Laid-off Enron employees caught by health insurance glitch
Associated Press Newswires, 01/05/2002

Former Enron workers left in insurance limbo / Company fails to complete paperwork
Houston Chronicle, 01/05/2002
COMPANIES & FINANCE INTERNATIONAL - Bidders line up in battle for Enron stake.
Financial Times, 01/07/2002

Companies diary - Crucial stage in Enron saga comes into spotlight.
Financial Times, 01/07/2002

Enron nears crucial decision on trading arm.
Financial Times, 01/07/2002

OTC regulation flaws exposed by Enron.
Financial Times, 01/07/2002
Enron? We're Missing The Point
The Washington Post, 01/06/2002
Investors to be more wary of credit products.
Financial Times, 01/07/2002

OBSERVER - Good news for Kinko's - AVENUE OF THE AMERICAS.
Financial Times, 01/07/2002

Wiser Oil Seeks Separate Enron Power Creditor Panel
Dow Jones Corporate Filings Alert, 01/07/2002

Preview / WEEK OF JAN. 7-12 Enron Creditors Want Case Moved to Houston
Los Angeles Times, 01/07/2002

Dynegy Gets Info From Enron Related To Venue Motion
Dow Jones News Service, 01/07/2002
Bush's first big scandal rises from the ashes of Enron
The Independent - London, 01/06/2002

Watch Out For...
Fortune Magazine, 01/07/2002
Enron Canada Corp To Assume New Form: CEO
Dow Jones Energy Service, 01/07/2002

Houston feels pain of Enron's collapse ; Insecurity is tempered by cockiness
The Washington Times, 01/06/2002

US Lindsey:Govt Response To Enron 'Tribute' To Capitalism
Dow Jones International News, 01/06/2002

Texas powers up for deregulation; Skeptics recall California debacle
Chicago Tribune, 01/07/2002

Texas Lets Consumers Pick Power Source As Other States Are Watching Experiment
The Wall Street Journal, 01/07/2002
Investigating Enron
The Washington Post, 01/06/2002
Investigating Enron Corp.
The Milwaukee Journal Sentinel, 01/06/2002
The 401(k) terrorists
The San Francisco Chronicle, 01/06/2002
Interview: Senators John McCain and Joseph Lieberman discuss the war in Afghanistan and the US economy
NBC News: Meet the Press, 01/06/2002
Interview With John Breaux
CNN: Evans Novak Hunt & Shields, 01/06/2002
Culpable Executives
The Washington Post, 01/06/2002

_________________________________________________________

Laid-off Enron employees caught by health insurance glitch

01/05/2002
Associated Press Newswires
Copyright 2002. The Associated Press. All Rights Reserved.

HOUSTON (AP) - A paperwork delay has caused the approximately 4,500 Enron Corp. workers laid off by the foundering energy giant to go without health insurance temporarily, forcing at least one ex-employee to put off cancer surgery.
Many employees, including Mike Black, had planned to continue their Enron benefits after their expiration last month under federal rules set up by the Consolidated Omnibus Budget Reconciliation Act, or COBRA.
But Black, who had to cancel skin cancer surgery set for last Thursday, and his fellow former Enron mates learned the company failed to complete all the necessary paperwork in time for coverage to continue into January.
Enron planned to have COBRA information mailed to workers three weeks after their termination, but spokeswoman Karen Denne said it's taken longer than expected.
Ex-workers should receive the paperwork by Jan. 15, Denne said.
The delay has left Black, a systems programmer who can't afford the operation without insurance, in limbo.
"I'm still waiting for my second unemployment check," Black said.
Black, 54, said he's been unable to get any COBRA information from Enron, the insurance plan administrator or the insurance company.
It seems as if "they're all pointing fingers at each other," Black told the Houston Chronicle.
Matt Isbell, president of consulting company COBRA Resources, said the problem is not unusual because of the complex process. Companies have 44 days to notify an individual they can buy the coverage, Isbell said.
During that time, former workers are on their own until they receive COBRA coverage. After that, qualifying expenses are reimbursed.
Black's not willing to front his surgery costs, however, because COBRA could disappear altogether if Enron switches its bankruptcy filing from Chapter 11, or reorganization, to Chapter 7, which is liquidation.
Another worker, Candace Womack, didn't find out her insurance had lapsed until New Year's Day, when she got out of the hospital from heart surgery and needed to buy prescriptions.
Womack, who worked in software support, carried health insurance for her family.
"I'm getting a little ticked about the situation," said Womack, 51, who added that she was able to sign up for COBRA coverage before she walked out the door after she was laid off from another company in the mid-1990s.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

NEWS
Former Enron workers left in insurance limbo / Company fails to complete paperwork
L.M. SIXEL
Staff

01/05/2002
Houston Chronicle
3 STAR
1
(Copyright 2002 Houston Chronicle)

Mike Black has skin cancer and was planning to have an operation Thursday.
But he had to cancel the surgery when he discovered his health insurance plan is in limbo.
Like the rest of the 4,500 workers laid off from Enron Corp. Dec. 5, Black had health insurance coverage through the end of December and was planning to continue his coverage under the federal rules set up by the Consolidated Omnibus Budget Reconciliation Act.
But he found out this week Enron failed to finish all the necessary paperwork so the laid off workers could participate in COBRA beginning in January.
COBRA requires employers to offer health insurance to their terminated employees for up to 18 months. Though COBRA is very expensive - the employee pays the entire cost of the plan, which is usually subsidized by an employer - it is designed to provide seamless health care coverage for the recently laid off worker.
But Enron officials said the company hasn't been able to process the COBRA paperwork fast enough.
The company planned to have the COBRA information mailed to workers 21 days after they were terminated but it's taken longer than Enron expected, said Enron spokeswoman Karen Denne. The layoffs and bankruptcy filing were so sudden that the company didn't have time to prepare in advance.
Employees should receive the COBRA paperwork by Jan. 15, Denne said. If they don't, they should contact the benefits office.
A benefits consultant in Houston said she isn't surprised about Enron's delay. COBRA can be a "paperwork nightmare." Documentation has to be sent to not just all employees but to all the employee dependents who are covered, she said, asking not to be identified.
But to employees like Black, the delay is devastating. When his insurance coverage couldn't be verified, Black said he couldn't afford to pay for the operation out of his own pocket.
"I'm still waiting for my second unemployment check," he said.
Black is frustrated because he can't get any information about COBRA insurance from Enron. He said that when he calls the company's benefits office, employees there don't know the answers to his questions. Neither does the plan administrator, and the insurance company seems to be in the dark, too, he said.
It seems as if "they're all pointing fingers at each other," said Black, who was a systems programmer at Enron.
Enron could have done it faster, he said, suggesting that arranging COBRA coverage is low on the company's priority list.
It's not an unusual problem, said Matt Isbell, president of COBRA Resources, a company that conducts COBRA training seminars in Kalamazoo, Mich.
Companies have at least 44 days to notify an individual employee that they can buy COBRA coverage, Isbell said. And depending on a company's plan documents, that waiting period can be even longer if the clock doesn't start until the last day of regular insurance coverage.
During that time, employees have to foot their own medical bills, he said. But once the employee applies for COBRA and pays for it, the bills are reimbursed.
Black knows that but he's worried that Enron may convert its bankrupty filing from a Chapter 11, which provides protection from creditors while undergoing reorganization, to a Chapter 7, which would liquidate the company. If that happened, health insurance would disappear and so would COBRA, leaving the 54-year-old with a bunch of unpaid bills.
Candace Womack found out she had no insurance when her husband went to the pharmacy Wednesday to fill several prescriptions. Womack had just had heart surgery and was released from the hospital New Year's Day.
Instead of paying the $10 co-pays, her husband had to pony up $250 to pay for antibiotics and blood pressure medicine because Womack's insurance had been canceled. Womack worked in software support for Enron until she lost her job last month.
Now she's worried about how she'll pay for the follow-up medical visits to her surgeon.
Like many of the laid-off employees, Womack carried the insurance for her family. Her husband is self-employed, and it's usually much more expensive to buy an individual insurance policy than it is to pay for a company subsidized plan like Enron's.
"I'm getting a little ticked about the situation," said Womack, who is 51.
Womack said the disaster she faces now is in such sharp contrast to when she lost her job in the mid-1990s.
Then, she had been working for First Interstate bank and was able to sign up for COBRA coverage before she even walked out the door.

Photo: Mike Black, a former Enron employee, had to cancel his skin cancer operation after discovering Enron failed to finish paperwork necessary for laid off workers to have continued insurance coverage under COBRA (color)
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

COMPANIES & FINANCE INTERNATIONAL - Bidders line up in battle for Enron stake.
By ROBERT CLOW and ANDREW HILL.

01/07/2002
Financial Times
(c) 2002 Financial Times Limited . All Rights Reserved

COMPANIES & FINANCE INTERNATIONAL - Bidders line up in battle for Enron stake - COLLAPSE AT LEAST THREE COMPANIES LIKELY TO BID FOR CORE ENERGY TRADING BUSINESS.
At least three companies are likely to bid for control of Enron's core energy trading business by today's deadline, according to the bankrupt US company's advisers.
Citigroup, the US bank that is also one of Enron's main creditors, is likely to be one of the bidders, according to other people close to the process.
It will not be clear until later in the week if all the potential bidders have submitted offers, but if the auction is successful, it will boost the confidence of Enron creditors.
Any delay in striking a deal could damage the chances of Enron reviving its trading operations and restructuring the rest of the company. Enron's traders are locked in by incentives for a limited time, and trading counterparties, bruised by the sudden collapse of the company, are already sceptical about dealing with a revitalised trading operation
Enron advisers said yesterday that all the potential buyers of a majority stake were sufficiently creditworthy to restore customers' confidence in the trading business. "That (creditworthiness) is not a problem," said Martin Bienenstock of Weil Gotshal & Manges, Enron's lawyer.
"We're expecting a number of bids," said a spokesman for Blackstone Group, financial adviser to Enron, yesterday.
The auction will be held on Thursday and a bankruptcy court hearing has been scheduled for Friday to approve a partner for the trading operation.
Enron hopes to auction off the assets, technology and key staff of its core trading operation, forming a joint venture in which the energy group would maintain a minority stake.
Banks, led by Citigroup, are the most likely buyers of a majority stake. UBS of Switzerland had expressed interest before Christmas, but the Swiss bank's enthusiasm for making an offer has cooled since, according to people involved. Neither bank would comment last week.
People close to the procedure said last week that Enron's cash flow was better than originally expected and it had not yet drawn on the $250m of emergency funds available as part of its $1.5bn debtor-in-possession financing package. They said Enron might even reduce the size of the loan to avoid paying unnecessary charges.
In a separate hearing today, a number of Texas creditors will argue for the whole procedure to be switched from New York to Houston, where Enron has its headquarters.
(c) Copyright Financial Times Ltd. All rights reserved.
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Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Companies diary - Crucial stage in Enron saga comes into spotlight.
By EDITED BY MARTIN BRICE.

01/07/2002
Financial Times - FT.com
(c) 2002 Financial Times Limited . All Rights Reserved

The latest moves in the Enron saga take place, with this week being crucial to the future of operations. The deadline passes for bids, while the formal auction takes place and the buyer may be approved for the energy trading unit. A series of post-Christmas trading updates from UK retailers will be examined for indications of the strength of consumer spending.
MONDAY
Monday is the deadline for companies to bid to form a joint venture with Enron's energy trading business, the core of the bankrupt company. Citigroup and UBS had both expressed interest in the business, which Enron believes can be revived with the help of a credit-worthy partner. A formal auction will be held by the bankruptcy court on Thursday, assuming more than one company comes forward, and a hearing has been set for Friday to approve a buyer. Administrators to Enron Corporation are close to the sale of the London-based metals trading business of the collapsed US energy group. The deal, which would be the third significant disposal to be negotiated in the UK since Enron's European operations were put into administration at the end of November, could be announced within days. Potential buyers for all or parts of the business are Glencore, the Swiss commodities trader, Sempra Energy of San Diego, HSBC and Goldman Sachs. PricewaterhouseCoopers, which is acting as administrator, is understood to have singled out one of the interested parties and is expected to finalise the sale over the weekend or early next week. A sale had been expected before Christmas, but was delayed because of difficulties in unravelling the complex corporate structure. TUESDAY
Alcoa, the world's largest producer of aluminium, is expected to report fourth-quarter earnings per share of 10 cents, far short of the 45 cents earned a year ago, as anaemic demand for aluminium in the auto and aerospace sectors is expected to strongly hit impact the company's bottom line, analysts said. Two weeks ago Alcoa pre-announced its fourth-quarter earnings per share expectations of 10 cents, excluding a $225m after-tax restructuring charge. Lower volumes, depressed metal prices and an overall weak downstream market will all weigh on fourth-quarter results, trimming full-year earnings to $1.43 compared with $1.81 last year. The company's current estimate of 10 cents is well below the previous forecast of Wall Street analysts' consensus of 30 cents. AFX, New York
Interim figures from Pace Micro Technology, the UK television set-top box maker, may contain news on progress in the US. It said at the final results announcement in July that sales in the US were likely to grow faster than in the more mature UK market. In that context, investors may be keen to hear how contracts with AOL Time Warner and Comcast of the US are progressing. Analysts expect Malcolm Miller, chief executive of Pace, to announce a rise from GBP18.4m ($26.7m) in profits before exceptionals to GBP19.3m, on sales up from GBP205.8m to GBP215.7m in the six months to the end of November.
One of the most eagerly-awaited of the post-Christmas trading statements is expected from Next, the UK clothing retailer. It said on the morning of September 11 that like-for-like sales were up 8 per cent, while Next Directory sales were 20 per cent ahead of the previous year.
WEDNESDAY
Oc, the Dutch repro-graphics group, will report for the fiscal year to November 30 net profit before extraordinary items of 106.7m-109m, down from 152m ($133.8m) a year earlier, analysts said. Earnings per share after preferred dividends are forecast to fall to 1.14-1.21 from 1.76 a year earlier. In a pre-announcement in December, the company forecast a 30 per cent fall in net profit before extraordinary items with sales unchanged. Oce also plans to take a restructuring charge of 125m. AFX, Amsterdam
Interim figures from Dixons, the UK consumer electronics retailer, are expected to be between GBP80m-GBP87m for the six months to October, against GBP90.8m before exceptionals and losses at Freeserve, the sale of which makes comparisons difficult. However, a trading update is likely to overshadow the figures.
Additional reporting by Andrew Hill in New York and Alex Skorecki in London.
(c) Copyright Financial Times Group.
http://www.ft.com.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Enron nears crucial decision on trading arm.
By ANDREW HILL AND ROBERT CLOW IN NEW YORK.

01/07/2002
Financial Times - FT.com
(c) 2002 Financial Times Limited . All Rights Reserved

Enron will find out whether there is sufficient interest in its core energy trading operations to justify an auction of a majority stake this week.
According to people close to the bankruptcy procedure, potential bidders were still conducting due diligence examinations of the business late last week.
The deadline for formal offers is Monday. If there are enough bids, the bankruptcy court will hold an auction on Thursday. A court hearing has been scheduled for Friday to approve a partner for the trading operation.
Enron hopes to auction off the assets, technology and key staff of its core trading operation, forming a joint venture with a creditworthy buyer, possibly a bank, in which the energy group would maintain a minority stake. The trading book is unlikely to be sold because of the size of Enron's liabilities to customers.
A long delay would be fatal to the prospects of reviving the business. Traders are locked in by incentives for a limited time and trading counterparties, bruised by the collapse of Enron, are already sceptical about dealing with a revitalised trading operation.
Martin Bienenstock of Weil Gotshal & Manges, Enron's lawyer, warned before Christmas that if the deal was not closed in early January, traders would "simply be compelled to find other jobs with other financial entities".
Citigroup is more likely to take a stake in the business, but it has not yet come forward with a stalking-horse offer, which would set a base for the auction. Interest from UBS has cooled, according to people involved. Neither bank would comment. Rival energy companies said they were unlikely to become partners of the trading business.
The creditors' committee might still select a stalking-horse, but one creditor said that even without an opening bid the committee was confident that a partner would be found.
People close to the procedure said last week that Enron's cash flow was better than had been expected and it had not yet drawn on the $250m of emergency funds available as part of the $1.5bn debtor-in-possession financing package arranged last month.
Court approval of the package has been postponed to January 30, but bankers have played down concerns that it would be difficult to syndicate the final $1bn tranche of the loan.
In a separate hearing on Monday, the New York bankruptcy court will hear arguments for the procedure to be switched to Houston where Enron has its headquarters.
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http://www.ft.com.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

OTC regulation flaws exposed by Enron.
By NIKKI TAIT.

01/07/2002
Financial Times - FT.com
(c) 2002 Financial Times Limited . All Rights Reserved

The furore over Enron - and cries from some quarters for greater regulation - come exactly one year after the US believed that it had put to rest the issue of derivatives trading supervision.
On a Friday night, December 15 2000, Congress passed complex and highly technical legislation which essentially ensured that much of the $94,000bn over-the-counter derivatives industry would operate outside the nation's commodities laws.
Senator Phil Gramm helped to resurrect the legislation after the House agriculture committee added a special exemption from regulation for EnronOnline, according to Michael Greenberger, a former official of the Commodity Futures Trading Commission. The package, attached to 200 pages of legislation of an 11,000-page general public funding bill, was barely noticed in the rush to adjourn Congress.
Much of America's regulatory regime was devised at a time when derivatives trading consisted mainly of standardised futures contracts transacted through third-party exchanges like the Chicago Board of Trade, and involving traditional commodity products such as corn or soyabeans.
But during the 1980s and 1990s, a good deal of risk-management action had shifted to the over-the-counter market, where banks and trading firms negotiated bilateral contracts (often called "swaps") on an individual basis. There had also been phenomenal growth in financial contracts - hedging interest rate or currency exposures, for example. Finally, the proliferation of electronic trading systems made it easier to transact business outside the US, if regulatory regimes were kinder elsewhere.
For participants in the swaps markets one of the biggest concerns is that the Commodity Futures Trading Commission, set up to regulate the futures markets, might seek to extend some authority to OTC markets. Brooksley Born, head of the agency in the late-1990s, felt strongly about the issue and the problems at Long-Term Capital Management offered her some vindication.
But swaps dealers argued that if swaps were deemed futures (giving the CFTC jurisdiction), counterparties with losing positions could argue the deals had been transacted illegally. Accordingly, the big Wall Street banks demanded "legal certainty", to ensure that OTC transactions were not caught in the regulatory net. Satisfying that demand was one important element of last December's legislation.
Separately, the legislation also set out a new regulatory structure for exchanges - with the degree of supervision highly dependent on the type of product traded and the nature of market participants. Certain commodity products, in finite supply, are susceptible to manipulation. Moreover, if retail customers were to be involved with a market, there would be a need for a decent degree of oversight. Conversely, sophisticated players, trading hard-to-manipulate financial contracts, could look after themselves.
Little of this applied to EnronOnline, however. Although outsiders may have viewed its trading activities as equivalent to an exchange, EnronOnline was structured so that the company itself was the counterparty to transactions handled by its trading unit. That made its business model very different from a traditional exchange, which serves as a neutral forum.
Few of the participants in last year's debate seem to have changed their views significantly. But regulators who believed that largely-unsupervised OTC trades could be a Pandora's box in future, still think last year's legislation a regressive step. "The Commodity Futures Modernisation Act [of 2000] sanctioned opaque markets," says Michael Greenberger, former director of the trading and markets division of the CFTC.
Conversely, observers in the swaps industry argue Enron's difficulties did not originate in its trading activities - the trading operations suffered when other problems caused the group's credit standings to collapse. "EnronOnline was a highly innovative means of servicing clients for nine months of the year," says Robert Pickel, executive director of the International Swaps and Derivatives Association, stressing that the trading arm had provided "convenient and cost-effective management of risk".
However, even advocates of the lighter, less proscriptive regulatory regime had cautioned that the relatively new area of energy derivatives trading could pose issues that trading of financial swaps did not.
"Most dealers in the swaps market are either financial institutions subject to supervision by bank regulatory agencies, or affiliates of broker-dealers regulated by the SEC, or affiliates of FCMs [futures trading firms] subject to CFTC oversight," Bill Rainer, the CFTC's former chairman told a congressional committee in June. "The same cannot be said of trading in energy derivatives ... Thus a principal argument warranting the exclusion of financial derivatives from the Commodity Exchange Act - the fact that derivatives trading in these products is subject to direct or indirect federal oversight - does not apply to OTC energy transactions."
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Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Outlook
Enron? We're Missing The Point
Lanny J. Davis

01/06/2002
The Washington Post
FINAL
B01
Copyright 2002, The Washington Post Co. All Rights Reserved

Here's a paradox: Despite predictions of doom from many financial writers, it doesn't matter very much that Enron -- at one time touted as the seventh-largest company in the nation -- failed. What matters is why it failed.
Enron's demise will be little more than a blip on the U.S. economy, with the big losers confined to the same financial speculators who rode the bubble on the way up. But the underlying cause of Enron's fall -- a corporate culture of secrecy and obfuscation -- is not unique to that company. Far from it. Enron's problems are emblematic of myriad public companies in the 1990s, from dot-com start-ups to some of America's biggest corporations, who yielded to the pressure to inflate their stock by whatever means possible.
If that culture isn't replaced by more transparency and accountability, regulated and enforced by the Securities and Exchange Commission (SEC) and U.S. prosecutors, the credibility and integrity of the various stock markets in which millions of Americans are now invested could be seriously undermined. That's why I hope that Sen. Joseph I. Lieberman (D-Conn.) meant it when he said Wednesday -- after his Senate Governmental Affairs Committee announced it would subpoena Enron's top executives and directors -- that the committee's focus will be "to make sure that something like this never happens again."
I know something about the culture of obfuscation. I have spent much of the past three years representing public companies and executives accused of accounting and financial fraud. Sometimes I have been lucky enough to be called in before the bad news hit the fan. But more frequently, I arrived after information had begun to leak out.
In one instance, the new CEO of a Nasdaq-listed company, Lernout & Hauspie Speech Products, retained me and my law firm. He told me he suspected that the books of the language translation software company had been cooked by the company's former CEO. The company, he said, had created the appearance of dramatic growth by establishing outside entities -- investment companies in which money from investors was being used to purchase what turned out to be mostly nonexistent products and services. Liabilities and losses were being hidden in these entities and not included in the company's financial statements.
The new CEO suspected that some members of the board of directors might be complicit. The Wall Street Journal had been writing bits and pieces of the story, but the company, based in Belgium, had either stonewalled or had given out misinformation.
We quickly initiated a two-part strategy based on complete transparency: First, we decided to support an investigation by outside auditors and a new law firm, with a commitment to publish the results and cooperate fully with the SEC; second, we proposed a program of internal reform to clean up the last vestiges of misleading financial reporting. While we knew the company's high-flying stock would take a major beating once we made these disclosures, we believed this strategy offered the only hope for the survival of the company.
However, we ran into a glitch. The company's board of directors opposed full disclosure. The new CEO defied the board and directed me to give the report to the Wall Street Journal and to other newspapers and to post it on the company's Web site. We both agreed he had no alternative if he were to avoid becoming part of the coverup. One immediate result of our strategy: The new CEO was summarily fired by the board -- as were my law firm and I. Another result: A short time later, the company filed for bankruptcy and was liquidated. The former CEO and some board members were charged with fraud and stock manipulation. All have denied these allegations. The investigation is continuing.
So you can see why I took such an interest in the rise and fall of Enron. As Yogi Berra would say, "It's de{acute}ja{grv} vu all over again." Enron, too, developed outside entities that supposedly generated revenues for the company, while keeping the expenses and contingent liabilities associated with those transactions off the books. And Enron's business, like Lernout & Hauspie's, didn't focus on selling real products to consumers with real profit margins. Rather, Enron was essentially a broker: It bought, resold and invested in commodities futures contracts, gambling on future prices and market conditions. One example of this business model is a brokerage company such as Goldman Sachs. But perhaps a more apt analogy is Las Vegas.
It really didn't matter what commodities Enron was betting on. Although it was known as an energy company, trading in natural gas and electricity contracts, it also speculated in water contracts, advertising and time contracts, complex derivatives, broadband capacity futures and weather derivatives (whatever that means). Its former chief executive, Jeffrey K. Skilling, actually once boasted about the company's absence of hard assets. He proudly described its approach as "asset lite," adding: "In the old days, people worked for assets. We've turned it around -- what we've said is, the assets work for people."
This characterization is the key to understanding both the breathtaking speed of Enron's collapse and the reason its failure will not have much impact on the nation's economy. Enron's geometric growth from a sleepy natural gas pipeline company in the '80s to a global giant -- with 21,000 employees, 3,500 subdivisions around the world and, by the summer of 2000, a total "market capitalization" value of more than $80 billion -- was based on perception rather than reality. As long as everyone saw the stock price going higher and higher, people were willing to bet their money (through loans, equity investments and credit on trades) on Enron. J.P. Morgan Chase & Co., for example, lent Enron $500 million without security and another $400 million purportedly secured by something.
But if you live by the perception and the illusion of growth, then you die by it once reality sets in. Being "asset lite" meant that once Enron's numbers and disclosures became suspect, there was no foundation of hard assets -- real products with real value -- to fall back on. Not surprisingly, once the first card of credibility was lost, the rest of the house collapsed quickly. On Oct. 17, Enron was forced to announce that it had hidden $1 billion of losses resulting from the outside entities; the next day it reduced its assets by $1.2 billion. Just six weeks later, on Dec. 2, after weeks of putting out deceptive information, Enron filed for bankruptcy. Its stock price had fallen from $90 a share in the previous year to just 87 cents.
The fallout? Thousands of Enron employees who lost their jobs and much of the value of their 401(k) pension plans, which included now-worthless Enron stock, will feel a deep impact. Because of decisions made by senior management, these employees were not allowed to sell the stock as it was dropping in value, though those same managers had sold nearly $1 billion worth of shares throughout the year. Others likely to suffer from the company's failure are the banks, investors and trading partners who willingly advanced Enron their money as the stock soared.
But it's hard to feel much sympathy there. Consumers won't really notice the difference. The electricity, natural gas and water supplies that were the subject of Enron futures contracts will still be delivered to their homes one way or the other. Speculators in Enron's "weather derivatives" may have lost some money, but that's not likely to have much effect on whether it rains or shines each day.
So if Enron's fall doesn't really matter in macroeconomic terms, why should we care? Because the corporate culture that bred that failure has undermined trust in the integrity of the public markets. The goal of "meeting the numbers" projected by analysts for each quarter has too often become the overriding goal -- to be achieved in the accounting department if it cannot be achieved in the marketplace. As Michael R. Young has written in "Accounting Irregularities and Financial Fraud," his seminal book, "What moves financial markets is the published expectations of Wall Street analysts." They "are perceived to establish, within a very narrow margin, the parameters for the upcoming actual financial results. Analyst expectations have become, in effect, a company's reported earnings."
With millions of Americans now invested in the stock market, this is no longer a concern limited to financial elites. We cannot afford to preserve a system in which perception is more important than reality.
The solutions are as obvious as they are unlikely to be met. The rule of thumb must be transparency, in word as well as deed. On a technical level, accounting rules and disclosure requirements have to be tightened up. Off-balance-sheet entities that create even the slightest contingent liabilities should be incorporated into the company's publicly filed financial information. We must also move to a system of real-time financial disclosures, with online access to the latest financial information. This is what SEC policymakers and congressional investigators should concentrate on.
In addition, white-collar criminals who cook the books should be prosecuted, sent to jail and required to disgorge profits from all stock sales made during the period of fraud, rather than receiving what is too often a slap on the wrist and a reminder to the corporate world that crime can pay.
Finally, corporate managers must practice the basic rules of crisis management -- which may mean defying the advice of many of their lawyers -- when they learn about bad news that could hurt the company's stock price. The truth will come out anyway, and dribs and drabs will only make its impact worse. So you might as well put it out yourself -- and then do something to fix the problem.
Of course, this advice to tell all the truth has been rejected, time and again, and not only by business executives. It has been ignored by politicians as well. The effect on the public's trust -- whether shareholders' or voters' -- has been the same.
Lanny Davis, special counsel to President Clinton from 1996 until 1998, is partner at the law firm of Patton Boggs and serves on its legal crisis management team. He is the author of "Truth to Tell: Tell It Early, Tell It All, Tell It Yourself" (Free Press).

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Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Investors to be more wary of credit products.
By JENNY WIGGINS.

01/07/2002
Financial Times - FT.com
(c) 2002 Financial Times Limited . All Rights Reserved

As Enron's bankruptcy has rippled through the markets, inflicting losses on holders of its shares and bonds, the credit derivatives market is among the sectors counting the costs of the energy trader's failure.
EnronOnline, which rapidly became the world's largest e-commerce site, was best known for its role in natural gas, power and crude oil trading. But at its height it offered more than 1,200 products, including bandwidth derivatives, weather derivatives, emissions credits, pipeline capacity and credit derivatives.
The credit derivatives market has exploded in recent years, with the global market for credit derivative contracts growing from about $50bn in 1996 to more than $1,200bn today.
The market has become ever more sophisticated, evolving into an alternative to the cash market.
Enron was one of the market's most active players, being both a dealer and a traded company. Through a credit derivatives exchange known as Enron Credit it encouraged other companies to use Enron to manage their credit exposure.
But following the collapse, and the negative impact on some of the credit derivative structures to which Enron was exposed, industry players predict investors will approach the market with greater caution.
"You're going to see people kind of stepping back and looking at collateral and thinking about the structures before they buy," says John Tierney, head of credit derivatives research at Deutsche Bank.
Investors are also likely to look more closely at the way rating agencies assess credit derivative structures, he adds. Ratings agencies have put numerous US and European credit derivative transactions containing Enron exposure on review for downgrade, reflecting possible losses for investors.
Previously an investment grade company with large amounts of debt and good liquidity, Enron was at one time an attractive asset to trade in the credit default swap market.
Credit default swaps are the most commonly traded credit derivative, providing insurance-like protection from the risk of default. There are two parties in a credit default swap: one party (the protection seller) receives a premium from another party (the protection buyer) for assuming the credit risk of a specified entity. In return for the premium, the protection buyer receives a payment from the seller in the case of the specified entity undergoing a "credit event", such as a default.
Total exposure to Enron via the credit derivative market has been estimated at as much as $6.3bn by Standard & Poor's. Much of this exposure occurred through complicated structured finance vehicles known as synthetic collateralised debt obligations (CDOs). These sell credit protection through a portfolio of credit default swaps, pooling a large number of credits, typically credits which are investment-grade.
CDOs give investors the opportunity to participate in a range of "tranches" of varying credit quality. The most junior tranche, often referred to as the "equity" portion of the deal because it offers a high, equity-like return, is the most risky.
Insurance companies and banks are among the biggest investors in CDOs. The structures provide insurance companies with a means of diversifying credit risk and offer relatively high rates of return.
Analysts and ratings agencies say exposure to Enron via CDOs should be "manageable". But the downgrading of many CDO transactions following Enron's collapse shows the difficulty of gauging many of the risks.
Although exposure to individual credits within synthetic CDO transactions are limited to very small amounts - exposure to any one credit is usually less than 2 per cent of the pool - the amount of leverage can be quite high, because the first-loss or junior portion of the tranche is typically quite small. Consequently, even investors in senior tranches of the transaction are vulnerable to sudden defaults.
Money managers are more wary than insurers of CDOs, citing the transactions' opaque nature. Many are private, and transaction managers often do not reveal immediately the names of companies involved, making it difficult to assess credit risk, fund managers say.
With CDO transactions so difficult to assess, the ratings agencies have acknowledged that quantification of exposure to Enron in the derivatives market remains "incomplete".
(c) Copyright Financial Times Group.
http://www.ft.com.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

OBSERVER - Good news for Kinko's - AVENUE OF THE AMERICAS.

01/07/2002
Financial Times
(c) 2002 Financial Times Limited . All Rights Reserved

Last week, the Senate's government affairs committee became the fourth congressional panel to pile on Enron, announcing a two-pronged inquiry into the bankrupt energy giant that will look into both malfeasance within the company as well as possible lapses by federal regulators.
But according to staffers from other committees that are already investigating the collapse, the folks at government affairs, which quickly issued subpoenas for documents from Enron and its auditor Arthur Andersen, may have bit off more than they can chew.
The reason: it seems getting documents from Enron is proving more costly than originally expected. Because the company is currently in bankruptcy protection, company lawyers have insisted it cannot pay copying fees for the papers the committees want, leaving congressional staffers to fork out the cash for duplication.
And the fees are beginning to rack up. While there are no estimates as to costs incurred thus far, the House energy and commerce committee - expected to take the lead in the probes because of its wide-ranging jurisdiction over both energy policy and accounting standards - expects to have 2m documents by the end of the month.
Senator Carl Levin, who chairs the government affairs subcommittee on investigations, said he had not requested any additional funding for his probe, adding that he believed some reallocation of resources, including using congressional fellows already detailed to the committee, would cover any additional expenses.
But other Capitol Hill denizens are not so sanguine. Said one staffer from a rival committee: "The fact that there are tens of thousands of these documents - that may take some of the steam out of them."
(c) Copyright Financial Times Ltd. All rights reserved.
http://www.ft.com.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Wiser Oil Seeks Separate Enron Power Creditor Panel

01/07/2002
Dow Jones Corporate Filings Alert
(Copyright (c) 2002, Dow Jones & Company, Inc.)

DJ CFA SOURCE:Bankruptcy

ISSUER: ENRON CORP.
SYMBOL: ENE

(This story was originally published Friday evening.)

By Carol McCleary
Of DOW JONES NEWSWIRES

WASHINGTON (Dow Jones) - A movement is underway to have a separate
committee formed in Enron Corp.'s (ENE) bankruptcy case to represent power
generators and traders, who contend that the current creditors' committee
can't adequately protect their interests.

Wiser Oil Co. (WZR) is among a group of Enron creditors who are concerned
with the way the U.S. Trustee comprised the creditors' committee - appointing
debtor-in-possession lenders to the panel.

The committee should be acting as the watchdog in the case, Wiser's
counsel Van Oliver said. He questioned how the lenders can exercise their
fiduciary duties as committee members.

A number of parties holding claims arising out of hedging contracts have
concerns with the way the committee has been set up to represent the
interests of Enron and not its subsidiaries, particularly Enron North
America, Oliver told Dow Jones Newswires.

There is also concern with the way the debtor's counsel has been
"mashing" all of the assets of Enron and its subsidiary debtors into one
basket, Oliver said.

The company hasn't yet filed its financial schedules - the U.S.
Bankruptcy Code gives it four months from the Chapter 11 petition date to do
so.

Noting that Enron and its subsidiaries prepare consolidated balance
sheets and income statements, Oliver said creditors don't know what the
subsidiaries themselves have in terms of assets and liabilities.

The cash management system in place isn't protective of the subsidiaries'
claims, according to Oliver.

Mirant Corp. (MIR) and Williams Cos. (WMB) are also involved in the
effort to have a separate committee appointed, people familiar with the
matter said. Oliver declined to identify those involved with Wiser, but said
that the parties together hold claims of at least $100 million and possibly
more than $500 million.

A motion is expected to be filed within the next couple of weeks asking
the U.S. Bankruptcy Court in Manhattan to order the trustee to appoint the
separate committee or, alternatively, appoint a subcommittee to represent the
power generators/traders.

As reported by Dow Jones Newswires, a hearing on the company's DIP
financing agreement with J.P. Morgan Chase & Co. (JPM) and Citigroup (C) has
been postponed to Jan. 30. A $1.5 billion DIP loan was initially planned,
but, sources said the lenders are reworking the facility based on Enron's
better-than-anticipated cash position, as well as lingering apathy among
bankers recruited to take part in the loan.

A change of venue request by several creditors who are seeking to move
the bankruptcy case to Houston from New York remains set for hearing before
Judge Arthur J. Gonzalez on Monday. The creditors are seeking to move the
bankruptcy case to Houston from New York.

-Carol McCleary; Dow Jones Corporate Filings Alert; 202-628-8916;

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Business; Business Desk
Preview / WEEK OF JAN. 7-12 Enron Creditors Want Case Moved to Houston
Associated Press

01/07/2002
Los Angeles Times
Home Edition
C-2
Copyright 2002 / The Times Mirror Company

A group of Enron Corp. creditors will try to persuade a New York bankruptcy judge today to move the case to a court in Houston, where the energy company is based.
Large creditors, such as energy traders Dynegy Inc. and El Paso Corp., and smaller ones, such as the Southern Ute Indian Tribe of Colorado, believe it would be more convenient and economical to hear the case near the location of many of Enron creditors and assets. Dynegy and El Paso are based in Houston.
In a motion filed by Dynegy and other creditors, lawyers also say there is "an emotional interest to be served" by moving the case to Houston, where thousands of Enron employees were laid off and many more witnessed the rapid evaporation of their retirement plans when the company's stock plummeted.
Analysts say these creditors might also be hoping for a potentially more favorable hearing in Houston, where the economy has suffered as a result of Enron's demise.
Lawyers for Enron, and a handful of creditors opposed to relocating the proceedings, are expected to argue that it would be less expensive and more accommodating if the case were administered in New York, home to the armies of lawyers and bankers working on both sides.
Howard B. Comet, an attorney for Weil, Gotshal & Manges in New York, said it also would be easier for business partners and potential witnesses involved in Enron's worldwide operations to participate if the proceedings took place in New York.
"The focus of the financial restructuring is here," Comet said.
Citigroup Inc. of New York, Barclays Bank of London and Dresdner Bank of Frankfurt are among the creditors opposed to changing venues.
Under the federal rules of bankruptcy procedure, a case may be transferred from one district court to another "in the interest of justice or for the convenience of the parties."
The basic criteria considered by judges ruling on previous change-of-venue motions have been the proximity of creditors, debtors and witnesses; the location of assets; and the cost.
Experts say few cases of this size have been moved but Judge Arthur J. Gonzalez could be swayed by the fact that so many of Enron's energy-trading partners are in and around Houston.
Enron collapsed late last year when revelations of questionable accounting practices and mounting debt caused investors and traders to lose confidence in the company. The company lost $60 billion in market value over the last year.
Enron filed for protection from creditors under Chapter 11 of federal bankruptcy law Dec. 2 in the U.S. Bankruptcy Court for the Southern District of New York.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Dynegy Gets Info From Enron Related To Venue Motion
By Kathy Chu

01/07/2002
Dow Jones News Service
(Copyright (c) 2002, Dow Jones & Company, Inc.)

Of DOW JONES NEWSWIRES

(This report was originally published late Friday.)
NEW YORK (Dow Jones)--In another concession to its former merger partner, Enron Corp. (ENE) agreed late Friday to provide Dynegy Inc. (DYN) with certain information about the role that some Enron executives will play in the company's financial restructuring.
Details are still scarce, but essentially, this means that Dynegy will no longer need to depose Enron's Chief Financial Officer, Jeffrey McMahon, in an effort to obtain information that may be relevant to Dynegy's motion to transfer the distressed company's bankruptcy case to Houston, lawyers for both companies said.
Judge Arthur Gonzalez, of the Bankruptcy Court of the Southern District of New York, is set to hear this and other motions to transfer the case Monday.
It's the second time in the past day that Dynegy has gotten the upper hand over Enron, and follows an agreement by the two companies earlier Friday to hand over control of a valuable pipeline to Dynegy.
Last month, Dynegy served McMahon and three other Enron executives with subpoenas for depositions, but later said it only needed to question McMahon. At the time, Dynegy said that a deposition was necessary to determine, among other things, why the bankrupt company filed for court protection in New York instead of Houston.
Most of Enron's assets and creditors are in Texas, making it more convenient and economical for the case to be heard there, according to Dynegy.
Enron, following a Wednesday court hearing, has provided Dynegy with enough information that the latter sees no immediate need for a deposition.
This includes details about which of Enron's executives are involved in the company's financial restructuring, according to Howard Comet, of Weil, Gotshal & Manges - which is representing Enron - and about which executives have detailed knowledge of the two companies' adversarial proceedings.
Dynegy had also requested information about the Enron's estimated financial reorganization budget, which isn't yet available, according to Comet.
But people familiar with the matter have told Dow Jones Newswires that Enron presented financial information, including its budget for reorganization, to debtor-in-possession lenders J.P. Morgan Chase & Co. (JPM) and Citigroup (C) recently.
In recent weeks, Dynegy, Enron's 401(k) plan holders, El Paso and other creditors have all filed motions asking that the largest bankruptcy case in corporate history be transferred to the Bankruptcy Court of the Southern District of Texas.
About a dozen financial institutions, including J.P. Morgan Chase and Citigroup, objected to the move.
Moving the cases "would frustrate, rather than further, the interest of justice" because Enron's list of 20 largest unsecured creditors is dominated by institutions located in, or controlled from, New York, J.P. Morgan said in a court filing.
-Kathy Chu; Dow Jones Newswires; 201-938-5392; kathy.chu@dowjones.com

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Foreign News
Bush's rst big scandal rises from the ashes of Enron
Rupert Cornwell in Washington

01/06/2002
The Independent - London
FOREIGN
14
(Copyright 2002 Independent Newspapers (UK) Limited)

It may not yet quite be the "cancer on the presidency" of which John Dean warned Richard Nixon in the early days of Watergate. But the collapse of the energy conglomerate Enron is suddenly shaping up as big, big trouble for George Bush.
All the ingredients of a classic Washington scandal are there: the biggest corporate failure in history, a chief executive on such good terms with George Bush that the President refers to him as "Kenny Boy" and a history of massive contributions by the Houston-based Enron to the White House campaigns of Bush the father and Bush the son.
The final element fell into place last week with the announcement of a full-scale Senate investigation, complete with subpoenas for top Enron executives including Kenneth Lay (aka "Kenny Boy"), representatives of the Arthur Andersen accounting firm which singularly failed to spot the impending disaster, and perhaps senior figures in the Bush administration as well.
Even the cast of characters is comfortingly familiar. Enron's lead attorney, for instance, is Robert Bennett, the $500-an-hour DC superlawyer who featured in Washington's most recent presidential scandal when he represented Bill Clinton in the Paula Jones sexual harassment suit. That led directly to the Monica Lewinsky saga.
By any yardstick, Enron is a massive financial scandal, a tale of concealed debt and shell companies, incompetent auditing and scanty regulatory oversight - not to mention the sudden impoverishment of thousands of employees obliged to hold their pension savings in now worthless Enron shares, even as senior executives cashed in stock and stock options for up to $1bn (pounds 700m) during 2000 and 2001.
Until now, however, Enron has been the dog which failed to bark - or, more exactly, was ignored as the media concentrated on Afghanistan and barely dared mention such goings-on as the presidential approval ratings hovered around the 90 per cent mark. Enron unravelled in November, but not until 28 December was Mr Bush first asked about the debacle. All that is about to change as the news focus starts to shift from the anti-terror campaign to domestic politics. Not only is this a mid-term election year in which the Democrats need just half-a-dozen seats to recapture the House of Representatives, but thoughts are already turning to the 2004 White House race. In all these calculations, Enron could prove a factor.
Already, at least three Congressional committees have been sniffing around the affair. But the main investigation will be conducted by the Senate's governmental affairs committee, headed by the Democrat Joe Lieberman of Connecticut. Mr Lieberman, it will not be forgotten, was Al Gore's vice- presidential running mate last time and is is widely believed to have ambitions for the top job in 2004.
Thus far, Mr Lieberman has followed the Washington scandal script to a T. Echoing investigators of Watergate, Iran-Contra and Whitewater before him, he promises solemnly that his probe will be even-handed, "a search for the truth, not a witchhunt". But, he warns, "we're going to go wherever the search takes us". If so, it could be a most interesting journey.
Enron has been a fountain of money for politicians of every hue. Since 1990, according to the Center for Responsive Politics, which monitors such donations, it has made campaign contributions of $5.8m (pounds 4m), three- quarters of it to Republicans. The biggest single beneficiaries, unsurprisingly, have been the two Texas senators, Kay Bailey Hutchinson and Phil Gramm, whose wife Wendy sits on the Enron board.
Like most big corporate donors, it has hedged its bets. On Capitol Hill, 71 of the 100 current senators and nearly half the 435 congressmen have received contributions. The investment paid off with a vengeance, when Enron secured exemption for its energy derivatives business under a 2000 Act regulating commodity futures trading. But the Bush family has been a special object of its attentions. Mr Lay was listed by the Bush-Cheney campaign as one of the "Pioneers" who raised at least $100,000 (pounds 70,000) for the election, while Enron gave $100,000 to the inauguration gala, a contribution matched by "Kenny Boy" and his wife.
Potentially most damaging is its possible backstage role in the formulation of Mr Bush's energy policy. At least four Enron consultants and executives have done work for the administration. A champion of the deregulation favoured by the White House, Mr Lay was a frequent informal adviser to the panel under the Vice-President, Dick Cheney, which drew up a national energy strategy.
"We've got to ask whether the advice tendered was self-serving," Mr Lieberman says. Or, to put it more bluntly, were the Texan oilman in the White House and the Texan energy baron in Houston running a mutual benefit society? These questions can no longer escape an answer.

Caption: Enron unravels: ex-employee Janice Farmer - who has lost most of her savings - with her daughter Julie at a Senate subcommittee hearing; `Kenny Boy' Lay, chief executive (top); and Senator Joe Lieberman DENNIS COOK/AP
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

First
Watch Out For...
Lee Clifford

01/07/2002
Fortune Magazine
Time Inc.
21
(Copyright 2002)

A deadly disease besieged executives across the country this year: Call it Sudden Reputation Death Syndrome. Early symptoms seemed innocuous enough--grumbling board members, mild cases of foot-in- mouth disease, stock falloffs. But once the disease took hold, no decision the afflicted executive made was the right one, and soon onetime People to Watch had become People to Watch Out For.
Houston became a regular hot zone after Jeff Skilling, Ken Lay, and the rest of the Enron gang managed to turn a thriving New Age energy business into a pile of rubble between Labor Day and Thanksgiving.
Blustery Linda Wachner and Jacques Nasser fought long battles but fell victim to the illness when Wachner plunged Warnaco into bankruptcy and Nasser's missteps alienated the Ford family and caused his company's stock to lose another 30% on the year. Shailesh Mehta, who pursued an aggressive growth strategy at credit card provider Providian, took sick while watching the stock drop 94% during 2001 amid a wave of card defaults. All three lost their jobs.
There's another possible case germinating at Hewlett-Packard-- that of Carly Fiorina. Whether the Compaq merger will push her into full arrest remains to be seen, but one thing's for sure: This drama is more action-packed than an episode of ER.
--Lee Clifford

COLOR PHOTO: WIN MCNAMEE--REUTERS/TIMEPIX Jacques Nasser
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Enron Canada Corp To Assume New Form: CEO

01/07/2002
Dow Jones Energy Service
(Copyright (c) 2002, Dow Jones & Company, Inc.)

(This article was originally published Friday)

CALGARY -(Dow Jones)- The head of former marketing giant Enron Corp.'s (ENE) Canadian unit is a strong believer in reincarnation, at least if it's corporate.
Enron Canada Corp.'s profitability and pool of talent will keep it from sinking under the ashes of its parent company's fiery demise, President and Chief Executive Robson Milnthorp said Friday to Dow Jones Newswires.
"There are a number of shapes that this can be resurrected under," Milnthorp said. "That might entail being auctioned off through the parent in Houston, or replacing the Enron balance sheet with someone else's.
"There's no reason to panic or jump at the first alternative," he said.
The shaved-bald executive believes a new entity will appear on the Canada power market by midyear, under a different name but with many of Enron Canada's strengths.
Enron Canada, which cornered approximately 40% of power trades in the country last year, tried unsuccessfully to distance itself from Enron Corp. when the global power trader lost investor status in November because of a number of dubious business deals.
The Canadian unit argued it was financially stable, compared to its parent and credit guarantor, but was unable to stop the flood of contract terminations that followed Enron's filing for bankruptcy protection in early December.
Milnthorp lost a court battle last month to keep counterparties from jumping ship, and has been liquidating company accounts since then to keep from becoming insolvent.
The biggest move was the C$215 million sale of its power contract for the output of a 706-megawatt generation station in northcentral Alberta.
Enron Canada lost $80 million on its original purchase price in the deal with TransCanada PipeLines Ltd. (T.TRP) and AltaGas Services Inc. that was completed last Friday when a U.S. bankruptcy judge approved the sale.
The sale enabled Enron Canada to meet December settlements from November contracts, albeit three days late, on Dec. 28.
Financial settlements due Jan. 5 will be met Friday, Jan. 4, Milnthorp said.
Enron's fall from credit favor across the world has changed how natural gas producers look on contracts, said a Calgary analyst.
"Credit is now No. 1 with producers," Ron Vogal, with Streamline Energy Group Ltd. said. "We're telling all the little guys to align themselves with a number of marketers instead of just one, and some are looking at going back to dealing directly with the end-user, rather than through a marketer."
Most Canadian producers have liquidated their contracts with Enron Canada and are in the process of replacing the natural gas. Offset agreements, where amounts due are balanced against amounts owing for a net result, are taking place between producers and Enron Canada, Vogal said.
A number of companies still owe the marketing firm. One company, IMC Canada Ltd., recently lost a court request to be released from its C$2.3 million debt to Enron Canada.
Milnthorp anticipates more litigation to come through Canadian courtrooms as counterparties and Enron Canada sort out contract terminations and calculate damages.
-By Dina O'Meara, Dow Jones Newswires; 403-531-2912; dina.omeara@dowjones.com

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

A
Houston feels pain of Enron's collapse ; Insecurity is tempered by cockiness
Nathan Levy
SPECIAL TO THE WASHINGTON TIMES

01/06/2002
The Washington Times
2
A2
(Copyright 2002)

HOUSTON - As the lunch-hour crowd shuffles by, Dave Glessner, a chemical engineer at Enron Corp., stands alone across the street from the company's glitzy headquarters. A box of his personal work belongings rests at his feet.
He has bittersweet feelings about the energy trader that recently filed the largest bankruptcy petition in U.S. history. "It was a great job, great company, great people," said Mr. Glessner, dressed casually in a short-sleeve shirt and olive-colored pants. He has worked at Enron for almost 11 years and will be dismissed in about a month.
"I just hope, if there was some criminal intent, that the people who caused this feel some real pain," referring to the legal punishment top management may receive for questionable accounting methods.
The collapse of Enron's stock price - it's now selling for 65 cents a share, after it lost 99 percent of its value in the past year - has wiped out the savings of many retirees and investors.
For example, Mr. Glessner's 401(k) company retirement plan has declined in value from $1 million to $5,000, but the pain for him and his colleagues runs deeper.
"People's lives were disrupted," the unassuming 52-year-old said. "It's everything from relationships to anxiety. People are feeling depressed."
Enron's release of 4,500 Houston employees, or 60 percent of its local work force, is just one event that has contributed to the insecure mood.
A couple of other Houston-based public companies have had similar woes. Compaq Computer, hurt by sluggish PC sales, already has laid off at least 1,500 workers here and may fire more if Hewlett-Packard acquires the firm. Continental Airlines announced thousands of local job cuts after the September 11 terrorist attacks because of reduced air travel and increased security costs.
Natural disaster struck, too, as flooding from Tropical Storm Allison caused $5 billion in damage and killed 22 persons in early June.
Yet Houston remains cocky, even with a nationwide recession. The city has been adding about 50,000 jobs annually in recent years, though leaders expect 2002 employment growth will be about half of that number.
"There is a quality in Houston of bravado, of risk taking, of dreaming big dreams and being prepared to fall on your face if they don't come true," said Stephen Klineberg, a sociology professor at Rice University. "In some paradoxical sense, Enron falling on its face is a confirmation of that entrepreneurial spirit."
Mr. Glessner, the Enron engineer, said the company already had taught him to be prepared always to reinvent yourself. Not married, he intends to stay in Houston and is pursuing job leads in the natural gas business.
"Change is a constant, and you have to keep current," he acknowledged. "That's what I'm doing."
Oil once dominated Houston, with four out of five jobs tied directly or indirectly to the industry. When oil prices fell in the mid-1980s, the city unraveled. Work evaporated, downtown office space went vacant, and banks locked their doors for good.
Houston diversified some in the 1990s and added jobs in such areas as technology, manufacturing and trade. Houston now also is home to a renowned medical center, the second-busiest port in the country, NASA's Johnson Space Center and a 17-block cultural district, replete with modern art centers, a theater hall and a Holocaust museum.
But regardless, the nation's fourth-largest city still runs on energy, said John Young, a wildcatter who drills for oil and natural gas in central Texas and the onshore Gulf Coast region. "It really is the world energy capital," he said.
In this city known for its traffic jams and air pollution, energy firms even now compose 50 percent of the economy. Enron, formed by Chairman Ken Lay in 1985 as a gas pipeline business, sought to be a pioneer. The company expanded into energy trading in the 1990s, as it bought and sold natural gas and electric power in wholesale markets.
Enron then branched out further and attempted to sell all sorts of goods on the Internet, from paper products to fiber-optic bandwidth. The company said it had sales of more than $100 billion in 2000, making it the seventh-largest U.S. company.
At the tony Galleria Mall, shoppers are buying more cautiously after Enron's demise. "It's all anyone's talking about at the Christmas parties," said Gayl Carlberg, who co-owns an advertising agency with her husband.
Holding a small, red Neiman Marcus bag, she said her firm has had a record year in winning new business, though existing clients have cut back. As a result, the mother of two said she plans to spend less on holiday gifts this year than last year.
Nevertheless, she's confident the city will bounce back. "That's the thing about Houston and Texas. You can't knock us down," Mrs. Carlberg said.
Mr. Young agreed, calling the Enron collapse just a "speed bump" for the home of 2 million residents and 21 Fortune 500 companies.
Houston's swagger may have been "downsized" a bit, but the city remains upbeat, local Salomon Smith Barney stockbroker David Harris said. He didn't recommend Enron stock to his clients because it was overvalued, though he had no inkling about Enron's ruin.
A Michigan native, Mr. Harris predicts Houston may face a fall in some residential real estate prices, and entertainment spending may decrease. The fiscal effects haven't filtered down yet, he said, though it might be like a "Chinese water torture" over the next several months.
"We've learned a lot from the boom and subsequent bust of the '80s," said Mr. Harris, 45, who moved to Houston 16 years ago. "The boom this time was far more subdued, and therefore, any downside will be much more modest."
The collapse of Enron has left other ripples in its wake. Enron had been a major benefactor to local charities, and city officials say the money will not be easily replaced.
"It was profoundly philanthropic," said Peter Marzio, the director of the Museum of Fine Arts in Houston. Enron's collapse "will certainly have a short-term effect."
Of the $35.5 million corporations contributed to the museum from 1995 to 2000, about $1.7 million, or 5 percent, came from Enron, he said.
Another Enron effect is the name of the 2-year-old downtown stadium where the Houston Astros baseball team plays. Enron agreed to pay the team $100 million over 30 years for the naming rights, though the future of the stadium's name is uncertain.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

US Lindsey:Govt Response To Enron 'Tribute' To Capitalism

01/06/2002
Dow Jones International News
(Copyright (c) 2002, Dow Jones & Company, Inc.)

WASHINGTON -(Dow Jones)- Lawrence Lindsey, President George W. Bush's economic adviser, Sunday described as a "tribute to American capitalism" the U.S. government's decision not to intervene during the collapse of energy giant Enron Corp.
Appearing on the Fox News Sunday program, Lindsey also confirmed that he worked briefly for Enron as a consultant providing macroeconomic analysis.
Enron filed for Chapter 11 bankruptcy protection in early December 2001 amid allegations of accounting irregularities that have prompted several investigations.
"What I think is the story here that's going untold (is that) in no other country in the world would you have the seventh-largest company fail - Enron, with these alleged political connections - and the government would simply let it happen," Lindsey said.
"This is a tribute to American capitalism, I believe, that we have a profit and loss economy; that If you make mistakes - and clearly mistakes were made by Enron - that the government is not going to step and save it. No one is proposing to do that," he said.
Enron, Lindsey said, pursued a strategy common among major corporations by making financial contributions to both major political parties. Fox News reported the President's economic counselor received $50,000 from Enron in 2000, and Lindsey was asked at one point whether he might become the victim of a Republican version of "Whitewater," referring to the investigations into the business dealings of former President Bill Clinton and his wife, Senator Hillary Rodham Clinton.
"I gave them (Enron) macroeconomic advice and if that's the case, so be it," he replied.

-By Damian Milverton, Dow Jones Newswires; 202-862-9272; damian.milverton@dowjones.com

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

News
Texas powers up for deregulation ; Skeptics recall California debacle
Judith Graham, Tribune national correspondent

01/07/2002
Chicago Tribune
North Sports Final ; N
1
(Copyright 2002 by the Chicago Tribune)

Last year gave a black eye to one of the great economic experiments of the late 1990s: deregulation of energy markets. Now energy-rich Texas is rolling out an ambitious deregulation plan, hoping to succeed where others, particularly California, have failed.
The nation's second-most-populous state is the great hope for free- market advocates, who say that unfettered competition among power companies will lower prices and improve choices for businesses and consumers. But Texas faces many hurdles, including skeptical consumers.
Few can forget the panic early in 2001 that surrounded rolling blackouts in California, where deregulation failed spectacularly and cost the state billions of dollars in bailouts and other expenses. Pennsylvania, once held up as a model by free-market advocates, also fell upon hard times last year, as prices spiked and electricity companies exited the state.
Texas-based Enron Inc., the most aggressive advocate of free energy markets in the United States, suffered a disastrous unraveling of fortunes at year's end and plunged into bankruptcy, with a record- setting $32 billion in debt. Feeling the need for greater caution, several states--Arkansas, Montana, Oklahoma, Oregon, Nevada, New Mexico and West Virginia among them -- have delayed or stopped plans to deregulate electricity.
But Texas, with its customary swagger, promises that its new open- markets energy plan will prove the benefits of the free-market gospel. The plan went into effect last Tuesday, covering much of the state and as many as 4.5 million customers.
"We're doing this right. We are not California," said Brett Perlman, a commissioner with the Texas Public Utility Commission, a regulatory agency.
"We desperately need a good story," said Ken Malloy, president of The Center for the Advancement of Energy Markets, a pro-competition think tank based in Burke, Va.
"If Texas fails, it will be a very, very hard blow, an even bigger disaster than California," Malloy warned.
Supporters of deregulation argue California's experience was an aberration, not a symbol of what is wrong with policies they have proposed. By contrast, they say, the new energy plan in Texas is a model of careful and intelligent planning.
"Texas has probably the best-thought-out system for deregulating electricity out there," said John O'Brien, the principal with Skipping Stone Inc., an energy consulting firm.
"Beyond that, it's got a great deal of symbolic significance because it's a plan from an energy-rich state signed off on by then- governor, now president, Bush," he added.
Enron's fall casts dread
Enron's demise has cast a shadow on the endeavor. Not only was the Houston-based company one of the primary supporters of deregulation, but it also planned to compete in the power business through subsidiaries or companies in which it held a substantial ownership interest.
Recently, Mario Max Yzaguirre, the chairman of the Texas Public Utility Commission and a former Enron executive, has been embroiled in controversy because of previously undisclosed ties to the company. The commission was responsible for implementing the 1999 deregulation legislation.
Illinois officials will be watching Texas with interest, as they prepare for the start-up of retail competition for electricity consumers, which begins in May.
Like Illinois, Texas adopted a staged approach to deregulation. In 1995, the Lone Star State lifted monopolistic restraints on wholesale electricity markets, giving incentives for new power generators to come to the state. Since then, 39 power plants have been built, 20 have started construction and 29 more have been proposed.
The result is an abundant supply of electricity for Texas, which meets its energy needs almost entirely from in-state production-- unlike California. Texas has a 23 percent cushion of excess supply over peak demand, well above the 15 percent cushion recommended by industry analysts.
Even with the state's rapid population growth and its enormous appetite for energy, especially during the brutally hot summers, a similarly substantial cushion should hold for several years, said Terry Hadley, a spokesman for the Texas Public Utility Commission.
"If California had the [supply] reserves that Texas has, the California crisis would have never occurred," O'Brien said, echoing a view expressed by several analysts.
Others are not convinced.
"In 1998, California believed there would be a glut of capacity, just like Texas does today," said Severin Borenstein, an economics professor with the University of California's Energy Institute. "We learned that a glut can dry up quickly. And Texas doesn't seem to appreciate the ability of sellers in a tight market to exercise market power and jack up prices."
Plan gets a good mark
One mark in its favor, analysts said, is that the Texas plan allows more pricing flexibility than California's. Twice a year, utilities can seek adjustments in rates, based on fluctuations in the cost of energy supplies such as natural gas. It will be several years before rates become entirely market-driven.
Like other states, Texas had to sell its package politically by guaranteeing savings to consumers.
By law, savings for existing utilities had to be at least 6 percent. But actual rate reductions this year will be between 11 percent and 17 percent, in large part because of lower natural gas prices. Only existing utilities' rates are regulated; new competitors can charge whatever they want.
Several of the new companies entering Texas' electricity market have complained, arguing that rates are set too low to allow meaningful competition. The companies have asked: Why should consumers switch when they can get such a good deal from their existing electricity providers?
"It's going to be very hard to turn a profit," said Marcie Zlotnik, president of GEXA Energy, one of the new entries.
Consumer advocates fought hard to keep the low rates intact.
"Our overall concern has been that consumers will not receive the promised benefits of competition," said Janee Briesemeister, senior policy analyst in the Austin office of Consumers Union.
Texas has put in place several important consumer protections, she acknowledged, including prohibitions against switching customers without their knowledge. The law also requires that marketing information be standardized so people can make meaningful comparisons between plans.
So far, competition on the residential side of the business does not appear robust. Although 41 companies have registered to enter the power business in Texas, only about five are marketing to households. The the business marketplace is seeing much more activity, said Gillan Taddune, president of the Texas region of Green Mountain Energy Co., which is touting its wind-powered product.
"I'd like to see another major company enter the residential market," she said.
Analysts look to June
Texas officials say it may take several years before competition really takes hold. But some analysts think early indications of the state's progress with deregulation will come sooner.
"By the time June or July rolls around, we'll be able to make some good initial judgments," O'Brien, the consultant with Skipping Stone.
"I think the Texas plan will work. If it doesn't, I won't call that fatal, but it'll be very hard for our industry to recover," he said.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Texas Lets Consumers Pick Power Source As Other States Are Watching Experiment
By Kristen McNamara
Dow Jones Newswires

01/07/2002
The Wall Street Journal
A19C
(Copyright (c) 2002, Dow Jones & Company, Inc.)

With meltdowns in California and Enron Corp. at either end, electricity deregulation may have had its worst year ever. But a number of states are nevertheless pushing ahead plans to open their markets to competition.
Those moves are being led by Texas, which has planned to allow the vast majority of its consumers to choose their power provider as of yesterday -- a year after an electricity crisis threatened to plunge California into darkness and a month after Enron, once the country's largest trader of power and natural gas, filed for bankruptcy-law protection.
Texas' effort ranks as the country's second-largest experiment with deregulation -- right behind California's -- and will affect eight million consumers. How well competition takes hold there could influence deregulation plans in other states, energy experts agreed. "I think everyone is watching Texas," said Sharon Reishus, associate director at Cambridge Energy Research Associates, a Massachusetts research firm. "It certainly is the key to restoring people's confidence that retail energy has a future."
Michigan and Virginia also planned to launch full retail competition on New Year's Day. In May, all residential consumers in Illinois will have the opportunity to choose an alternate power supplier.
But success in Texas won't necessarily translate into momentum in all regions. Lingering concerns over California's energy crisis may continue to stall deregulation plans in some states, some regulators and consumers advocates said.
Deregulation will affect most consumers in Texas, those under the Electric Reliability Council of Texas, or Ercot, which runs the power grid in all areas of the state except the Texas Panhandle and parts of the southeast and far west.
Conditions in Texas bode well for competition to take root, Ercot and some analysts said. Power supplies are plentiful, wholesale electricity prices are low and the retail rates Texas utilities must initially charge their customers are high enough to give other service providers room to compete, Ms. Reishus said.
Ercot ran a pilot program during the second half of 2001 under which 5% of customers in the region could switch providers and now says it is ready to open competition to all.
Computer glitches that surfaced during the trial phase have been worked out, and Ercot successfully tested the centralized computer-registration system in late November, said Tom Noel, the grid operator's chief operating officer. "We are very confident that everything is in excellent working order," he said. "I expect the transition from Dec. 31 to Jan. 1 to be very much like Y2K. It will just come and go."
It is difficult to estimate how many customers will seek alternate providers, but the migration will likely be gradual, rather than a frantic rush to switch in the first few days of deregulation, Mr. Noel said.
That has certainly been the case in other states, where even relatively successful efforts like Pennsylvania's have seen few residential customers willing to switch providers. Alternate suppliers in such states have complained they can't compete with the low rates state energy regulators have allowed incumbent utilities to offer.
A successful transition in Texas could help move deregulation forward elsewhere, Ms. Reishus said. "If it works there, we'll see some renewed optimism about the retail markets in general," she said.
About half of the states in the union have deregulated their retail electricity markets or are in some stage of laying the groundwork.
Though Texas is moving forward, some of its neighbors are having second thoughts. Arkansas and Oklahoma, along with a handful of other states, have sought to delay the start of competition, citing uncertainty about wholesale market development and the consequences for consumers.
That uncertainty was generated by California, where a poorly designed market structure and tight supplies produced soaring power costs and rolling blackouts, and left the state's two largest utilities unable to pay their bills. The state of California, which contends energy companies took advantage of a lack of oversight to manipulate the market and boost prices, has become the primary procurer of power for millions of consumers. As such, it has signed $43 billion in power-supply contracts that consumers will be paying off for the next decade.
Some of the 26 states that haven't passed deregulation laws, such as Wisconsin and Minnesota, have cited concerns about California-style problems as the reason for holding back.
---
Jon Kamp in Chicago contributed to this article.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Editorial
Investigating Enron

01/06/2002
The Washington Post
FINAL
B06
Copyright 2002, The Washington Post Co. All Rights Reserved

NO SERIOUS scandal in Washington is investigated just once, and Enron's spectacular collapse is generating multiple inquiries. So far three House committees and two Senate committees are looking into the energy trading firm's demise; the Justice Department, the Labor Department and the Securities and Exchange Commission are conducting three more postmortems. This hydra-headed inquisition is basically welcome, because Enron's bankruptcy raises many troubling issues. But its focus must remain on the regulatory failures that allowed the company to defraud shareholders and workers. Enron's links to the Bush administration, a tempting target for Democrat-controlled committees in the Senate, appear less salient for the moment.
The regulatory failures begin with the auditing profession. Over the past four years, Enron's accounts overstated its real earnings by half a billion dollars. At the end of 2000 Enron reported debts of $10.2 billion; in its bankruptcy filing last month, it listed debts of almost $40 billion. This sort of deception is supposed to be prevented by a firm's outside auditor, whose job is to certify the accuracy of accounts. But Arthur Andersen, the auditor in this case, knowingly certified misleading financial statements. In 1997 Andersen identified $51 million of problems in Enron's books. It suggested that these should be put right. But when its advice was ignored, it went ahead and certified Enron's accounts anyway.
This may not be the first time that Andersen turned a blind eye to dishonesty. The Securities and Exchange Commission has alleged that the firm's partners saw problems at two other big clients, Sunbeam Corp. and Waste Management Inc. According to the SEC, Andersen decided that the problems could be overlooked because they were not "material." In the Waste Management case, the SEC accused Andersen of fraud and the firm agreed to a settlement involving a fine of $7 million. In light of this track record, it is not very comforting that another big auditor, Deloitte Touche Tohmatsu, completed a peer review of Andersen on Wednesday and offered only minor criticisms of its operations. The whole edifice of self-regulation appears insufficiently robust. An important focus for Enron's inquisitors is to consider tougher oversight.
The second focus ought to concern pensions. Enron's employees were encouraged to invest their 401(k) plans in Enron stock, which came to make up more than half the assets in the company's retirement system. Enron's collapse therefore left many of the 4,500 U.S. employees who were laid off pensionless as well as jobless. This ill-advised concentration of risk exists at many firms. One study of retirement plans at 219 firms found that a fifth bet more than half their wealth on the company's own stock. Last month Sens. Barbara Boxer (D-Calif.) and Jon Corzine (D-N.J.) proposed legislation that would cap company stock at 20 percent of a retirement fund. Reform along these lines ought to be supported.
Fixing audit and pension rules is a meaty challenge. But some Democrats seem tempted to play down these issues in favor of focusing on links between Enron and the Bush administration. Kenneth Lay, Enron's chairman, has been President Bush's leading financial backer; he was consulted when the administration was drawing up its energy plan. But, barring further disclosures, this looks more like an instance of the generalized corruption of campaign finance than a shadow over the Bush team. The truth is that Enron showered money on many politicians of both parties, and especially on Texans. If Democrats are outraged by this, they should push for campaign finance reform rather than attacking the administration.

http://www.washingtonpost.com
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Crossroads
Investigating Enron Corp.
RUBY

01/06/2002
The Milwaukee Journal Sentinel
All
04J
Copyright 2002 Journal Sentinel Inc. (Note: This notice does not apply to those news items already copyrighted and received through wire services or other media)

Investigating Enron Corp.
By RUBY
Sunday, January 6, 2002
About the same time the Winter Olympics are gearing up in Salt Lake City, other games will be under way at a venue nearly a continent away. The collapse of Enron Corp., the giant energy and trading company, has sparked an investigative groundswell in Washington. This is as it should be: Enron's spectacular sinking spell has raised questions about the probity of financial reporting and auditing, the integrity of the company's top brass, whether ordinary employees were prevented from selling shares while officers were dumping theirs and the quality and quantity of government regulation. The war on terrorism is mandatory Job One for the U.S. government, but cleaning out the Enron sewer may be Job Two.
The Securities and Exchange Commission is the lead government agency investigating Enron right now. The company was a Wall Street darling less than a year ago when its stock price was nearly $90 a share. But investor confidence imploded following stories of alleged insider partnerships and downgraded earnings forecasts. By the time Enron sought protection under bankruptcy laws, its stock had declined to less than $1 a share. It closed on Friday at 66 cents a share. In the process, thousands of employees invested in the company's stock through their 401(k) plans lost almost everything.
Congress is investigating, too, with several committees or subcommittees planning hearings. To prevent a real circus, these congressional inquiries ought to be consolidated -- ideally, into a special joint committee of the House and Senate that would be co- chaired by members named by House Speaker Dennis Hastert (R-Ill.) and Senate Majority Leader Tom Daschle (D-S.D.). This joint committee would have the same subpoena powers as a standing committee, and its members obviously could seek guidance from outside experts.
But the objective is to get to the bottom of the Enron debacle, find out what went wrong and whether individuals are culpable, and take prosecutorial action if appropriate. That objective will be better achieved if the effort is not scattered throughout the government.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

INSIGHT
JOAN RYAN
The 401(k) terrorists
Joan Ryan

01/06/2002
The San Francisco Chronicle
FINAL
D.1
(Copyright 2002)

They were the secretaries and bookkeepers and engineers who brought their families to the company picnic every year and drank their morning coffee from company mugs. All the magazines said Enron was one of the best companies in America, so they squeezed 30,000 extra miles from the family car to put aside a bit of every paycheck to buy company stock.
When the 401(k) statement arrived each month, they slept easier that night. Even when rumors surfaced that Enron was faltering, employees were assured it was media gossip.
Marie Thibaut, a 61-year-old executive assistant, had planned to retire from Enron at the end of 2002. She finally could help her exhausted father in Michigan care for her mother, who suffered from Alzheimer's. And she wanted to spend time with her four grandchildren.
By August 2001, her 401(k) had grown to almost $500,000 -- enough with Social Security to provide a comfortable retirement and maybe leave a little something to her kids.
Then, just like that, the money was gone, lost in the biggest bankruptcy in American history.
"You can't believe it's happening," she said by phone from Houston the other day. "It's like an out-of-body experience."
Of all the ideas and institutions we took for granted as recently as six months ago -- our electoral system, our national security, our civil liberties -- none has shaken the confidence of more Americans than the sudden and colossal collapse of that sure-thing, Wall- Street-darling Enron.
Perhaps this sounds politically insensitive, but I fear the upper management of the companies that comprise my pension fund more than I fear the upper management of al Qaeda. The truth is, the cold indifference inside an American boardroom is more likely to cripple any one of us than the cold indifference inside an Afghan cave.
The executives at Enron knew the company was in trouble as early as last spring. But chairman Ken Lay repeatedly assured employees their 401(k)s were safe, even as lawyers and accountants shuttled money among partnerships to keep the company afloat.
In December, after reports had become public about inflated earnings, hidden losses and secret deals, Enron filed for bankruptcy, vaporizing what was once more than $50 billion of shareholders' wealth. But Lay, former chief executive Jeffrey Skilling and other insiders had already saved themselves. They had been cashing in millions of dollars' worth of shares at premium prices.
The employees, however, were locked inside the sinking ship. Enron froze their 401(k) plans just when stock prices began to plummet to less than 60 cents a share. People like Marie Thibaut watched helplessly, prohibited from withdrawing their money until it was too late. They also watched, in horror and disbelief, as Enron distributed more than $100 million in bonuses to a select group of executives and other employees.
Thibaut's savings has now dwindled to about $22,000. And she has been laid off, leaving Enron with just $4,500 in severance pay for 15 years of service.
"We believed in our company. We believed in Ken Lay. He kept telling us not to worry, that everything was OK," Thibaut said. "I hope these people go to jail."
On Monday, she will start a new job with Shell Oil at a lower salary, and she feels lucky to have it. She will begin to build a new pension account. She has to keep working for at least another five years to become vested.
Ken Lay and his colleagues will move on, too. One imagines they'll play 18 at Kapalua during Easter week and dig a pond at the ranch for summer fishing and land at another corporation with cappuccino in the executive kitchen.
American law doesn't define what these men have done as terrorism. So they do not qualify for trial in front of a tribunal to account for the pain and fear they've spread.
I propose we make an exception.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Interview: Senators John McCain and Joseph Lieberman discuss the war in Afghanistan and the US economy

01/06/2002
NBC News: Meet the Press
(c) Copyright 2002, National Broadcasting Company, Inc. All Rights Reserved.
Excerpt Only
MR. RUSSERT: And we are back and joined by Senators Joe Lieberman and John McCain. They're heading for Afghanistan and Pakistan this morning, are in Tashkent, Uzbekistan. Senator McCain, you just heard Mr. Karzai talk about the frustration of trying to find Mohammad Omar. Are you confident that we will take him into custody eventually?
**********************************************
MR. RUSSERT: Senator McCain, and, Senator Lieberman--let me start with Senator McCain first--how serious do you think the investigation into the collapse of Enron is for the Bush administration?
SEN. McCAIN: I don't know, because we've just begun the investigation, but there sure was a lot of money washing around. And I'll be very interested to see what we find out. And, clearly, I don't understand some of the machinations that took place that allowed executives to make millions of dollars while the shareholders are left holding the bag.
MR. RUSSERT: Senator Lieberman, how serious is the Enron investigation?
SEN. LIEBERMAN: Well, the Enron investigation is very serious. The focus of it is not in the first instance on a connection between anybody in the Bush administration and the folks at Enron, but, you know, to do a thorough investigation, you've got to ask that question, certainly, down the road. And the question that we're going to ask on our committee is: Where were the oversight agencies of the federal government? Could they have done more? And what about the auditors and outside directors of Enron? And what about these strange offshore entities, partnerships that were created by executives of Enron, which traded with the company, in some cases seeming to create a market, that then drew average Americans to put their money into the company and lose an awful lot of it?
So this is an unprecedented event. The largest bankruptcy in American history. And unless we look at it thoroughly and ask all the questions, the danger is it's going to happen again and a lot more average folks are going to lose a lot of hard-earned money.
MR. RUSSERT: Democratic Senator Joe Lieberman, Republican Senator John McCain. And we'll be right back.
(Announcements)

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

News; Domestic
Interview With John Breaux
Robert Novak, Al Hunt

01/06/2002
CNN: Evans Novak Hunt & Shields
(c) Copyright eMediaMillWorks, Inc. (f/k/a Federal Document Clearing House, Inc.). All Rights Reserved.

Louisiana Democratic Senator John Breaux discusses the possible composition of economic stimulus legislation.
ROBERT NOVAK, CO-HOST: I'm Robert Novak. Al Hunt and I will question a leader of the bipartisan Centrist Coalition in Congress.
AL HUNT, CO-HOST: He is Democratic Senator John Breaux of Louisiana.
(BEGIN VIDEOTAPE)
Excerpt Only
************************************
HUNT: Senator Breaux, Enron, as you know, only months ago, one of the highest values companies in America, has gone bankrupt, top executives that walked away with millions from the sweetheart deals, while thousands of workers have lost their pensions. A lot of talk about the identification with George Bush and the Republican Party. They also have contributed to a number of Democrats. I think you were the 11th-largest Senate recipient of Enron funds over the last 12 years. They had street fair for you at a previous Democratic convention.
As you look at that company now, do you think Enron was merely a victim of an economic downturn or do you think it was an ethical and perhaps even criminal scam?
BREAUX: It wasn't a street fair; that was a Mardi Gras party, in the finest New Orleans tradition.
HUNT: I stand corrected.
BREAUX: The Enron thing is a mess and I think that it's going to be properly looked at at the very highest level. It's already been investigated by a number of congressional committees, and they should look into it. I think that some of the activities of some of the leaders of that corporation right before it tanked is absolutely unacceptable.
I mean, it was obvious to me that somebody knew what they were doing by bailing out of the company, while they were in leadership positions. The people who were hurt the most were the individuals or the every-day working guy and lady who had their lifetime savings invested in their stock. And there were some terrible things -- wrong things that were done. And I think it's going to come out.
HUNT: One thing that is alleged is that Ken Lay, the former CEO, and the company had an enormous amount of influence in helping Dick Cheney put together the Bush energy package, reportedly even some veto power over some measures.
Do you think that all ought to be revealed? Should Vice President Cheney have to tell the American public and the Congress what role Ken Lay and Enron played in formulating the Bush-Cheney energy policy?
BREAUX: Whether he should or shouldn't, I think he's probably going to have to. I think the political situation, I think, is going to require that they pretty much divulge everybody that, perhaps, they talked to and got recommendations.
I want to say, however, I have no problems talking to energy companies about getting recommendations on energy. I mean, what do you do? Talk to people who know nothing about the problem, and then listen to what they have to say?
I think you have to go to people that know something about the process and know something about developing energy to develop an energy policy. So I have no problems with the fact that they consulted with people in the business. I think they should have.
But I think also, they're going to have to say that and have to disclose it now.
********
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Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Editorial
Culpable Executives

01/06/2002
The Washington Post
FINAL
B06
Copyright 2002, The Washington Post Co. All Rights Reserved

Kenneth Lay should be in the spotlight on the Enron scandal ["Enron Executives Face Subpoenas," Business, Jan. 3]. As head of Enron, he is ultimately answerable and culpable. No one should take a fall for him. He exploited shareholders. He deceived analysts, suppliers and customers. He gamed the system and took, unfairly, all the personal wealth he could. He cost many employees their jobs through predatory and poor fiscal judgment. Maybe we should start a category labeled business terrorists.
FRANK SLAVICK
Superior, Colo.
http://www.washingtonpost.com
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved.

Sarah Palmer
Internal Communications Manager
Enron Public Relations
(713) 853-9843