron's 42.5 percent stake in Teesside is probably the collapsed company's = most valuable physical asset in Europe, where the bulk of its business was = based on trading in energy and commodities.=20 Industry sources believe Enron's equity in Teesside, the largest combined c= ycle plant of its kind in Europe, is likely to be sold to one of its existi= ng partners in the venture. The complex ownership structure is likely to di= scourage outside bidders.=20 "There is no formal process to seek outside bids," a spokeswoman for Enron = said.=20 She said Enron's partners in Teesside - Midland Power International (GPU Po= wer), Northern Electric owned by MidAmerican Energy and itself part of Berk= shire Hathaway , and Western Power Distribution - have first call on whethe= r to acquire Enron's stake.=20 ONE STAKE HOLDER NOT INTERESTED=20 So far none have declared an interest in doing so. Western Power Distributi= on said it does not want to extend its 15.4 percent stake in the venture.= =20 "We are a distributor, not a generator and we are not interested in expandi= ng our generation at Teesside," a company spokesman said.=20 Western Power's stance is unsurprising given the current high cost of UK ga= s set against electricity prices which are at 10-year lows.=20 Before Enron's collapse the group's stake in Teesside was valued at about 2= 50 million pounds thanks in part to Power Purchase Agreements (PPAs) - cont= racts to sell power at a set price - which currently provide a steady reven= ue stream.=20 The PPAs are understood to be favourable to the power station since Innogy = paid 391 million pounds to get out of the contract it acquired when it boug= ht the supply side business of MEB.=20 The Teesside station is run by Teesside Power Limited, of which Teesside Po= wer Holdings has a 50 percent share.=20 Enron itself has 85 percent control of Teesside Power Holdings, with Midlan= ds Power International holding the remaining 15 percent.=20 Of the other 50 percent of Teesside Power Limited, Midlands Power has 19.2 = percent, Northern Electric 15.4 percent and Western Power Distribution 15.4= percent. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Enron's Creditors' Group Setting Stage for Lawsuit Against Andersen By Kathy Chu 02/06/2002 Dow Jones Business News (Copyright © 2002, Dow Jones & Company, Inc.) Dow Jones Newswires=20 NEW YORK -- Arthur Andersen LLP's mountain of legal troubles could get a li= ttle higher. Andersen, which is already dealing with a slew of shareholder lawsuits over= its relationship with Enron Corp. (ENRNQ), may be slapped with more litiga= tion in the coming weeks -- this time, by Enron's creditors' committee, acc= ording to people familiar with the matter.=20 The committee didn't return repeated phone calls seeking comment. But Marti= n Bienenstock, an attorney who represents Enron and deals with the committe= e extensively, said, "It's more likely than not" that a lawsuit will be fil= ed. "It's not a question of whether, it's a question of when."=20 Andersen didn't return repeated calls seeking comment.=20 The lawsuit, always considered a possibility in the legal proceedings, woul= d come on the heels of the Powers report, the three-month internal Enron in= vestigation led by William C. Powers, dean of the University of Texas law s= chool. The report criticized Andersen for failing to give Enron "objective = and critical professional advice."=20 As a result, the creditors' committee now has more ammunition to use agains= t Andersen, experts said.=20 "[The committee] almost has a duty to pursue this," said Nancy D. Rapoport,= dean of the University of Houston Law Center. "There's enough in the Power= s report that people are going to wonder why, if it doesn't happen."=20 In the meantime, the committee is still gathering information. The group is= getting ready to subpoena key financial documents and depose select auditi= ng executives.=20 A federal bankruptcy judge Tuesday granted the committee's request for an i= n-depth examination of Andersen, which, according to a court filing, will b= e given 20 days notice from the time the subpoena is issued to produce docu= ments and 30 days notice before executives are deposed.=20 The information gleaned from Andersen over the next few weeks will likely b= e used as fodder in any potential lawsuit against the auditors. Such a laws= uit could allege fraud and negligence by Andersen related to the firm's adv= ice about the risk associated with Enron's off-balance-sheet transactions a= nd how that risk should be managed, according to bankruptcy experts.=20 In court documents filed with the New York bankruptcy court in late Decembe= r, the creditors' committee said a "complete examination" of Andersen would= shed light on the "accounting irregularities disclosed by Enron and the re= sulting financial implication that in part precipitated the bankruptcy fili= ng ..."=20 The extensive documents requested by the group range from routine auditing = paperwork to more detailed e-mails and computer disks. But it is the demand= for Andersen's "internal manuals, statements of policies and procedures," = and "documents referring to, describing, suggesting or alleging possible vi= olations of professional standards in the services Andersen provided to Enr= on" that suggest the committee isn't just trying to piece together the deta= ils of Enron's collapse.=20 Rather, the committee seems to be trying to establish a case against Anders= en, and recoup for creditors some of the millions it paid the auditing firm= , bankruptcy experts said.=20 Enron, for its part, plans to steer clear of the committee's deliberations.= "We told the creditors' committee at the outset that we would allow the cr= editors group to take the legal action -- when or whether it was necessary,= " said Mr. Bienenstock. "They may still be investigating the facts."=20 A lawsuit against Andersen by the committee would come as little surprise t= o bankruptcy experts. "It's not unheard of by any stretch," said Margaret H= oward, the scholar-in-residence at the American Bankruptcy Institute, a non= profit think tank in Alexandria, Va.=20 But it could be an uphill, and costly, legal battle. In cases where a credi= tors' committee or trustee have sued a company's auditors or lawyers, the p= laintiffs are usually left with substantial legal fees and a disappointing = ruling. That is partly because it's difficult to establish a third party's = responsibility for a company's actions, say experts.=20 But because Enron's bankruptcy is the largest and possibly the most complex= in corporate history, little precedent exists for this type of lawsuit. "I= t's really going to come down to the quality of the facts and the quality o= f the lawyers," said Ms. Rapoport. "[The committee] doesn't have to have a = slam-dunk case. They only have to be 51% right."=20 Write to Kathy Chu at kathy.chu@dowjones.com=20 Copyright © 2002 Dow Jones & Company, Inc.=20 All Rights Reserved. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 US lawmakers, SEC's Pitt to unveil binding new rules for Wall St analysts 02/06/2002 AFX News © 2002 by AFP-Extel News Ltd WASHINGTON (AFX) - House lawmakers together with Securities & Exchange Comm= ission chairman Harvey Pitt and executives of the National Association of S= ecurities Dealers plan to unveil a range of new rules tomorrow governing Wa= ll Street financial analysts' conduct.=20 The binding new rules, details of which have yet to be fully released, will= make Wall Street analysts subject to strong oversight and enforcement in o= rder to boost their independence and stock recommendations, according to a = statement from the House Capital Markets subcommittee. "These people are professionals and should be held to professional standard= s, especially because what they do has direct bearing on the lives and live= lihoods of so many average Americans," said subcommittee chairman Richard B= aker.=20 Baker said the rules will "protect unsuspecting minnows from irresponsible = and self-serving sharks... rebuild Chinese Walls, and usher in dramatic cha= nges in financial sector governance, oversight, disclosure, and responsibil= ity."=20 The subcommittee chairman convened a blue ribbon panel of academic experts = last year to come up with a range of new rules to reform analysts' independ= ence following a series of hearings which uncovered instances of analysts i= ssuing 'buy' recommendations on stocks while ordering their in-house broker= s to sell the same stock.=20 Baker's subcommittee also found instances of analysts unwilling to downgrad= e companies whose stock they themselves owned or whose investment banking b= usiness their own firms already handled or were actually seeking with the p= romise of rosy analyst reports.=20 Several Wall Street securities organisations moved to bolster their analyst= s reporting procedures as a result of the hearings, and several institution= s including Goldman Sachs Group Inc and Merrill Lynch & Co Inc subsequently= ordered their analysts to disclose all their stock holdings.=20 The new rules were due to be unveiled last year, but an announcement has be= en delayed because of the subcommittee's investigation into Enron Corp's co= llapse which Baker says makes the reforms even more necessary.=20 Baker and Pitt will also be joined by NASD president and chief executive Ro= bert Glauber at tomorrow's press event unveiling the new rules. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Enron's Baxter Died From Self-Inflicted Wound, Examiner Says 2002-02-06 14:52 (New York) Houston, Feb. 6 (Bloomberg) -- Former Enron Corp. executive J. Cliffor= d Baxter died from a self-inflicted gunshot wound to the head, according to= autopsy results from the Harris County, Texas, Medical Examiner's office. The report, released today by Chief Medical Examiner Joyce Carter, co= nfirms an earlier ruling that Baxter committed suicide on Jan. 25. Police i= n the Houston suburb of Sugar Land, Texas, found Baxter's body at 2:23 a.m.= in his 2002 Mercedes-Benz, about a mile from his home. Attempts to revive = Baxter, who was wearing a blue t-shirt and workout pants, were unsuccessful= , the report says. A suicide note found at the scene has been sent to the Texas Attorney = General's office for a ruling on whether it can be made public. The note sa= id Baxter, 43, was distraught over Enron's collapse and the prospect of tes= tifying against friends who worked there, CNBC reported the day of his deat= h. Baxter resigned in May after a decade with Enron. The company is the subject of numerous shareholder lawsuits, as well a= s congressional and criminal investigations, after filing the largest bankr= uptcy in corporate history in December. Baxter was Enron's vice chairman be= fore leaving the company in May. Sugar Land police are continuing to investigate Baxter's death. Justic= e of the Peace Jim Richard, who ordered the autopsy and hasn't seen the rep= ort, said he expects to concur with Carter's findings. "Out of an abundance of caution, I ordered an autopsy,'' he said. -- Loren Steffy and Jim Kennett in Houston (713) 353-4871 through the Dalla= s newsroom. =20 Tragedy Ripple Effect ; In the wake of the Enron collapse ex-exec Cliff Baxter take= s his life Bill Hewitt; Gabrielle Cosgriff in Houston and Diane Herbst in Amityville 02/11/2002 People Magazine Time Inc. 123 (Copyright 2002) In the past month or two friends had noticed his hair go from salt- and-pep= per to almost completely white. Otherwise Cliff Baxter, a former vice chair= man of the Enron Corp., seemed in reasonably good spirits. But the collapse= of Enron amid allegations of wrongdoing was surely preying on Baxter, 43, = who left the company abruptly last May. "People are being investigated; peo= ple are being sued," Baxter's wife, Carol Whalen, 43, told a reporter for t= he Los Angeles Times recently. "This is going to follow people for the rest= of their lives, people who didn't do anything wrong."=20 A few days later the Enron scandal caught up with her husband-- and the con= sequences were tragic. In the early morning hours of Jan. 25, Baxter left h= is $700,000 home in the affluent Houston suburb of Sugar Land, got into his= new Mercedes-Benz sedan and drove about a half mile. He pulled over betwee= n the medians and shot himself once in the head with a .38-cal. revolver. I= n the car was a suicide note, which reportedly expressed anguish over Enron= 's stunning tumble into bankruptcy. In recent weeks Baxter had been subpoen= aed by Congress to testify about what he knew of the shady financial dealin= gs that led to the company's fall and had also been named in a class-action= suit filed by disgruntled shareholders who claim the top brass cashed in s= hares before the stock tanked. The sad irony was that Baxter was one of the few executives who had raised = objections within the company about accounting practices that allegedly wil= dly inflated the firm's profits, and he may have dreaded being forced to go= public with his concerns. "Cliff was looking pretty good in this," says on= e friend who had worked closely with Baxter and is now a consultant. "But h= e was intensely loyal and would never like to be seen as a guy who's going = to tell on everybody else."=20 Until the recent troubles, Baxter had led something of a charmed life. The = youngest of six children, he was raised in the seaside community of Amityvi= lle, N.Y., where his father, Edwin, was a police sergeant and his mother, D= orothy, a municipal employee. He grew up as an avid surfer and boater. Afte= r graduating in 1980 from New York University, he enlisted in the Air Force= for five years, where he served as a captain. He then attended Columbia Un= iversity School of Business, graduating first in his class. In 1991 he move= d to Houston to join Enron, a formerly staid natural-gas-and-pipeline firm = that was then getting into the more aggressive area of trading commodities.= =20 His intelligence and brashness served Baxter well in Enron's go- go culture= . He soon became chairman and CEO of Enron North America, the company's hug= ely profitable trading business. He was named chief strategy officer in Jun= e 2000 and vice chairman of the entire company four months after that. At i= ts peak Enron was ranked as the seventh largest corporation in America.=20 Baxter himself enjoyed an uncommonly favorable reputation among those who w= orked for him. John Allario, who was a manager at Enron North America, reca= lls the way Baxter handled the teams he coached in the company's annual bas= ketball tournament. "He reminded me of a very successful coach of a college= or pro team--very demanding but very fair," says Allario. "He made sure ev= erybody got to play, but he had a burning desire to win." And though Baxter= worked long hours, he still carved out plenty of time for his family--wife= Carol and their two children, John Clifford III (known as J.C.), 16, and L= auren, 11. "He was very into his family," says one former employee. "He rea= lly did go to Disney World every year." Baxter's greatest delight, however,= was going out on his 72-ft. cabin cruiser Tranquility.=20 Meanwhile, over the past year or so, Baxter had started to raise storm flag= s over the way Enron did business. In her now-famous memo last August to En= ron's former chairman Kenneth Lay, company executive Sherron Watkins pointe= d out that Baxter had already "complained mightily" to then-chief executive= Jeffrey Skilling "and all who would listen, about the inappropriateness of= our transactions." (In an interview with NBC's Today Show, Lay's wife, Lin= da, praised Baxter as a "wonderful man" whose death "makes my heart ache. I= t makes Ken's heart ache.") When he suddenly stepped down from his post las= t May, Baxter cited a desire to spend more time with his family as the reas= on. It is still not clear why he did quit. What is certain is that he left = a very wealthy man. From 1998 until early last year, Baxter had sold stock = options worth $35.2 million.=20 To be safe, police in Sugar Land are continuing to look into Baxter's death= , though they say they have no reason to doubt it was a suicide. Congressio= nal investigators in Washington, D.C., were hoping that Baxter would be abl= e to supply some inside information of any possible malfeasance at Enron. A= round the depleted corporate headquarters of Enron, which has taken plenty = of hits lately, the news of Baxter's suicide left many people "devastated,"= according to one staffer who worked with Watkins. "It was like the last st= raw," she says. "It just brings home the total misery of this situation."= =20 --Bill Hewitt --Gabrielle Cosgriff in Houston and Diane Herbst in Amityvill= e B/W PHOTO: AP One former colleague describes Baxter as a "hardworking guy" = who treated others with "professional kindness." B/W PHOTO The apparent sui= cide was the latest twist in the Enron debacle. COLOR PHOTO: STEVEN LONG Po= lice investigators were still examining Baxter's car for any clues. COLOR P= HOTO Last September Baxter (center) joined classmates at his 25th reunion f= or Amityville Memorial High School on Long Island. COLOR PHOTO: JAMES NIELS= EN/GETTY IMAGES In recent weeks Baxter had reportedly been spending more ti= me on his boat and less at his Houston-area house. COLOR PHOTO: F. CARTER S= MITH/CORBIS SYGMA Through her lawyer, Enron exec Sherron Watkins (on Jan. 2= 0) said she was "deeply saddened and stunned" by Baxter's death.=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Business Ignorant & Poor? ; His family says Ken Lay was misled about Enron and now i= s broke. Why Congress isn't likely to buy it Daniel Eisenberg; Reported by Bernard Baumohl and Eric Roston/New York and;= Cathy Booth Thomas and Jyoti Thottam/Houston 02/11/2002 Time Magazine Time Inc. 37 (Copyright 2002) When Ken Lay shows up this week to testify before Congress, the disgraced f= ormer chairman of Enron should know how to handle a hostile crowd. Even his= current employees, after all, are calling for his head. Just a few weeks a= go, Enron employees tell TIME, the Houston-based energy-trading company bro= ught in an outside consulting firm to conduct a series of focus groups with= some of the remaining workers on how to reinvigorate the sagging firm. One= of the first steps, six out of eight people indicated in one session, shou= ld be to get rid of Lay.=20 Before the company officially went bankrupt, Lay, who had earned admiration= for his unpolished, affable manner, had lost his loyal fan base. In late O= ctober--a day after Enron acknowledged that the SEC had opened an investiga= tion of its accounting practices--Lay tried his best to raise the spirits o= f his downtrodden workforce. At a company gathering caught on videotape, th= e son of a Missouri minister promised that there wouldn't be any layoffs an= d that Enron would rise again. For once, though, the rank and file weren't = drinking Ken's Kool-Aid. As one disgruntled worker put it, in a statement t= hat Lay chose to read aloud: "I would like to know if you are on crack. If = so, that would explain a lot." Not enough, surely, to satisfy members of Congress. An army of legislators,= lawyers and federal agents is bearing down on Lay with the threat of both = civil and criminal charges. They all want to know why he seemed to be touti= ng Enron stock and simultaneously selling his own shares--while knowing tha= t the firm he had turned from a staid pipeline operator into an innovative = energy-trading giant was imploding. Investigators for plaintiff lawyers tel= l TIME they are looking into allegations that investment bankers helped top= executives like Lay and former CEO Jeffrey Skilling (who is also supposed = to pay a visit to Capitol Hill this week) put so-called collars on their st= ock options so they would not lose money, no matter how low the stock sank.= =20 Lay's dubious defense strategy was foreshadowed by his wife Linda in an ill= -conceived appearance last week on NBC's Today show. She claimed that her h= usband was hoodwinked by nefarious underlings and that the proof of his inn= ocence is that he and his family are now near bankruptcy. "If those people = had come back to him and told him there was anything wrong, he would have s= topped it and fixed it," Linda Lay declared. "There's nothing left. Everyth= ing we had mostly was in Enron stock."=20 When he appears before the Senate Commerce Committee, Lay is expected to ar= gue, as his wife did, that he relied on the counsel of legal and financial = experts, who told him there was nothing illicit or unethical about hiding b= illions of dollars of Enron's debts in off- balance sheet partnerships that= ended up inflating the company's reported earnings. To prove his point--an= d show how much he believed in the company until the bitter end--the man wh= o has collected some $200 million in compensation over the past three years= will try to explain how he is now flat broke. An internal Enron probe rele= ased Saturday night blamed the company's demise on a wide range of executiv= es and auditors but went easy on Lay.=20 But the lawmakers and staff members preparing questions for Lay wonder how = he is going to explain away all the evidence to the contrary. Lay's claim o= f ignorance is "as implausible as imagining that Richard Nixon did not know= what was being done by his staff at Watergate," says David Beim, a profess= or of economics and finance at Columbia University Business School.=20 Lay knew all along about the possible ethical conflicts posed by the involv= ement of Enron chief financial officer Andrew Fastow in off- the-books part= nerships with shell corporations, according to a confidential study conduct= ed at Lay's request by the Houston law firm Vinson & Elkins. On Nov. 5, 199= 7, as first reported by the Wall Street Journal, the executive committee of= Enron's board voted to provide hundreds of millions of dollars in loan gua= rantees to a partnership known as Chewco. Then, in June and November of 199= 9, the board waived the company's ethics code to allow Fastow to serve as g= eneral partner of two additional partnerships, both supposedly independent = of Enron.=20 It's hard to imagine how the mounting evidence of trouble could have escape= d Lay's attention by last summer. Vice chairman Clifford Baxter--who commit= ted suicide late last month--resigned in May after voicing concerns about a= ccounting practices to Lay's top deputy, Jeffrey Skilling. The whistle-blow= ing memo by Enron vice president Sherron Watkins was sent to Lay on Aug. 15= . Another warning memo, from employee Margaret Ceconi, made its way to Lay = soon after. Nonetheless, Lay in September was telling employees to buy more= stock and bet on Enron's future.=20 It was an open secret at Enron that the company was all but a "house of car= ds that will fall," as a Texas energy executive attending an industry confe= rence in Vail, Colo., a year ago groused to a senior Enron v.p. His dinner = companion's startling reply: "You're more right than you know." Even people= who believe that Lay was not involved in the dubious dealings of Skilling,= Fastow and chief accounting officer Richard Causey concede that Lay had la= id the foundation by encouraging Enron's ruthless, winner-take-all culture.= A band of cocky, inexperienced young M.B.A.s was left alone to do whatever= it took to structure a deal, regardless of the consequences. "Pushing the = limits was what you were told to do, and you were given the resources to do= it," says an Enron manager.=20 The Lays' claim that they are nearly as bankrupt as Enron is not winning th= em much trust or sympathy in Houston--or in Washington. Ken Lay now holds c= lose to 3 million essentially worthless Enron shares, but he got most of hi= s money by selling Enron stock early, reaping more than $100 million over t= he past three years. During that same period, he received salary and cash b= onuses of more than $17 million. Last year alone he unloaded $25.7 million = in Enron stock between January and mid-July as the share price fell from $8= 0 to less than $50. And at the end of 2001, according to public records, he= owned stock that today is worth more than $11 million in companies for whi= ch he was either an officer or director, including Compaq, Eli Lilly and a = bevy of start-ups.=20 The Lays own at least 20 properties in Colorado and Texas. These include th= eir principal home--a five-bedroom high-rise condo in Houston that's worth = at least $8 million--as well as rental properties from Houston to Galveston= that are worth an additional $4.5 million. The Lays are selling all their = Aspen, Colo., properties, including a 4,537-sq.-ft. log cabin and a four-be= droom riverfront house, together worth about $20 million.=20 What's unclear is how much debt the Lays have. Lay and his lawyers declined= to discuss that issue or answer other questions put to them by TIME. Last = year Lay sold millions of dollars of Enron stock back to the company to rep= ay some loans. It was not illegal, but it's a maneuver that makes it harder= to track insider selling; instead of disposing of stock on the open market= and having to declare it publicly soon afterward, Lay did not have to repo= rt it until 45 days after the end of the fiscal year.=20 It was just that penchant for secrecy that got Enron in trouble in the firs= t place. But as FBI agents and 10 congressional committees and subcommittee= s probe the scandal, it's only a matter of time before someone breaks the c= ode. And when they do, Ken Lay may well have to deal with an even less symp= athetic audience.=20 --Reported by Bernard Baumohl and Eric Roston/New York and Cathy Booth Thom= as and Jyoti Thottam/Houston=20 STOCK HOLDINGS* Value of shares Ken Lay got from firms for serving as an of= ficer or director=20 Eli Lilly $4.1 million Compaq $4.1 million EOG Resources $1.7 million Enron= $1.1 million Baker Hughes $113,200 Newpower Holdings $56,250 EOTT Energy P= artners $41,250 I2 Technologies $37,500=20 TOTAL $11,248,200=20 REAL ESTATE The Lay family owns 18 properties in Colorado and Texas; severa= l are for sale=20 Aspen, Colo. $20.2 million Houston $9.9 million Galveston, Texas $1.7 milli= on=20 TOTAL $31.8 million=20 *Stocks as of year end, 2001; value based on Feb. 1 close. Source: Thomson = Financial=20 Quote: "We've lost everything." In an NBC interview, a tearful Linda Lay sa= ys her family is in financial ruin "Obviously, if he knew that something wa= s going on with the company, he would have cashed, you know, all of--all of= his stocks." --ONE OF LAY'S DAUGHTERS, speaking last week on NBC's Today s= how "I would like to know if you are on crack. --ENRON EMPLOYEE, to Kenneth= Lay during an October question-and-answer session COLOR PHOTO: F. CARTER SMITH--CORBIS SYGMA COLOR PHOTO: TODAY SHOW--NBC NEW= S B/W PHOTO In a memo last August, Sherron Watkins, an Enron vice president= , expressed to Lay her worries over the company's aggressive accounting. Wa= s this the first that Enron's chief heard about it? COLOR PHOTO: JOHN EVERE= TT--HOUSTON CHRONICLE HAPPIER TIMES Linda Lay beamed at social events like = this 2000 Houston museum fete=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Business/Family Business Lay's Sister Had A Sweet Deal Too Jyoti Thottam/Houston 02/11/2002 Time Magazine Time Inc. 38 (Copyright 2002) Ken Lay isn't the only member of his family to make a name in Houston's bus= iness elite. Travel Agency in the Park, co-owned by his younger sister Shar= on Lay, 56, took the No. 4 spot in the Houston Business Journal's 2001 rank= ing of woman-owned businesses. But Ken Lay didn't just set an example for h= is sister--his company sent lots of deals her way. From 1996 through 2000, = Sharon Lay's company (renamed Alliance Worldwide in December) received $6.8= million in commissions from Enron travel, according to SEC documents. Enro= n commissions reportedly accounted for half the travel company's revenue.= =20 While Enron's employees were in theory permitted to book their business tra= vel elsewhere, Sharon Lay's was the agency of choice. Callers to Enron's co= rporate-travel department still reach a telephone extension at Alliance Wor= ldwide. Enron managers strongly discouraged employees from going elsewhere,= according to former Enron staff members. Says one: "You only did that once= ." A memo last June reminded Enron employees to use TAP because of its volu= me discounts. But in some cases, the agency quoted fares that were no bette= r than published rates, and still charged Enron a $30-per-ticket fee, Enron= insiders say. Sharon and Ken Lay declined to comment. Other Houston travel firms knew they had little hope of an Enron contract. = "Let's just say it was hard to get in," says Gary Pearce, general manager o= f Navigant, one of the city's largest corporate- travel firms. For all of K= en Lay's belief in free-market competition, for family he made exceptions. = Enron also acquired a company owned in part by Ken Lay's son Mark, who then= received a three-year, $1 million employment contract. As for Ken Lay, he = continues to travel on a private Enron jet.=20 --By Jyoti Thottam/Houston COLOR PHOTO: DAVE ROSSMAN--GAMMA FOR TIME UPGRADE: Alliance Worldwide got E= nron business; Lay flew corporate jets COLOR PHOTO: ABC NEWS [See caption a= bove]=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Nation & World One cozy bunch Christopher H. Schmitt; Julian E. Barnes; Megan Barnett 02/11/2002 U.S. News & World Report 28 c Copyright 2002 U.S. News & World Report. All rights reserved. As a member of Enron Corp.'s board of directors, Frank Savage seemed ideal = for providing the kind of unvarnished advice and oversight that big compani= es need from their governing bodies. A director of Alliance Capital Managem= ent, a leading investment company, Savage also served on two other major co= rporate boards.=20 That's what Enron told the world. What it didn't say was that Alliance is p= art of Axa Financial, a New York investment and insurance company, and that= Axa was a huge Enron shareholder. So much for Savage's independence--and s= o, too, for the independence of the rest of Enron's board. This week, as Congress holds another round of hearings on Enron's spectacul= ar collapse, lawmakers will begin delving into why Enron's board failed to = prevent financial calamity. It has been known that some directors have had = extracurricular ties with the company. But the relationships are even tight= er than has been revealed. As Enron was crumbling, its board effectively be= came one composed entirely of insiders, such that even the board committees= that served crucial watchdog roles lacked anyone without some other relati= onship to the firm.=20 Because outside directors are a public company's last line of defense, expe= rts widely agree that these members should make up the majority of a compan= y's board. But Enron's outside directors have had investment, consulting, a= nd other business ties to the company, some of them not disclosed. They bec= ame involved in Enron's jumble of partnerships and subsidiaries. Several we= re part of "interlocking directorates," in which they served together not o= nly on the Enron board but on others as well. Some have been involved in or= ganizations that have reaped millions in charity from Enron or its former c= hief, Kenneth Lay. Beyond those connections, directors had a strong incenti= ve to back Lay's go-go strategy because they were required to take much of = their compensation in stock.=20 A few cases highlight the problem. Director Robert Belfer was the chief exe= cutive of Belco Oil & Gas Corp. For years his company has done tens of mill= ions of dollars in business with Enron units, and it even acquired an Enron= -affiliated company. Various Enron entities have invested in Belco. Belfer = has joined many other directors in serving with other Enron ventures.=20 Many of Enron's directors--including Robert Jaedicke and fellow audit commi= ttee members John Mendelsohn, Paulo Farraz-Pereira, Wendy Gramm, Ronnie Cha= n, and John Wakeham--are listed as directors of a murky Enron entity known = as ES Power 3, among the thousands of subsidiaries and partnerships now und= er scrutiny.=20 Sweet charity. Three Enron directors--Mendelsohn, Charles LeMaistre, and Jo= hn H. Duncan--have been key figures in the University of Texas's M. D. Ande= rson Cancer Center, which has received at least $1.9 million from Enron or = the Lay family or foundation. In Enron's early days, a firm in which Duncan= was a partner received hundreds of thousands of dollars for investment ser= vices. Director Joe Foy has been a director of a Dallas utility company tha= t competed with Enron to obtain power plant facilities. He was also a retir= ed partner of a Houston law firm that has done work for Enron.=20 Several directors have had well-paid consulting contracts with the company = they oversaw. Perhaps the most lucrative of them went to John Urquhart, who= has earned millions for such services, on top of millions more from stock = deals with Enron and affiliated companies. An oil a
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