Message-ID: <15111552.1075841109495.JavaMail.evans@thyme> Date: Wed, 30 Jan 2002 07:22:55 -0800 (PST) From: sarah.palmer@enron.com To: sarah.palmer@enron.com Subject: Enron Mentions -- 01/30/02 Mime-Version: 1.0 Content-Type: text/plain; charset=ANSI_X3.4-1968 Content-Transfer-Encoding: quoted-printable X-From: Palmer, Sarah X-To: Palmer, Sarah X-cc: X-bcc: X-Folder: \ExMerge - Martin, Thomas A.\Deleted Items X-Origin: MARTIN-T X-FileName: tom martin 6-25-02.PST New Enron Chief Likes Challenges; Cooper Known as Blunt, Creative Strategis= t The Washington Post, 01/30/2002 Accounting for Enron: Enron Selects Cooper of Zolfo Cooper For Post of Acti= ng CEO, Succeeding Lay The Wall Street Journal, 01/30/2002 ENRON'S MANY STRANDS: THE TURNAROUND EFFORT Enron Names an Interim Chief to Oversee Its Bankruptcy The New York Times, 01/30/2002 Video: Angry employee demanded to know if Lay on crack Reuters, 01/30/2002 ENRON'S MANY STRANDS: THE TV INTERVIEW Did NBC Let Lay's Wife Get Around Hard Issues? The New York Times, 01/30/2002 Ill. Regulators Vote To Remove Enron Energy-Sale Rights Dow Jones Energy Service, 01/30/2002 House Panel Seen Asking Enron Board Members To Testify Dow Jones Energy Service, 01/30/2002 Enron failed to disclose full lobbying expenses=20 Associated Press, 01/30/2002 ENRON'S MANY STRANDS: THE DOCUMENTS Enron Says Shredding of Records Was Not Stopped Until Recently The New York Times, 01/30/2002 Prosecutors, FBI Pore Over Enron's Books; Responsibility for Company's Demi= se Is Shrouded by Mystery Partners, Offshore Entities The Washington Post, 01/30/2002 Enron Puts Stock in Turnaround Specialist RELATED STORY More scrutiny: Regu= lators are probing whether Enron inflated California power prices. A12 Los Angeles Times, 01/30/2002 ENRON'S MANY STRANDS: THE ACCOUNTING Fuzzy Rules Of Accounting And Enron The New York Times, 01/30/2002 Andersen's Reputation in Shreds. The accounting firm was once considered th= e industry's conscience. But the Enron scandal has revealed the dark side o= f the profession. Los Angeles Times, 01/30/2002 Accounting for Enron: U.S. Probes Enron's Effect on Power Prices The Wall Street Journal, 01/30/2002 U.S. to Probe Enron Tie to Energy Prices; Senators From West Voice Concern = About Alleged Manipulation The Washington Post, 01/30/2002 Accounting for Enron: Davis Polk Is Barred From Enron Work For J.P. Morgan = Chase The Wall Street Journal, 01/30/2002 Burden of Doubt: Stocks Take a Beating As Accounting Worries Spread Beyond = Enron --- Investors Ignore Good News About Economy; Banks Are a Focus of Se= lling --- `A Big Haircut' for Some The Wall Street Journal, 01/30/2002 At Energy Firm, A Post-Enron Double-Check The Washington Post, 01/30/2002 Ex-Enron workers feel jilted by Bush=20 Houston Chronicle, 01/30/2002 Sempra buys metals business from Enron Associated Press Newswires, 01/30/2002 DENMARK: Enron Wind "too risky" for German rival Nordex. Reuters English News Service, 01/30/2002 . . . And the Enron Pundits The Washington Post, 01/30/2002 Greedy Liars? The Enron Scandal; TheBIGStory An Occasional Look at Stories = Everyone Is Talking About The Washington Post, 01/30/2002 Open Cheney's Enron Baggage to Scrutiny Los Angeles Times, 01/30/2002 Attorney general's opinion is sought Media has asked to see suicide note=20 Houston Chronicle, 01/30/2002 ENRON'S MANY STRANDS: AN EXECUTIVE'S DEATH Hometown Remembers Man Who Wore Success Quietly The New York Times, 01/30/2002 ___________________________________________________________________________= ____________ Financial New Enron Chief Likes Challenges; Cooper Known as Blunt, Creative Strategis= t Albert B. Crenshaw Washington Post Staff Writer 01/30/2002 The Washington Post FINAL E01 Copyright 2002, The Washington Post Co. All Rights Reserved Corporate turnaround expert Stephen F. Cooper likes to rate restructuring j= obs on a scale of 1 to 10, with 10 being the most difficult.=20 "I would rather work on a 10 than a 4," he told the Toronto Globe and Mail = two years ago as he took over at Burlington, Ont.-based Laidlaw Inc. -- par= ent of the Greyhound bus line -- shortly before it entered bankruptcy. Now he may have has his "10" -- at bankrupt Enron Corp., where Cooper was n= amed interim chief executive yesterday. He replaces company founder Kenneth= L. Lay, who resigned last week under pressure from creditors.=20 Cooper said his group will start immediately.=20 "Our focus is on the future of Enron," he said in a statement released by E= nron. "With more than 19,000 employees worldwide, Enron has real businesses= with real value. We will work closely with the board of directors, managem= ent and the creditors committee to develop a reorganization plan to maximiz= e value for the company's stakeholders."=20 Whether Enron will survive in any form is highly uncertain, however. The co= mpany has at least $40 billion in debt, with the full extent of its liabili= ties from hundreds of partnerships and related companies as yet unknown. In= addition, most of its known assets are heavily mortgaged, and some of its = viable operations have already been sold off.=20 Enron's cornerstone energy-trading operation was sold earlier this month to= UBS Warburg, a Swiss bank, and Enron announced yesterday that its presiden= t and chief operating officer, Lawrence G. Whalley, had resigned to go with= UBS Warburg. Earlier, Enron ceded control of its largest pipeline to its H= ouston-based rival, Dynegy Inc. And yesterday, Enron agreed to sell its Lon= don-based metals-trading unit for $145 million to Sempra Energy.=20 It is possible all of Enron's remaining assets will also have to be sold to= pay creditors, and some experts said Cooper's main challenge may be hammer= ing out an agreement among creditors on how to divide up the proceeds.=20 As managing principal of Zolfo Cooper LLC, a New York and Los Angeles-based= firm specializing in the reorganization of corporations in bankruptcy or o= ther difficult circumstances, Cooper has worked with such troubled companie= s as Macy's parent Federated Department Stores Inc., appliance maker Sunbea= m Corp. and construction firm Morrison Knudsen.=20 The firm "has terrific cachet in the workout community," said Stephen H. Ca= se of the Washington office of Dave, Polk & Wardwell. "They are very much i= n demand and highly respected."=20 Cooper is known as blunt-spoken, pulling no punches about what a company ou= ght to do to survive, and creative in coming up with strategies to achieve = those goals.=20 And as an executive who tries to rescue companies in extremis, he has won s= ome and lost some.=20 One of his biggest victories was at Federated, which filed for Chapter 11 p= rotection in 1990 and emerged two years later. Federated owns Bloomingdale'= s and other department-store chains as well as Macy's.=20 Federated, once owned by Canadian developer Robert Campeau, was a basically= solid business that was overwhelmed by junk-bond debt from the 1980s takeo= ver binge. Cooper was able to cobble together a large retail firm from the = wreckage and have it in the black by late 1992.=20 At the other end of the scale, Bradlees, a chain of discount department sto= res operating in the Northeast, turned out not to be viable and was liquida= ted, with unsecured creditors receiving 22 cents on the dollar.=20 Cooper is a graduate of Occidental College and holds an MBA from the Wharto= n School of the University of Pennsylvania. He was not available for commen= t yesterday. http://www.washingtonpost.com=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Accounting for Enron: Enron Selects Cooper of Zolfo Cooper For Post of Acti= ng CEO, Succeeding Lay By Rebecca Smith Staff Reporter of The Wall Street Journal 01/30/2002 The Wall Street Journal A4 (Copyright (c) 2002, Dow Jones & Company, Inc.) Enron Corp. said it named Stephen Cooper, a principal at New York restructu= ring firm Zolfo Cooper, as acting chief executive officer, succeeding Kenne= th Lay, who resigned from the embattled energy concern last week.=20 In his new role, Mr. Cooper, 55 years old, faces the daunting challenge of = shepherding Enron through the biggest bankruptcy case in U.S. history. The = appointment had been expected. Enron still employs some 19,000 people, alth= ough the company has been mired in Chapter 11 bankruptcy-court proceedings = since last month, which shields it from creditors as it attempts to reorgan= ize. Meantime, Enron's board is continuing to search for a chairman, a position = also held by Mr. Lay. Those close to the matter say that Enron is seeking s= omeone with a high public stature. The idea is for this person to be someth= ing of an ambassador to Congress, which now has nearly a dozen committees i= nvestigating Enron's business practices.=20 Mr. Cooper, who declined an interview request yesterday, is expected to run= Enron on a day-to-day basis and help it navigate the bankruptcy process. I= t is expected that he will leave the post if the company emerges from bankr= uptcy proceedings. Previously, Enron noted, he has worked on the bankruptcy= proceedings of Laidlaw Inc., Morrison Knudsen Corp., Sunbeam Corp., Federa= ted Department Stores Inc., as well as many other big-name Chapter 11 cases= .=20 Those who know Mr. Cooper describe him as an energetic deal maker who is go= od at getting to the crux of issues. In a room filled with suit-and-tie-cla= d bankruptcy attorneys, Mr. Cooper often stands out for his casual dress. W= hen discussions get contentious, he is known to defuse the tension with hum= or then redirects discussions back in the direction of solutions.=20 "He's a very interesting person, and I can't say that about a lot of the pe= ople you deal with when you're in bankruptcy," said Peter Widdrington, chai= rman of Laidlaw, the big Toronto-based transportation company that operates= school buses in the U.S. and Canada and owns Greyhound bus lines. Laidlaw = filed for bankruptcy protection last summer, and Mr. Cooper has been advisi= ng it on how to emerge from court proceedings.=20 Mr. Widdrington said Mr. Cooper has indicated that he will continue to work= 20 hours a week for Laidlaw, as specified in his contract. "I'm not unconc= erned about the fact he's now working with Enron," said Mr. Widdrington, bu= t he added that others at Mr. Cooper's firm are capable of "stepping in."= =20 Some observers wonder whether Mr. Cooper will, for all his talents, be able= to lead Enron out of bankruptcy; they speculate that the company could wel= l be liquidated in the end. In all, Enron's bankrupt entities have liabilit= ies exceeding $30 billion.=20 Mr. Cooper will work most closely with Jeff McMahon, Enron's chief financia= l officer, who yesterday was named president and chief operating officer, a= nd with Ray Bowen, formerly treasurer, who will step into Mr. McMahon's fin= ance job.=20 Greg Whalley, named president of Enron last summer by Mr. Lay, has resigned= to take a senior level job at UBS AG's UBS Warburg, which this month bough= t Enron's energy-trading business.=20 Separately, Texas Deputy Attorney General Jeff Boyd filed a motion in the U= .S. Bankruptcy Court of the Southern District of New York -- where Enron's = case is being heard -- asking the court to appoint an additional creditors = committee to represent the interests of former and retired Enron employees.= =20 "While the major financial creditors of Enron have a right to adequate repr= esentation in the bankruptcy case, so do the thousands of former and retire= d Enron employees who are the least able, on an individual basis, to partic= ipate meaningfully in this case," Mr. Boyd said in a statement.=20 Meanwhile, Sempra Energy Trading, a unit of San Diego-based Sempra Energy, = said it will pay $145 million for Enron's London-based metals trading busin= ess, formerly Metallgesellschaft Ltd. The transaction, subject to final aud= it, is expected to be completed by Feb. 4. Don Felsinger, head of Sempra's = unregulated operations, said the Enron unit has been profitable "since its = inception . . . and we expect this track record of success to continue."=20 ---=20 Joann S. Lublin contributed to this article. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Business/Financial Desk; Section C ENRON'S MANY STRANDS: THE TURNAROUND EFFORT Enron Names an Interim Chief to Oversee Its Bankruptcy By SHAILA K. DEWAN With JENNIFER 8. LEE 01/30/2002 The New York Times Page 7, Column 1 c. 2002 New York Times Company HOUSTON, Jan. 29 -- Enron today named Stephen F. Cooper, a specialist in re= vamping troubled companies, to lead it through the largest bankruptcy in th= e nation's history.=20 Mr. Cooper, who will serve as Enron's interim chief executive, fills the to= p position vacated by Kenneth L. Lay, who resigned last Wednesday as chief = executive and chairman under pressure from the company's creditors. Enron is still searching for a chairman, who will serve as the political fa= ce of the company in Washington, where it is being investigated by Congress= , the Securities and Exchange Commission and the Department of Justice.=20 Mr. Cooper, 55, has been involved in prominent bankruptcies, including thos= e of Federated Department Stores and Trans World Airlines. But sorting out = Enron's tangled and opaque finances will be the biggest challenge of his ca= reer, bankruptcy experts said.=20 Enron also named Jeffrey McMahon president and chief operating officer. He = succeeds Lawrence G. Whalley, who resigned to take a position with UBS Warb= urg, which bought the energy trading business that was once the centerpiece= of Enron's success.=20 Mr. McMahon, who was named in a letter by a former employee, Sherron S. Wat= kins, as one executive who complained about the company's conflicts of inte= rest, became chief financial officer after the forced resignation in Octobe= r of Andrew S. Fastow, who managed some of the partnerships that helped bri= ng the company to ruin. Raymond M. Bowen Jr., formerly the treasurer, was a= ppointed executive vice president and chief financial officer.=20 Mr. Cooper, a managing partner at Zolfo Cooper, a boutique advisory firm fo= r companies in trouble, was the leading candidate to replace Mr. Lay. In se= lecting candidates for the Enron board to interview, the creditors committe= e decided to focus on specialists in corporate turnarounds, rather than chi= ef executives with marquee names.=20 ''Our focus is on the future of Enron,'' Mr. Cooper said in a statement. ''= Enron has real businesses with real value. We will work closely with the bo= ard of directors, management and the creditors committee to develop a reorg= anization plan to maximize value for the company's stakeholders.''=20 Mr. Cooper is known for his ability to balance the interests of warring fac= tions.=20 ''He's a person who can get in there and see where the bodies are buried an= d see what things are needed to calm the waters,'' said Sandra E. Mayerson,= a bankruptcy lawyer at Holland & Knight who represents several of Enron's = smaller creditors.=20 Still, some creditors not represented on the committee reacted with only a = cautious optimism, praising the naming of an outsider to run the company bu= t noting that the terms of Mr. Cooper's contract, which calls for him to be= paid an hourly wage with a bonus if he meets certain goals, have not yet b= een made public.=20 ''We're going to keep an open mind as to Mr. Cooper and his team,'' said Da= vid Bennett, a lawyer who represents a group of oil and gas companies owed = about $100 million. ''To have someone with restructuring experience is a go= od thing.''=20 While a few creditors have asked for a court-appointed trustee to oversee t= he reorganization, some said that the choice of an outsider might satisfy t= hem. ''He's going to bring credibility to the situation,'' Ms. Mayerson sai= d. ''I think if you hadn't gotten him involved in management, there would h= ave been movement for an examiner or a trustee. He can serve that function = as well as the C.E.O. function. So you are getting two functions for the pr= ice of one.''=20 A lawyer for the Wiser Oil Company, another creditor that has asked for a t= rustee, declined to comment.=20 Some bankruptcy experts have questioned Mr. Cooper's lack of experience as = a chief executive. But Mr. Cooper's defenders point out that what is needed= in Enron's case is someone intimately familiar with bankruptcy, not someon= e who can lead or innovate in the context of a healthy company.=20 ''He's a person who knows the ins and outs of restructuring and a person wh= o knows the ins and outs of forensic accounting,'' said Deborah Hicks Midan= ek, a principal for Glass & Associates, a Zolfo competitor.=20 Mr. Cooper began work today, sending Enron employees a voice mail message p= raising the work force and expressing confidence that the company would eve= ntually emerge from bankruptcy in some form. But many outside experts maint= ain that Enron may have little choice but to sell its viable businesses and= eventually shut down.=20 Mr. Cooper has largely avoided the spotlight, even as he has advised or man= aged well-known companies in crisis.=20 He grew up in Indiana and received his M.B.A. from the Wharton School in 19= 70. At the accounting firm of Touche Ross, now a part of Deloitte & Touche,= he and Frank Zolfo, now retired, founded the reorganization advisory group= and were early advocates for bankruptcy as an area of specialty.=20 In the early 1990's, Mr. Cooper served as an adviser to Federated, the owne= r of Bloomingdale's and Macy's, as it worked through its bankruptcy. In par= t because of the aggressive timelines Mr. Cooper set, the Federated bankrup= tcy proceeding took only two years instead of the five years that some anal= ysts had predicted.=20 He also served as an adviser in two of T.W.A.'s bankruptcies.=20 Even as he takes the Enron job, Mr. Cooper continues to serve as vice chair= man and chief restructuring officer of the Canadian conglomerate Laidlaw In= c., the largest North American ground transportation company, whose holding= s include Greyhound Lines. Though he was called in to help the debt-burdene= d company stave off bankruptcy in 2000, Laidlaw filed for protection from c= reditors in June 2001.=20 ''When we did eventually file for bankruptcy, we did it in a very orderly b= asis, and that had a lot to do with his efforts,'' said Peter Widdrington, = the chairman of Laidlaw. Mr. Cooper cleared a major obstacle by negotiating= a recent $55.4 million settlement, announced two weeks ago, in a class- ac= tion lawsuit against Laidlaw.=20 On a scale of one to 10, Mr. Cooper told a Canadian newspaper, he rated Lai= dlaw a 4 for complexity. ''I would rather work on a 10 than a 4,'' he said.= =20 Enron, then, is his wish come true.=20 Stephen F. Cooper=20 BORN: Oct. 23, 1946, Gary, Ind.=20 EDUCATION: B.S. in economics, Occidental College, 1968; M.B.A., Wharton Sch= ool of Business, 1970.=20 CAREER HIGHLIGHTS: 1970-1985 -- Helped found reorganziation advisory group = at Touche Ross & Co., which later became part of Deloitte & Touche. 1985 --= Joined advisory firm Zolfo, which was renamed Zolfo Cooper. 1990-1992 -- A= dvised Federated Department Stores on reorganization. 1995-1996 -- Adviser = to Morrison Knudsen during its reorganization. 2000-current -- Vice chairma= n and chief restructuring officer of Laidlaw, an Ontario-based conglomerate= . The company filed for bankruptcy protection in June 2001. 2001-current --= Advised Washington Group International, a company formed when Morrison Knu= dsen acquired Raytheon Engineers and Constructors, on reorganization.=20 FAMILY: Nancie, wife, with two daughters.=20 HOBBIES: Golf, tennis, skiing, biking, gardening. Photos: Enron has appointed Stephen F. Cooper, left, as interim chief execu= tive, Jeffrey McMahon as president and chief operating officer, and Raymond= M. Bowen Jr., right, as chief financial officer.=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Video: Angry employee demanded to know if Lay on crack=20 Reuters News Services=20 Jan. 30, 2002, 8:26AM WASHINGTON - A video of an Enron staff meeting, held as the former energy g= iant began to unravel, showed former chief Kenneth Lay under fire from empl= oyees, one of whom demanded to know if he was on crack.=20 "I would like to know if you are on crack. If so that would explain a lot, = if not you may want to start because it's going to be a long time before we= trust you again," was one written comment Lay read out at the meeting, hel= d Oct. 23.=20 "I think that's probably not a very happy employee, and that's understandab= le," Lay said in response.=20 Enron, once the world's largest energy trader and a Wall Street darling, ma= de the largest bankruptcy filing in U.S. history on Dec. 2. Damning allegat= ions of insider trading and financial misdeeds evaporated investor confiden= ce, threw thousands out of work and wiped out workers' retirement savings.= =20 The staff meeting, aired today on NBC's Today show, happened just days afte= r Enron reported its first quarterly loss in over four years after taking c= harges of $1 billion on poorly performing businesses.=20 In the video, Lay, who last week quit as Enron's chairman and chief executi= ve officer, apologized to his workers and promised to get back money they l= ost when the company's share price plummeted.=20 "Let me say right up front, I am absolutely heartbroken about what's happen= ed both over the last few months and more importantly the last several days= ," he told glum-faced employees.=20 "Many of you, who were a lot wealthier six to nine months ago, are now conc= erned about college education for your kids, maybe the mortgage on your hou= se, maybe your retirement and for that I am incredibly sorry. But we're goi= ng to get it back."=20 Earlier this week Lay's wife Linda said her family lost its fortune when En= ron, the once-proud linchpin of the Houston economy and national energy mar= ket, collapsed.=20 "There's nothing left. Everything we had mostly was in the one stock... Oth= er than the home we live in, everything else is for sale.. We are fighting = for liquidity," she said.=20 But NBC said they had found at least 10 homes or lots, owned by the couple,= that were not listed for sale and were worth about $10 million.=20 The network said Lay was entitled to a severance package of $25 million. An= d as of Jan. 1, the former-Enron chief owned more than $5 million in two co= mpanies -- with 340,724 shares in the No. 2 Houston computer-maker Compaq a= nd 20,220 in drugmaker Eli Lilly.=20 USA: Video shows Enron employee asked if Lay was on crack. 01/30/2002 Reuters English News Service (C) Reuters Limited 2002. WASHINGTON, Jan 30 (Reuters) - A video broadcast on Wednesday of an Enron s= taff meeting, held as the former energy giant began to unravel, showed its = former chief Kenneth Lay under fire from employees, one of whom demanded to= know if he was on crack.=20 "I would like to know if you are on crack. If so that would explain a lot, = if not you may want to start because it's going to be a long time before we= trust you again," was one written comment Lay read out at the meeting, hel= d on Oct. 23. "I think that's probably not a very happy employee and that's understandabl= e," Lay said in response.=20 Enron, once the world's largest energy trader and a Wall Street darling, ma= de the largest bankruptcy filing in U.S. history on Dec. 2. Damning allegat= ions of insider trading and financial misdeeds evaporated investor confiden= ce, threw thousands out of work and wiped out workers' retirement savings.= =20 The staff meeting, aired on Wednesday on NBC's "Today" show, happened just = days after Enron reported its first quarterly loss in over four years after= taking charges of $1 billion on poorly performing businesses.=20 In the video Lay, who last week quit as Enron's chairman and chief executiv= e officer, apologized to his workers and promised to get back money they lo= st when the company's share price plummeted.=20 "Let me say right up front, I am absolutely heartbroken about what's happen= ed both over the last few months and more importantly the last several days= ," he told glum-faced employees.=20 "Many of you, who were a lot wealthier six to nine months ago, are now conc= erned about college education for your kids, maybe the mortgage on your hou= se, maybe your retirement and for that I am incredibly sorry. But we're goi= ng to get it back."=20 Earlier this week Lay's wife Linda said her family lost its fortune when En= ron, the once-proud linchpin of the Houston economy and national energy mar= ket, collapsed.=20 "There's nothing left. Everything we had mostly was in the one stock... Oth= er than the home we live in, everything else is for sale.. We are fighting = for liquidity," she said.=20 But NBC said they had found at least 10 homes or lots, owned by the couple,= that were not listed for sale and were worth about $10 million.=20 The network said Lay was entitled to a severance package of $25 million. An= d as of Jan. 1, the former-Enron chief owned more than $5 million in two co= mpanies - with 340,724 shares in the No. 2 personal computer company Compaq= and 20,220 in drugmaker Eli Lilly. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Business/Financial Desk; Section C ENRON'S MANY STRANDS: THE TV INTERVIEW Did NBC Let Lay's Wife Get Around Hard Issues? By FELICITY BARRINGER 01/30/2002 The New York Times Page 7, Column 6 c. 2002 New York Times Company Lisa Myers, the NBC Capitol Hill correspondent long known as tough-minded, = left much of her aggressive edge at the door on Saturday when she did an ex= clusive interview with the wife of Kenneth L. Lay, the former chief executi= ve of Enron.=20 As a result, Linda Lay felt comfortable enough to say that she and her husb= and, who took home about $200 million worth of cash and stock the last four= years, ''are fighting for liquidity.'' ''We don't want to go bankrupt,'' she added. ''Other than the home we live = in, everything else is for sale.''=20 So should Ms. Myers earn praise from her colleagues for eliciting such a ne= wsworthy -- and, to former Enron employees, infuriating -- statement? Or di= d she shirk her duty by failing to grill Mrs. Lay on the details of where a= ll the money went, accepting the answer: ''There's nothing left. Everything= we had mostly was in Enron stock.''=20 For 10 minutes on Monday on the NBC News program ''Today'' and for another = 6 minutes yesterday, Mrs. Lay, the couple's children, Mr. Lay's former wife= and his pastor were given a platform to praise the integrity of the man wh= o Ms. Myers said in a separate report ''led Enron to great heights and to r= uin.''=20 Ms. Myers, while challenging Mrs. Lay in general terms on issues like Mr. L= ay's responsibility for Enron's collapse, gave the Lay family plenty of roo= m to make the case for him, free of prosecutory inquiry.=20 This led some journalists and media critics to ask whether the network and = one of its sharp-edged correspondents had become soft.=20 Ken Auletta, who covers media companies for The New Yorker, said: ''Lisa My= ers has proven over the years that she knows how to ask tough questions and= be in-your-face aggressive. With this she proved she has another pitch, to= draw people out.''=20 He added: ''That's commendable. But there's another pitch, a combination of= solicitous and tough questions. We didn't see that third pitch'' in the in= terview, he said.=20 But Richard Wald, a former ABC News executive who is now a professor at the= Columbia University Graduate School of Journalism, said aggression was oft= en counterproductive. ''What you wanted was a sense of what this woman was = like,'' Mr. Wald said. ''I had the feeling she shot herself in the foot.''= =20 One core question raised by critics was how much leeway an interviewer shou= ld give when the only person who can be enticed before the camera's eye is = a surrogate -- a wife, a friend, a child -- for the newsmaker the journalis= t really wants to interview. ''She's not a main character in the drama,'' M= r. Wald said, ''she's a peripheral character now putting herself forward.''= =20 Don Hewitt, executive producer of the CBS News program ''60 Minutes,'' had = not seen the interview, but said: ''When you invite somebody in and you mak= e it apparent that you want to discuss the business at hand, there are no g= round rules. If she knows that much about what he made and what they lost a= nd what they don't have, she's qualified to answer all the rest of the ques= tions.''=20 Ms. Myers said: ''I dealt with her on the broad strokes of every significan= t issue of potential misconduct that had been raised about her husband. But= you cannot go into all the minutiae.''=20 A second question, Ms. Myers and Mr. Wald say, is the extent to which relen= tless critical scrutiny can and should be balanced with sympathetic coverag= e.=20 In another report this month, Ms. Myers captured the tone and substance of = much of her Enron coverage. In it, she described an optimistic Mr. Lay sayi= ng in October that ''we had a good strong quarter.'' Ms. Myers followed by = saying: ''Six weeks later, Enron laid off 4,000 employees and declared bank= ruptcy, costing thousands of workers their life savings. Tonight, Enron had= no comment on why it didn't level with the public last fall.''=20 Ms. Myers said yesterday that she and the network should be judged by ''the= totality of the coverage.''=20 Last night, a Myers report on the defense of Mr. Lay's family included crit= ical commentary by business experts. Another NBC reporter, Jim Avila, also = reported on the Lay's $10 million in real estate holdings and $5 million in= stock and interviewed an Enron employee who was incredulous about Mrs. Lay= 's claim that her family was nearly broke.=20 As for the amount of time given to the defense of Mr. Lay, she said, ''We w= anted to let the family make all the points they wanted to make -- they hav= e a right to be heard from -- the amount of time they've gotten for their p= oint of view has been dwarfed by the hours and hours of critical coverage.'= ' Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Ill. Regulators Vote To Remove Enron Energy-Sale Rights Of DOW JONES NEWSWIRES 01/30/2002 Dow Jones Energy Service (Copyright (c) 2002, Dow Jones & Company, Inc.) By Jon Kamp CHICAGO (Dow Jones)--The Illinois Commerce Commission approved an order Tue= sday to strip an Enron Corp. (ENRNQ) unit of its right to sell electricity = to retail customers in the state.=20 Illinois law requires retail electric providers such as Enron Energy Servic= es to be backed by a company with at least an investment-grade credit ratin= g. Major ratings firms dropped Enron to below that level last November, and= while EES has maintained hundreds of customers around the U.S. despite joi= ning its parent in bankruptcy court, it is missing needed criteria to opera= te in Illinois, the ICC said.=20 "As a result of Enron's ratings downgrades, EES can no longer rely on the E= nron guarantee to demonstrate that it is in compliance" with state law, the= ICC said in its order.=20 Enron's certificate won't be immediately revoked. Instead, Tuesday's order = starts a process in which an administrative law judge will review the issue= , and will give Enron an undermined amount of time to show why it should re= tain its certificate, ICC spokesman Beth Bosch said.=20 The commission said in its order that EES was notified Nov. 30 that it had = 30 days to demonstrate it had financial resources to meet the state's crite= ria. But EES hasn't provided any documentation since then, the order said.= =20 An EES representative didn't return repeated calls seeking comment.=20 ICC Commissioner Ruth Kretschmer said EES has already informally suggested = it will voluntarily give up its right to serve retail customers in Illinois= .=20 "My understanding is that they have offered to relinquish the certificate,"= Kretschmer said in an interview.=20 But Kretschmer still expects there will be a review process to determine ex= actly how Tuesday's order impacts EES' ability to do business in Illinois. = While the company had dozens of Chicago-area customers before its parent's = collapse, including the city of Chicago and PepsiCo Inc. (PEP) unit Quaker = Oats Co., the ICC said EES wasn't actually supplying electricity for any of= its Illinois customers.=20 Instead, EES was acting as a billing agent and manager, helping mostly larg= e commercial and industrial customers manage their energy use and restructu= re deals with local utilities, such as Exelon Corp.'s (EXC) Commonwealth Ed= ison Co. Kretschmer said it is unclear whether EES needs the retail electri= city provider to serve in such a capacity.=20 "We probably won't have an answer until we go through the (review) process,= " Kretschmer said.=20 While EES may not have directly served customers with power, some energy ma= nagement deals were a foothold to later energy provider service. In its eig= ht-year contract signed with the city of Chicago last summer, for example, = Enron was to provide management services for the first few years and then a= ctual electricity for the remainder of the deal.=20 The city of Chicago canceled its Enron deal in early December. Quaker Oats,= the University of Chicago and the Archdiocese of Chicago have also backed = out of their EES contracts in the wake of Enron's financial troubles.=20 EES was a large player in Illinois' young, deregulated retail electric mark= etplace, but Kretschmer said she doesn't see its withdrawal hindering the g= rowth of competition.=20 "There are a number of other big players that can pick up what Enron lost,"= she said. "I don't think it will have a negative impact here."=20 -By Jon Kamp, Dow Jones Newswires; 312-750-4129; jon.kamp@dowjones.com Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 House Panel Seen Asking Enron Board Members To Testify By Jason Leopold 01/30/2002 Dow Jones Energy Service (Copyright (c) 2002, Dow Jones & Company, Inc.) Of DOW JONES NEWSWIRES=20 (This article was originally published Tuesday.) LOS ANGELES (Dow Jones)--Members of Enron Corp.'s (ENRNQ) board of director= s are expected to be asked next week to testify before the House Energy and= Commerce Committee, a lawyer representing the board said Tuesday.=20 The board members will appear before the committee whether or not they are = subpoenaed and will answer all questions, attorney Neil Eggleston said.=20 "I expect something will happen in the next day or so regarding their appea= rance," Eggleston said. "We were notified already, but we should know for s= ure by next week."=20 Peter Sheffield, a spokesman for the committee, said Tuesday that he expect= s committee Chairman Billy Tauzin, R-La., to issue subpoenas next week to c= ompel members of Enron's board to testify, possibly by mid-February.=20 Enron's former Chairman and Chief Executive Ken Lay, who resigned last week= but remains on the board, is scheduled to testify before the House committ= ee on Monday. Enron's board is named in a number of civil and class action = lawsuits associated with the company's collapse. Its audit committee review= ed some of the off-balance sheet partnerships now at the center of federal investigations, and the full board voted twice to suspend Enron's code of e= thics to allow former Chief Financial Officer Andrew Fastow to run partners= hips even as he served as an officer for Enron. Eggleston said last week Enron's board of directors didn't learn until Octo= ber that an Enron executive had serious concerns accounting improprieties c= ould bring down the company, although word of those concerns had spread thr= oughout the company by early September.=20 The executive, Sherron Watkins, raised her concerns with Lay in August. Tho= se concerns were shared with the board after being reviewed at Lay's reques= t by Vinson & Elkins, Enron's outside law firm, Eggleston said last week.= =20 According to Eggleston, Robert Jaedicke, the chairman of the board's audit = committee, became aware of Watkins' concerns a few days before the committe= e met on Oct. 8. Vinson & Elkins advised others on the committee at the mee= ting, and the rest of the board was informed a couple of days before the fi= rm released its report.=20 The firm submitted its findings in a report dated Oct. 15, concluding that = the company's handling of its off-balance-sheet partnerships was proper but= could be portrayed in a way that could be damaging to Enron.=20 Enron has declined to challenge Eggleston's account.=20 Some members of Enron's board - including audit committee members Ronnie Ch= an, chairman of the Hang Lung Group in Hong Kong; John Wakeham, chairman of= the Press Complaints Commission in the U.K.; and Paulo V. Ferraz Pereira, = executive vice president of Group Bozano in Brazil - reside outside the U.S= .=20 Eggleston said he didn't know if those board members would travel to the U.= S. to testify.=20 -By Jason Leopold, Dow Jones Newswires; 323-658-3874; jason.leopold@dowjone= s.com Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Enron failed to disclose full lobbying expenses=20 Associated Press=20 Jan. 30, 2002, 6:53AM WASHINGTON - Enron Corp. apparently failed to disclose many of its lobbying= expenses to Congress last year as the energy trader headed toward financia= l disaster.=20 Enron acknowledged the problem Tuesday night after a private group that tra= cks money in politics compared Enron's lobbying filing to Congress in Augus= t with congressional filings by outside lobbying firms. The lobbying firms = say they were paid more than $1.6 million by Enron for the first six months= of 2001. Enron reported spending $825,000.=20 Enron spokeswoman Karen Denne said the company's spending figure submitted = to Congress last Aug. 15 is meant to cover lobbying by the company's own st= aff and work by outside lobbying firms.=20 "We are reviewing those fees and will respond in writing to the secretary o= f the Senate," Denne said.=20 Among the lobbyists doing work for Enron were Republican strategist Ed Gill= espie; ex-Sen. J. Bennett Johnston, a Louisiana Democratic; and current Rep= ublican Party chief Marc Racicot; and two ex-aides to House Majority Whip T= om DeLay. Racicot still collects a salary from his firm but said when he to= ok the GOP post he would no longer lobby for Enron. In the face of mounting= criticism, Racicot has since given up his other lobbying clients as well.= =20 The discrepancy in Enron's lobbying expenses was discovered by the Washingt= on-based Center for Responsive Politics. Its executive director, Larry Nobl= e, said "it is particularly critical at this time for the public to have th= e full picture of Enron's lobbying activities."=20 Also on Tuesday, Enron's political action committee said it donated at leas= t $26,000 to congressional campaigns in November, the month before the comp= any filed for bankruptcy protection. Recipients included several lawmakers = on the committees now investigating Enron's collapse. At least two, Rep. Ma= ry Bono, R-Calif., and Rep. Greg Walden, R-Ore., plan to give their donatio= ns to charity.=20 The Enron PAC donated at least $120,188 to federal candidates and fund-rais= ing committees last year, the report shows.=20 In another development, the issue of document-shredding re-emerged at Enron= , with the company saying it hired private companies to destroy documents. = Robert Bennett, an attorney representing the company, said the discarded do= cuments were not sensitive financial records, and any suggestion of any imp= ropriety was "a bunch of nonsense."=20 Enron hired two companies, one of them named Shredco, to destroy a huge vol= ume of material, ABC News reported Tuesday night.=20 "There was a contract with a company when Enron consolidated down from two = buildings to one building," Bennett said. "There was a lot of information i= ncluding payroll records, resumes, Social Security numbers. These trucks ca= me in in the light of day."=20 "Even if they're shredding old newspapers, they need to contact the Justice= Department" to get permission to do so and allay suspicions, said Rep. Jim= Greenwood, R-Pa., who chairs the House Energy and Commerce oversight and i= nvestigations subcommittee looking into Enron.=20 FBI agents have been investigating allegations of massive shredding of docu= ments at Enron's Houston headquarters. The company's auditor, Arthur Anders= en LLP, has acknowledged destroying Enron-related documents and e-mails tha= t were sought by federal and congressional investigators.=20 Business/Financial Desk; Section A ENRON'S MANY STRANDS: THE DOCUMENTS Enron Says Shredding of Records Was Not Stopped Until Recently By BARNABY J. FEDER and MICHAEL BRICK 01/30/2002 The New York Times Page 1, Column 1 c. 2002 New York Times Company Enron acknowledged yesterday that it had contracted until mid-January with = commercial shredding companies to destroy company records.=20 The disclosure outraged a congressman whose subcommittee is investigating d= ocument destruction at Enron and its accounting firm, Arthur Andersen, thou= gh Enron insisted that the records being destroyed were unrelated to the co= ntinuing investigations of the company's collapse. F.B.I. agents were in the company's Houston headquarters as recently as Mon= day, government officials said. They have been working there to preserve po= tential evidence since last week, when an employee came forward to say docu= ments were being shredded earlier in the month.=20 In Washington, House Republican leaders backed President Bush and Vice Pres= ident Dick Cheney in their refusal to tell Congress about contacts between = Enron and the administration's energy task force. But several Republican se= nators called on the White House to disclose the information. [Page C1.]=20 Mark Palmer, an Enron spokesman, said the commercial shredding was a routin= e matter. The materials destroyed by a private company, Shredco, included i= tems like payroll runs, old personnel records, performance reviews, medical= records and other items that he called ''sensitive employee documents.''= =20 Representative James Greenwood, the Pennsylvania Republican who is chairman= of the investigative subcommittee of the House Energy and Commerce Committ= ee, said last night that he was dismayed that even routine shredding had co= ntinued for so long at Enron.=20 ''It is stunning to me that this company, which is being investigated by th= e Congress, by the Justice Department, by the S.E.C., would get anywhere ne= ar a shredder without at least seeking the permission of the Justice Depart= ment and others, so that everyone is clear on what it is that they were shr= edding,'' Mr. Greenwood said. ''Otherwise they are either incredibly arroga= nt and out of control, or somebody's incredibly stupid.''=20 As for Andersen, the Energy and Commerce Committee sent the firm a letter d= emanding details of its internal investigation of document shredding, as we= ll as information about any consulting work it did on a score of Enron's co= mplex partnership deals.=20 And computer experts said in interviews that the majority -- perhaps nearly= all -- of the destroyed Andersen and Enron materials could be recovered by= electronic means.=20 Brian Sierra, a Justice Department spokesman, declined yesterday to comment= on whether agents had secured computer hard drives and other electronic me= dia at Enron. Asked if the F.B.I. had succeeded in preventing any further d= estruction of potential evidence at the company, he said, ''We certainly ho= pe so.''=20 Mr. Palmer said that all shredding at Enron had ceased as of Jan. 14, after= the first reports of document destruction at Andersen.=20 ''A lot of things are stacking up that under normal circumstances we would = destroy and employees would want us to destroy,'' he said.=20 Last week, when Maureen Castaneda, a former Enron executive, disclosed that= the company was continuing to shred documents in its accounting department= , the company insisted that it had issued several directives stating that '= 'all relevant documents should be preserved in light of pending litigation.= ''=20 But those directives, issued as e-mail messages beginning on Oct. 25, began= by specifying only certain materials related to investigations that had co= me to light. At the end of October, the company issued a broader message te= lling employees to preserve just about all documents.=20 On Jan. 14, another directive was issued by Enron's general counsel, James = Derrick Jr., to ''remind all employees, that, as earlier instructed, in vie= w of the pending and threatened legal proceedings involving the company, no= company records, either in electronic or paper form, should be destroyed.'= '=20 One Enron employee who insisted on not being identified said that on Friday= the company had gathered up the shredders on each floor of its headquarter= s and put them into sealed-off areas, but that the machines had not been re= moved from the building.=20 At Andersen, the focus was on electronic records. The firm has hired ASR Da= ta Acquisition and Analysis, a small computer forensics firm, to recover co= mputer records that may have been deleted or overwritten.=20 Because nearly all paper documents these days are created on computers, inv= estigators say that recovering the electronic materials is likely to be far= more important to sorting out what happened than gathering and reassemblin= g shredded paper documents.=20 ASR, based in Cedar Park, Tex., declined to describe in any detail its work= for Andersen and for Davis, Polk & Wardwell, the law firm that Andersen ha= s hired to investigate its dealings with Enron.=20 Andrew S. Rosen, president of ASR, said the extent of his inquiry was ''sti= ll emerging.'' He added that while it was generally easy to recover deleted= data, figuring out who deleted it and when -- crucial information for Cong= ressional and criminal investigators -- is much harder.=20 ''This is like an onion,'' Mr. Rosen said. ''The first layers come off easi= ly, but it gets harder and makes you cry as you go deeper.''=20 Andersen itself is anxious to complete the investigation because the firm's= senior management believes that the inquiry will show that potentially ill= egal activities were confined to a handful of individuals. The firm is stru= ggling to retain customers amid growing concerns that its reputation has be= en irreparably damaged.=20 Andersen, based in Chicago, has promised to issue a complete report on its = Enron dealings in a few days. The Energy and Commerce Committee, in its let= ter yesterday, asked Andersen to disclose by tomorrow who was being intervi= ewed as part of the investigation, anyone identified as taking part in the = destruction of records and the details of Andersen's engagement of Davis, P= olk.=20 The continuing pressures come at a crucial time for Andersen as it tries to= head off client defections.=20 The Wall Street Journal reported yesterday that Delta Air Lines would give = other firms the opportunity this spring to bid for the auditing job now per= formed by Andersen. Peggy Estes, a Delta spokeswoman, described the process= as a normal one for the company.=20 Other big Andersen clients, like Utilicorp United of Kansas City, Mo., and = International Paper of Stamford, Conn., said they were conducting similar r= eviews. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 A Section Prosecutors, FBI Pore Over Enron's Books; Responsibility for Company's Demi= se Is Shrouded by Mystery Partners, Offshore Entities Susan Schmidt Washington Post Staff Writer 01/30/2002 The Washington Post FINAL A06 Copyright 2002, The Washington Post Co. All Rights Reserved Enron's ex-chairman Kenneth Lay says he was in the dark; his subordinates s= ay he knew of their deals. The company insists accountants approved its off= -the-books partnerships, but Arthur Andersen says key facts were withheld. = Creditors are demanding payment; the board of directors is eyeing the stagg= ering stock profits made by former executives.=20 The finger-pointing has started in earnest now that more than 60 prosecutor= s and FBI agents swarm over Enron's books, trying to untangle a web of myst= ery partners and offshore entities that swapped and hedged the Houston-base= d company's debt. There is still a vast amount unknown -- and no proof so far of criminal int= ent by Enron officials -- as the Justice Department ramps up its investigat= ion of the energy giant's collapse. At this early stage, legal experts and = lawyers close to the probe say, it may not even be clear who the chief inve= stigative targets should be.=20 Prosecutors are casting about for the right witnesses to guide them through= the complexity, a decision that could prove crucial to their success. They= are likely to offer deals with some people in exchange for information and= testimony. Of central interest is Lay's role at the company, and that of f= ormer executives Andrew Fastow and Jeffrey Skilling, principal architects o= f the hundreds of partnerships.=20 "You have to decide who you want to scapegoat -- who you want to build your= case toward," said Donald Langevoort, a securities law professor Georgetow= n University. The choice goes beyond strictly legal questions, he said, for= it helps establish a public face for the inquiry.=20 "Would you rather this be a Kenneth Lay story or the story of a highly ambi= tious second in command?" Langevoort said. "Who you portray as the bad guy = is a political decision."=20 Prosecutors have focused their early attention on the shredding of Enron re= cords at the Arthur Andersen auditing firm, though it's not clear that will= lead them to the principal figures at Enron. Bringing an obstruction-of-ju= stice case against Andersen may be a relatively quick call, lawyers close t= o the probe said, if it's found that documents were destroyed after officia= ls knew they could be sought in legal proceedings.=20 Investigators have collected numerous Andersen e-mails and memos dealing wi= th the retention or destruction of documents. The lead Andersen auditor on = the Enron account, who was fired by the company for allegedly orchestrating= the shredding, has already spent seven hours with the Justice Department's= Enron task force telling prosecutors about the role he says higher-ups pla= yed in the document destruction.=20 Any underlying fraud and securities cases against Enron and Andersen will b= e much more difficult to sort out. Securities law experts closely tracking = the Enron saga said possible wrongdoing may include insider trading, materi= al misrepresentations to the Securities and Exchange Commission or to the p= ublic in press releases, as well as mail and wire fraud.=20 "Serious questions have been posed, but whether anyone is criminally liable= for anything is not known yet," said Joel Seligman, dean of Washington Uni= versity School of Law. Whether charges are brought, he said, likely rests o= n information not yet pieced together.=20 "Why did people destroy so many documents?" Seligman said. "What was potent= ially so unnerving in those documents for Enron and Arthur Andersen? I'd re= ally like to know the answer to that question."=20 Investigators are poring over reams of company records and trying to recons= truct what was shredded, both at Enron and Arthur Andersen. Help from insid= ers would be vital to speed the investigation along and illuminate what can= 't be readily gleaned from company records.=20 Forty FBI accountants have been dispatched to Houston to examine Enron's bo= oks. But former Enron executives and lawyers close to the case say there is= only so much the paper trail will reveal. Heading the investigation is fra= ud division chief Joshua Hochberg, with coordination of prosecutors across = the country by Leslie Caldwell, former chief of the securities fraud unit i= n the U.S. attorney's office in San Francisco.=20 The most pressing unknown at this point may be who the real players are in = the more than 1,000 Enron-related private partnerships and investment group= s, many of which were kept off the company books. Those entities hid compan= y debt and pumped up the company's stock, which Enron executives cashed out= for hundreds of millions of dollars.=20 It may take an insider to reveal those names, because they are not on compa= ny records. Even Enron's lawyers say they don't have them. Similarly, it ma= y require an inside source to help prosecutors decide if there is a tax eva= sion case to be made from the partnerships located in the Cayman Islands.= =20 The prospect of an obstruction case against Arthur Andersen seems to have s= haken at least one important potential witness loose already. David B. Dunc= an, Andersen's lead auditor on the Enron account, has met with the Justice = Department Enron task force twice. His lawyers said he is cooperating, but = he has not so far entered into any deal with prosecutors.=20 Duncan is in a position to know what went on at both companies and about th= e partnerships themselves. Enron executives came up with the partnership co= ncepts and the accountants "tweaked" the financial setups, said one source = familiar with the accountant's work.=20 The early phase of the investigation may turn on how far up the chain the d= ocument destruction investigation goes at Andersen. Duncan has told congres= sional investigators he believed he was following direction from company la= wyer Nancy Temple.=20 In October, with shareholders filing lawsuits against Enron and the SEC pre= paring an inquiry, Temple sent Duncan's group an e-mail reminding him of th= e Andersen document retention policy. It called for the retention of some d= ocuments and the destruction of others. A week later, Temple e-mailed the p= olicy to two high-level Chicago partners who were reviewing the Enron audit= and the way the partnerships had been reviewed.=20 Yesterday, the House Energy and Commerce Committee demanded information fro= m Andersen about Enron document destruction, which the company has acknowle= dged went beyond the Houston office. Committee investigators also are inter= ested in the role of Andersen's outside lawyers, the New York-based law fir= m of Davis, Polk and Wardwell.=20 The firm was hired Oct. 9. It has declined to comment on what advice it gav= e Andersen and Temple about preserving documents. Temple testified before C= ongress that the firm advised her to send out an e-mail on Nov. 10 -- three= weeks after the SEC began probing Enron -- saying it was time to start pre= serving documents.=20 Davis, Polk and Wardwell is conducting Andersen's internal investigation of= the document destruction, prompting questions among committee staffers abo= ut the objectivity of the investigation. http://www.washingtonpost.com=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Business; Business Desk Enron Puts Stock in Turnaround Specialist RELATED STORY More scrutiny: Regu= lators are probing whether Enron inflated California power prices. A12 JEFF LEEDS and LEE ROMNEY TIMES STAFF WRITERS 01/30/2002 Los Angeles Times Home Edition C-1 Copyright 2002 / The Times Mirror Company HOUSTON -- Eight weeks after going broke, Enron Corp. selected management c= onsultant Stephen Cooper as interim chief executive to steer the fallen ene= rgy giant through Bankruptcy Court, a battery of shareholder lawsuits and a= criminal probe.=20 Board members tapped Cooper, a principal of New York-based turnaround firm = Zolfo Cooper, less than a week after the resignation of Chairman and Chief = Executive Kenneth L. Lay. The board has not named a new chairman. Cooper, 55, said Tuesday that "Enron has real businesses with real value." = But whether he can restructure the firm and handle the complex legal issues= to allow it to keep operating remained an open question, analysts said.=20 Enron already has sold a majority stake in its commodities trading business= , which generated about 90% of the $100 billion in revenue it reported for = 2000. The company also has handed control of its largest pipeline to Housto= n-based rival Dynegy Inc., and expects to sell its Portland General Electri= c division for an estimated $3 billion to Northwest Natural Gas Co. Enron's= remaining assets, including smaller pipelines and utilities outside the U.= S., accounted for just a fraction of its revenue.=20 But Cooper, in a voicemail disseminated to Enron's employees, offered an op= timistic take on the company's current divisions.=20 "The physical assets look to me to be of an enormous advantage here," Coope= r said. "The regulated assets--the pipelines and generating plants-- provid= e reliable, steady cash flow and returns. And they provide a very sound, fu= ndamental base to restructure around."=20 Many experts, however, expressed doubt Cooper will be able to do anything m= ore than sell off Enron in pieces.=20 "I find it hard to envision a workable entity coming out of bankruptcy here= ," said Andre Meade, a utilities analyst for Commerzbank Securities. "The o= nly business that really makes sense is a smaller version of what Enron was= in the first place--a small gas-pipeline company, but the demands of the i= ndustry over the last couple of years have basically eliminated all small-p= ipeline companies."=20 Enron is still seeking a chairman, who must deal with the firm's interests = in Washington, where it is under attack on Capitol Hill.=20 Steven Panagos, a partner at Zolfo Cooper, said the firm believes Enron has= enough cash to continue operations and emerge from bankruptcy. ''It has a = good customer base, it has a good supplier base and most importantly it has= plenty of liquidity,'' he said.=20 Cooper's biggest asset, analysts said, is whatever goodwill he can generate= from the creditors' committee. Cooper comes to the company as an outsider-= -an attribute sought by committee members who pushed for Lay's exit.=20 Cooper began studying company reorganizations while working as an accountan= t at Touche Ross, now known as Deloitte & Touche. In 1986, he joined a form= er colleague, Frank Zolfo, to form Zolfo Cooper. Cooper, a graduate of Occi= dental College in Los Angeles and the University of Pennsylvania's Wharton = School, declined interview requests Tuesday.=20 As part of the management shuffling announced Tuesday, Enron President and = Chief Operating Officer Lawrence G. Whalley resigned to take a post at UBS = Warburg, the Swiss bank that acquired Enron's trading division this month. = Enron also elevated Chief Financial Officer Jeff McMahon to succeed Whalley= and named treasurer Ray Bowen as CFO.=20 Shannon Burchett, president of Dallas-based energy firm specialist Risk Lim= ited Corp., noted that the promoted executives have not been implicated in = the scandal, but "if I were a creditor, what I'd like to see is a whole new= cast."=20 When Cooper was hired to help rescue troubled Canadian transportation firm = Laidlaw Inc. in mid-2000, he clearly identified the problem areas, Laidlaw = Chairman Peter Widdrington said.=20 "He can get deadlines established which initially look unrealistic, but the= more he sells the deadline to all involved, the more realistic they become= ," he said.=20 Some analysts noted that Cooper, a veteran of the bankruptcies of Federated= Department Stores and other firms, has little experience in the energy fie= ld.=20 But Widdrington, who has discussed the Enron debacle with Cooper, said, "St= eve himself is not awed by the task. He thinks essentially the operational = aspects of the company are still in decent shape."=20 Cooper plans to continue as Laidlaw's vice chairman and chief restructuring= officer.=20 Cooper's firm also has been consulting for Polaroid Corp. since last summer= and assisted the firm as it prepared to file for Chapter 11 bankruptcy pro= tection in October. Polaroid spokesman Skip Colcord said the company could = not comment on Zolfo Cooper's performance because Polaroid has not yet emer= ged from bankruptcy.=20 UCLA bankruptcy law professor Lynn LoPucki said Enron probably can emerge f= rom Chapter 11, but it probably will do so as a shadow of its former self. = "There will be a lot of pieces of things that survive from Enron, but they = aren't in any real sense Enron," he said. "One might carry the Enron name, = one might be the same legal entity, but they won't be anything like the pre= -bankruptcy Enron."=20 Michael J. Miller, a former Enron employee and a member of the organization= that sued Enron officials Monday for severance and other losses, said he r= emains hopeful that Cooper can squeeze cash flow from Enron's shell.=20 "Certainly we'll wish this guy well on his endeavors, but we're also going = to be watching what's going on," Miller said. "We have very high stakes."= =20 *=20 Leeds reported from Houston and Romney from Los Angeles. PHOTO: Stephen Cooper, 65, has an undergraduate degree from Occidental Coll= ege in Los Angeles.; ; PHOTOGRAPHER: Associated Press=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Business/Financial Desk; Section C ENRON'S MANY STRANDS: THE ACCOUNTING Fuzzy Rules Of Accounting And Enron By FLOYD NORRIS and KURT EICHENWALD 01/30/2002 The New York Times Page 1, Column 5 c. 2002 New York Times Company Enron collapsed after reporting strong profits for years, a fact that might= be seen as proof that the profits were illusory.=20 But even some accountants who are extremely critical of Enron's accounting = now say that accounting rules -- including one that was influenced by Enron= when it was being written -- give at least a veneer of acceptability to so= me of the most widely questioned Enron accounting practices. ''It's conceivable that they complied with the rules,'' said Douglas Carmic= hael, a professor of accountancy at Baruch College. ''Absent a smoking-gun = e-mail or something similar, it is an issue of trying to attack the reasona= bleness of the assumptions they made.''=20 The Enron case highlights a weakness in the system that exists to encourage= companies to fairly describe their financial health: when accounting rules= are written very specifically, clever accountants find ways to get around = them. When, as in this case, they are written far more generally, proper ac= counting can be overly reliant on the good faith of companies and auditors = in applying the rules.=20 As a result, the evidence that the Justice Department and the Securities an= d Exchange Commission would need to bring fraud charges would be documents = showing that accountants made estimates they knew to be unreasonable. To fi= nd such evidence, investigators would review internal memorandums and e-mai= l messages. But some of those appear to have been destroyed by employees of= Enron and its former auditor, Arthur Andersen.=20 The rule in question concerned trading in the energy business. When Enron's= energy services division agreed to supply power to a company at a fixed pr= ice, it made optimistic projections that energy prices would fall enough in= the future to guarantee Enron a healthy profit. It was then able to report= that profit as soon as it signed the contract -- long before it was clear = whether its optimistic assumptions would prove to be accurate.=20 ''It looked like a license to print money,'' said Glenn Dickson, a former m= anager in the energy services unit.=20 The decision that energy trading could be accounted for in the way that Enr= on used was made by the Emerging Issues Task Force, a group under the overs= ight of the Financial Accounting Standards Board, the principal accounting = rule maker in this country. It did so in 1999, after meeting with Enron, wh= ich was viewed as the leading company in energy trading.=20 Timothy S. Lucas, the director of research at the F.A.S.B. and the nonvotin= g chairman of the task force, said Enron's role was to provide information,= not to serve as a consultant. He said that, as he recalled, Enron had alre= ady begun using accounting similar to the accounting the task force wound u= p endorsing.=20 In retrospect, Mr. Lucas said, the task force may have erred by not requiri= ng more disclosures about the accounting used, particularly in long-term tr= ansactions.=20 ''There are suggestions for good information that we could add to the discl= osure that we simply did not think of,'' he said, adding that such disclosu= res would now be considered.=20 The accounting rule in question required Enron to ''mark to market'' the va= lue of its energy trades. Where there was an active market, as with stocks = or publicly traded bonds, that is relatively easy to do and difficult to ma= nipulate. But where there is no such market, companies were allowed by the = rules to use their own models to estimate fair value, and to treat that as = the market value.=20 The mark-to-market technique was used to report profits in some Enron busin= esses. When its energy services unit signed a power-supply contract with a = company, it would structure the deal to bring it under those accounting rul= es. It would then project electricity and natural gas prices for the full t= erm of the deal, which could last as long as 10 years, according to former = Enron officials.=20 Many of the contracts covered companies in states that had not yet deregula= ted their power markets. In those cases, Enron forecast when the states wou= ld deregulate those markets and then projected what prices would be under t= he currently nonexistent deregulated market.=20 Then, based on its projections, Enron would calculate its total profit over= the life of the contract. After discounting that figure to account for the= risk its customer would default and the fact that it would not receive mos= t payments for years, Enron would book the profit immediately.=20 Mr. Lucas said it had not occurred to him that anyone would use models to t= ry to forecast energy prices for 10 years, and then use those models to rep= ort profits, but that the rule had not placed a limit on such trades. He no= ted that any trade that required assumptions for such a long time would app= ear to be very risky.=20 A former Enron official has told associates that Arthur Andersen, Enron's a= uditor, took a number of issues related to Enron's accounting to the task f= orce. That official said Andersen accountants viewed the company's structur= ing of financial instruments to be on the cutting edge.=20 Andersen has a seat on the task force, as do each of the four other large a= ccounting firms. The other members among the 13 on the task force are 4 rep= resentatives of smaller accounting firms and 4 executives from large compan= ies. One industry seat is now vacant, after an executive from General Elect= ric left. The others are held by officials of J. P. Morgan, Exxon Mobil and= Dow Chemical.=20 The task force does not disclose who suggests topics, so it is not possible= to be certain which Enron issues were considered. But it appears that one = such issue came in 2000, when the task force addressed the question of what= should be done about what appeared to be the application of widely varying= approaches by energy traders to determine how much contracts were worth. T= he task force refused to specify how valuations should be made, leaving com= panies free to use methods they deemed best.=20 It is not possible to know how much, if at all, Enron would have been restr= ained from its aggressive accounting had the task force chosen to enact mor= e detailed rules. But Mr. Carmichael, the Baruch professor, said that an en= forcement case would be easier to make had the regulators ''set some kind o= f parameters on the ability to use an internal model.''=20 Absent such clarifying rules, he said, ''you would expect an auditor to com= e in and challenge the assumptions made.'' He said the investigation ''is l= ikely to delve into whether the assumptions were reasonable and to what ext= ent did Arthur Andersen challenge the reasonableness of the assumptions.'' = Internal Andersen memorandums could be crucial to making a case against the= auditor.=20 Edward W. Trott, who in 1998 was a member of the task force representing KP= MG, a large accounting firm, and who since 1999 has been a member of the F.= A.S.B., said in an interview that he believed that the right decisions were= made on how to account for energy trading.=20 But, he added, ''if you're telling me that somebody who wants to game the s= ystem can do it, you probably have a lot of evidence to support that.''=20 The accounting for energy services is not the only area in which Enron enga= ged in accounting that used rules in surprising ways.=20 In one transaction involving a joint venture with Blockbuster, Enron report= ed large profits even though the venture never attracted more than a few cu= stomers.=20 ''They were extremely clever,'' said Paul Brown, the chairman of the accoun= ting department at New York University.=20 In the Enron-Blockbuster deal, the two companies set up a pilot project, st= reaming videos to a few dozen apartments in Portland, Ore., from servers se= t up in the basement of the building. With that tiny beginning, Enron opene= d up a partnership, called Braveheart, which raised more than $115 million = from a bank in exchange for a promise of most of the earnings from the Bloc= kbuster deal for years.=20 Enron asserted that there was a market in broadband, and that its transacti= on amounted to one involving the transfer of financial assets. That meant i= t could report the transaction on a mark-to-market basis, similar to the wa= y it accounted for the energy trades. It applied its undisclosed model to c= alculate how much revenue it could report from the transaction, and reporte= d more than $110 million. Former executives say accountants at Arthur Ander= sen approved the accounting.=20 ''Nobody in the division could comprehend how they got Andersen to sign off= on that,'' one former senior executive in the broadband division said. ''I= t just didn't make any sense. When we heard what they did, everybody's mout= hs just hung open. We weren't doing business on any scale even close to tho= se numbers.''=20 The Wall Street Journal has reported that the bank that put up the money ha= d a guarantee from Enron that it would not lose money. From the bank's poin= t of view, that may have made the transaction look like a loan, but Enron s= ays the accounting came under an F.A.S.B. rule covering the securitization = of assets. Under that rule, accountants say, Enron could still treat the tr= ansaction as a sale, while reducing the profit to reflect the value of its = guarantee.=20 An Enron spokesman said the company believed that it had complied with appl= icable accounting rules. ''I'm sure all of these past transactions will be = investigated by lots of people,'' he said. ''Why don't we just wait and see= what the appropriate authorities decide?''=20 An auditor at one large firm not involved in the Enron case said it was com= mon for auditors to face creative ways to use accounting rules. ''These iss= ues can become very complex and very fact-specific,'' he said. ''You have a= lot of sharp pencils on Wall Street cooking up transactions to achieve a s= pecific result. Oftentimes, they understand the accounting rules as well as= or better than we do.''=20 Or, as Mr. Brown, the N.Y.U. professor, put it: ''It's the old adage of a F= .A.S.B. rule. It takes four years to write it, and it takes four minutes fo= r an astute investment banker to get around it.'' Chart: ''A Complicated Partnership With Debilitating Results'' Investigator= s are examining some of the deals that improved Enron's balance sheet but w= ere not part of its financial statements. Here is one in which Enron used a= partnership to increase its short-term earnings. 1. Enron signed a multiye= ar deal with Blockbuster to provide videos over Enron's broadband network. = Enron hoped to make millions of dollars off the deal. 2. Enron created a pa= rtnership called Braveheart whose purpose was to get someone to advance Enr= on the money it expected to make on the deal with Blockbuster. To capitaliz= e Braveheart, a small amount of money came from outside investors and Enron= lent the partnership some stock. 3. An outside investment bank gave Braveh= eart $115 million in return for a promise that most of the earnings from th= e Blockbuster deal would go directly to the bank. If the earnings were not = enough for the bank to recoup its investment, Enron promised that it would = repay the bank. 4. Enron recorded $110 million of the money invested in Bra= veheart as profit. Enron did not count all $115 million because, under an a= ccounting rule, it had to estimate the value of its guarantee to pay back t= he bank and reduce its revenue by that amount. PROBLEM: Blockbuster backed = out of the contract, leaving Enron responsible for repaying the bank. (pg. = C6)=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Financial Desk THE NATION COLUMN ONE Andersen's Reputation in Shreds The accounting firm w= as once considered the industry's conscience. But the Enron scandal has rev= ealed the dark side of the profession. RALPH FRAMMOLINO; JEFF LEEDS TIMES STAFF WRITERS 01/30/2002 Los Angeles Times Home Edition A-1 Copyright 2002 / The Times Mirror Company CHICAGO -- Think straight, talk straight.=20 That motto was coined by Arthur Edward Andersen, a Northwestern University = accounting professor who made standing up for what's right the bedrock prin= ciple of the company he founded 88 years ago. What John Wayne was to westerns, Andersen was to accounting--demanding abso= lute honesty and probity from employees and clients alike. Andersen's fasti= diousness even extended to an employee dress code, which for years required= all auditors to wear fedoras on appointments, no matter the weather.=20 Andersen's company grew into the world's fifth-largest accounting firm, wit= h more than 100,000 corporate clients, $9 billion a year in revenue and 85,= 000 employees around the world. More than that, it helped set ethical stand= ards for the entire profession.=20 "Arthur Andersen wouldn't put up with anything that wasn't complete, 100% i= ntegrity," said George R. Catlett, 84, a retired Andersen partner from Evan= ston, Ill. "If anybody did anything otherwise, he'd fire them. And if clien= ts wanted him to do something he didn't agree with, he'd either try to chan= ge them or quit."=20 Today the Chicago-based firm, known simply as Andersen, is an emblem of acc= ounting misdeeds, the focus of congressional investigations and the butt of= presidential jokes.=20 Andersen vouched for financial statements that overstated Enron Corp.'s ear= nings by $586 million over nearly five years. It has admitted shredding doc= uments even after the Securities and Exchange Commission began examining En= ron's collapse, the largest corporate bankruptcy in U.S. history.=20 The scandal threatens the survival of Andersen. And because of the company'= s prominence, the disclosures are reverberating widely, shaking investors' = confidence in the profits and losses reported by corporate America. Members= of Congress and federal regulators are examining the accounting industry's= practices and standards.=20 "The conscience of the industry, essentially, appeared to sell out," said B= ill Cummings, an accounting professor at Northern Illinois University and a= past president of the American Accounting Assn.'s Midwest region. "I think= it's pure and simple. It's greed and the allure of the big-money clients."= =20 Andersen's role in the Enron collapse has revealed the "dark side" of a pro= fession whose independence has been compromised by the chase for multimilli= on-dollar fees, Cummings said.=20 Like many accounting firms these days, Andersen wore two hats at Enron. It = was the company's independent auditor, responsible for ensuring that its fi= nancial statements were accurate. It was also a financial consultant, helpi= ng Enron executives devise ways of running the business more profitably and= reducing its tax bill.=20 Andersen auditors and consultants occupied a floor of their own in the ener= gy company's gleaming Houston headquarters. They carried Enron-issued elect= ronic ID cards, mingled at office picnics--and even wore Enron golf shirts.= =20 Investigators are looking at Andersen's alleged role in setting up complex = transactions that inflated Enron's earnings by keeping massive debts off th= e company's books. Andersen has claimed that its accountants were misled by= Enron.=20 Arthur Andersen himself wouldn't have gotten so cozy with a client, to judg= e from accounts of his career. The son of Norwegian immigrants, Andersen is= described as crotchety, opinionated and stubborn.=20 Company lore has it that he lost the prized E.I. du Pont account in the 193= 0s over an interpretation of operating income. Du Pont executives insisted = on using a more liberal definition that would lump in the value of the comp= any's large investment in General Motors. Andersen's auditors said no, and = Andersen backed them up. Du Pont found another auditor.=20 The episode sealed the reputation of Andersen and his firm. The company sti= ll guards that legacy jealously, said Andersen spokesman Dave Tabolt. "It's= an issue that people are concerned about every day," he said.=20 Even now, Andersen employees can be fired for fudging a meal on an expense = form or lying about their college grade-point averages, say former partners= .=20 Before accepting a client, Andersen performs background checks on its top e= xecutives. Andersen auditors are told to summarily "leave the field"--walk = away from the job--if they meet unreasonable resistance.=20 The firm also has shaped reforms within the accounting profession.=20 Firm Insisted on Tight Central Controls=20 Auditors perform a vital role in the nation's financial system by certifyin= g the accuracy of profits, losses, debts and other financial data reported = by companies. They are hired by a company's shareholders and its board of d= irectors to ensure that financial statements meet federal disclosure standa= rds.=20 During the 1950s and 1960s, Leonard Spacek, Andersen's successor, openly cr= iticized the profession for tolerating what he considered a sloppy patchwor= k of accounting standards that left the investing public no way to compare = the financial performance of different companies.=20 Spacek's evangelism led to the creation of the Accounting Principles Board,= an industry group that established uniform financial accounting and report= ing standards. In 1973, the board was replaced by the Financial Accounting = Standards Board, an independent body recognized by the SEC.=20 "They wanted what they considered to be substandard accounting principles .= . . to be improved," said Stephen Zeff, an accounting professor and histor= ian at Rice University. "The accounting establishment back East . . . didn'= t want the cage rattled. Arthur Andersen rattled the cage."=20 The firm also has set itself apart over the years by cultivating a corporat= e cohesiveness that borders on clannishness, say experts and former employe= es.=20 The firm has always insisted on tight central controls and uniformity. Befo= re computers, Andersen partners around the world worked off a cross-indexed= central filing system that listed every client, audit and supporting memos= .=20 At the firm's campus in rural St. Charles, Ill., about 40 miles west of Chi= cago, uniformity is stressed to new recruits during an intensive two-week t= raining course.=20 "They always talked about the one-firm philosophy. . . . No matter where yo= u are, there was one firm, one philosophy," said Vadim Fridman, 31, a forme= r Andersen auditor who is now chief financial officer for St. Maartens Spir= its, a distributor of premium liqueurs in Santa Barbara.=20 Over the years, the practice of accounting changed in ways that Andersen's = original credo didn't anticipate.=20 Accounting firms now offer lucrative consulting services. Their clients inc= lude complex businesses with dozens of different divisions. And when compan= ies go bad, shareholders often target the auditors as well as the managemen= t.=20 Worries over shareholder lawsuits rippled throughout the firm and shaped ho= w audits were conducted during the 1990s, former employees say.=20 Auditors use two files to keep records of their work. One is for working pa= pers that offer supporting documentation for the auditor's findings about a= company's finances. The other file is for personal notes, memos and other = documents. At the end of an audit, papers in the second file are destroyed = while those in the first are preserved.=20 "The emphasis when I was at Andersen was to take more and more out of the w= ork file. They wanted fewer and fewer source documents to be in the source = file, across the board with any client," said a former employee in Houston,= who left the firm about a year ago. "The less of that you keep in the file= , the less likely there is of someone coming back in and finding a smoking = gun."=20 Equally troublesome, say regulators and critics, was Andersen's habit, comm= on in the industry, of encouraging its auditors to seek employment with the= companies they were auditing. This gave Andersen a network of allies in bi= g corporations and with it leverage to preserve its auditing and consulting= contracts and prospect for new ones.=20 Andersen alumni hold top positions in industries where Andersen has a large= share of the auditing business. Andersen is the dominant accounting compan= y for Texas energy companies. Former Andersen executives hold top corporate= slots at such companies as Dynegy, Petroleum Geoservices and Comstock Reso= urces. All buy auditing services from Andersen, whose contracts are reviewe= d annually.=20 "We call it practice development," said one Andersen alumnus. "The biggest = reason to do it is, if there's other [non-audit] work to be done, you want = to be the first one they call."=20 Case in point: Vadim Fridman. He worked in Andersen's Woodland Hills office= , auditing mid-size businesses. When he left the company, he wasn't forgott= en. "They've always maintained contact," he said.=20 Two jobs later, an Andersen executive called him and asked whether he had a= ny interest in becoming chief financial officer of St. Maartens Spirits, th= e Santa Barbara company.=20 "They did some [consulting] work for the company and came up with the fact = they needed a CFO and got me the interview," said Fridman, who ended up get= ting the job. If St. Maartens ever needs the services of a major accounting= firm, he added, "obviously I'd lean toward Andersen. I know how they work.= "=20 Over the years, Enron hired away dozens of current and former Andersen empl= oyees--including Sherron S. Watkins, the Enron vice president who eventuall= y warned of the company's collapse. In 1993, Enron shifted 40 employees to = Andersen's payroll when it hired the firm, already its outside auditor, to = take over internal auditing as well.=20 Outside auditors examine transaction records to verify the accuracy of a co= mpany's financial statements. Internal auditors monitor the effectiveness o= f the company's internal financial controls.=20 The arrangement meant that Andersen would be essentially policing its own w= ork, said one former Andersen energy expert.=20 In the case of another Andersen client, Waste Management Inc., the SEC cite= d such interlocking ties when it levied a $7-million fine against Andersen = last year, the largest ever imposed by the agency on an accounting firm.=20 In that case, Andersen issued "materially false or misleading audits" that = overstated Waste Management's net income between 1993 and 1997 by more than= $1 billion, the SEC said. The agency also fined four Andersen partners and= barred them for varying periods from working on audits of publicly traded = companies.=20 "Arthur Andersen and its partners failed to stand up to company management = and thereby betrayed their ultimate allegiance to Waste Management's shareh= olders and the investing public," said Richard Walker, the SEC's chief of e= nforcement.=20 The agency disclosed that every chief financial officer and chief accountin= g officer at Waste Management from 1971 until 1997 was a former Andersen au= ditor. Altogether, 14 former Andersen employees worked for Waste Management= during the 1990s in key financial and accounting positions. Andersen and W= aste Management paid $220 million to settle several lawsuits over accountin= g practices.=20 The case was one of the latest in a string of lawsuits and sanctions agains= t Andersen or its partners for alleged shoddy or misleading work. In April,= the SEC sued an Andersen partner for allegedly covering up a massive manag= ement fraud at appliance maker Sunbeam Inc. Andersen agreed to pay $110 mil= lion to settle a related shareholder lawsuit.=20 In 1999, the accounting giant paid $90 million to investors and $2.5 millio= n to Connecticut authorities to settle allegations that it knowingly approv= ed overly optimistic projections for real estate ventures launched by Colon= ial Realty, a commercial real estate company.=20 Those settlements have come as Andersen has fought tighter restrictions on = the accounting industry.=20 Last year, Andersen led the lobbying campaign that ultimately defeated a pr= oposed SEC rule to force accounting firms to separate their business consul= ting practice from auditing. Former SEC Chairman Arthur Levitt and others a= rgued that the twin functions posed a temptation for firms to coddle high-p= aying clients or bury their accounting sins.=20 At Enron, Andersen collected $52 million for its auditing and consulting se= rvices for 2000.=20 The firm that once defied du Pont is accused of wilting in the face of a du= bious client that paid it a million dollars a week in fees. "Nobody's going= to walk away from that," said Cummings, the Northern Illinois University p= rofessor.=20 Andersen Chief Executive Joseph Berardino rose to the defense of his firm t= his week, saying the Enron debacle does not represent the true character of= the company and its 85,000 employees.=20 "They want you to know that this is not their Andersen," he said.=20 Berardino conceded the company was losing business. One recent defector is = Keystone Automotive Industries, a Pomona-based distributor of auto parts. I= n November, the firm's board voted to hire Andersen after using Ernst & You= ng as its auditor for 20 years. The board dropped Andersen when the Enron r= evelations began to roll.=20 "We just felt that there was so much noise surrounding this situation that = maybe for us the best thing to do was not be second-guessed" by stockholder= s, said John Palumbo, Keystone's chief financial officer.=20 Among the clients sticking by Andersen for now is Houston-based Swift Energ= y, an oil and gas exploration firm. Yet Bruce Vincent, Swift's executive vi= ce president, said he could understand why others might desert the company.= =20 "The risk to Andersen is almost like that of a bank," said Vincent. "If you= have a loss of credibility, you have a run on the bank. If you have enough= clients that start switching, they're out of business." Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Accounting for Enron: U.S. Probes Enron's Effect on Power Prices By Jeanne Cummings Staff Reporter of The Wall Street Journal 01/30/2002 The Wall Street Journal A4 (Copyright (c) 2002, Dow Jones & Company, Inc.) WASHINGTON -- Federal energy regulators are looking into whether Enron Corp= . improperly boosted the electricity prices that Californians and other con= sumers in the Pacific Northwest will be paying for years under long-term en= ergy contracts, as a private study suggests.=20 Several senators from western states cited the report at a Senate hearing o= n the impact of Enron's collapse on the energy sector, and Federal Energy R= egulatory Commission Chairman Patrick Wood said he would open an inquiry in= to the matter. Overall, Mr. Wood said he has concluded that the U.S. energy markets absorb= ed the Enron Dec. 2 bankruptcy filing without major disruption or price spi= kes, and the debacle shouldn't "sound the death knell for competition." Sti= ll, the FERC chairman and five other experts said the situation exposed a n= eed for greater transaction disclosure, particularly in the area of online = energy trading, Enron's core business.=20 Because Enron's trading wasn't subject to government oversight, the evidenc= e of price manipulation presented against Enron at the hearing was anecdota= l.=20 Robert McCullough, a Portland, Ore., energy consultant with clients affecte= d by last year's energy crisis in the West, conducted research to determine= Enron's market dominance in one pricing area -- the area along the Califor= nia-Oregon border -- by studying data voluntarily made public by other comp= anies in the same business. His conclusion was that Enron accounted for mor= e than a 30% share of the business.=20 On Dec. 3, the day after Enron filed for protection from its creditors unde= r Chapter 11 of the U.S. Bankruptcy Code, the forward markets -- hedge trad= ing on future energy prices -- on the West Coast fell 30%, Mr. McCullough t= estified. After ruling out other possible causes for the price drop -- a de= cline in hydroelectric supply or a spike in fossil-fuel prices -- "the clea= r implication is that Enron may have been using its market dominance to set= forward prices," he said. With Enron out of the market, prices fell.=20 Enron denies any manipulation. "There is political grandstanding going on r= ight now, and it's been going on against Enron for more than a year," compa= ny spokeswoman Karen Denne said. "There are a number of factors that drive = prices, seasonal, weather or demand factors. There have been a number of in= vestigations into price manipulation and collusion, and none of them found = Enron to engage in any of those practices."=20 Indeed, Lawrence Makovich, an analyst at Cambridge Energy Research Associat= es in Massachusetts, told the committee that forward prices dropped markedl= y throughout the country earlier in the year and the decline identified in = the study could have been part of that pattern.=20 Sen. Dianne Feinstein (D., Calif.) questioned whether Enron's trading could= have contributed to California's struggle last year to recover from an ene= rgy shortage that led to rolling blackouts, sharply higher prices charged t= o consumers and big political problems for Democratic Gov. Gray Davis.=20 Mr. Davis is running for re-election this year; he faces a tough Republican= field and an electorate that gives more credit to its own conservation in = ending the state's energy crisis than to the governor's actions.=20 As part of his recovery plan, Mr. Davis signed several expensive, long-term= energy contracts. Though none of those agreements was with Enron, official= s hope to prove that Enron's dealings in the marketplace improperly boosted= the overall market price. Such a finding could pave the way for California= and other entities to attempt to break their contracts and renegotiate low= er prices for consumers.=20 Mr. Wood said he has concluded Enron didn't contribute to California's shor= t-term energy crisis last year. But, he said the allegation about manipulat= ion of the futures market "is an interesting question." In his review, he s= aid he would try to determine how big the forward-market is and to what deg= ree Enron dominated it.=20 He suggested to Ms. Feinstein that California file a formal complaint with = his agency, which would trigger a formal, 60-day investigation. Ms. Feinste= in said she would see that it is filed.=20 Mr. Wood also endorsed lawmakers' suggestions that Internet energy trading = should be subjected to rules for disclosure.=20 Much of Enron's business -- buying and selling of over-the-counter energy d= erivatives -- was exempted from regulation by the Commodity Futures Trading= Commission. Mr. McCullough and other witnesses said online traders should = face the same disclosure requirements as traditional trading entities, such= as the New York Mercantile Exchange.=20 "We need to find out if there is only one person in the [trading] pit," Mr.= McCullough said. "If there is, we know to proceed with caution." Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 A Section U.S. to Probe Enron Tie to Energy Prices; Senators From West Voice Concern = About Alleged Manipulation Kathleen Day and Susan Schmidt Washington Post Staff Writers 01/30/2002 The Washington Post FINAL A06 Copyright 2002, The Washington Post Co. All Rights Reserved The nation's top energy regulator promised yesterday to investigate whether= Enron Corp. manipulated long-term energy prices in western states until th= e day it declared bankruptcy last month.=20 Pat Wood III, chairman of the Federal Energy Regulatory Commission, made th= e pledge during a congressional hearing in which several senators voiced co= ncern about Enron's dominance of electronic trading of financial instrument= s tied to energy. Such trading is unregulated. This would be the second time FERC has looked at Enron's role in setting we= stern energy prices. During the year-long California energy crisis that end= ed last summer, the agency found no evidence that energy companies, includi= ng Enron, had manipulated the short-term market for electricity, although i= t found serious flaws in the market structure.=20 "There are issues about whether Enron was manipulating the West Coast energ= y markets," said Sen. Ron Wyden (D-Ore.). "It's important not just to ratep= ayers on the West Coast, but it goes to the issue of the confidence America= ns need to have in the energy market. We need to lift the veil of secrecy a= bout how energy is bought and sold in this country."=20 The hearing by the Senate Energy and Natural Resources Committee was meant = to explore the impact that Enron's collapse in December had on energy marke= ts.=20 Robert McCullough, an energy consultant whose clients include utilities in = the Northwest, testified that the price of unregulated financial energy con= tracts on the West Coast dropped 30 percent on Dec. 3, the day after Enron = filed for bankruptcy. This suggests, he said, that "Enron may have been usi= ng its market dominance" to set long-term energy prices.=20 Wood, a former Texas utility commissioner backed by longtime Enron chairman= Kenneth L. Lay for the federal job, told lawmakers that Enron's demise did= n't damage the nation's energy-trading industry or disrupt the supply of en= ergy.=20 Enron, meanwhile, named Stephen F. Cooper, a corporate turnaround expert, a= s its interim chief executive, replacing Lay, who resigned last week.=20 In other Enron-related news:=20 * A House subcommittee leading the investigation of document shredding by E= nron's outside auditor, Arthur Andersen LLP, announced it will turn its foc= us to Enron at hearings next week. Merrill Lynch & Co. confirmed that some = of its senior executives invested in one of the controversial Enron partner= ships involved in the company's unraveling last fall.=20 * More than 400 past and present Enron workers asked the bankruptcy judge t= o appoint an official panel to give them greater say in the case, saying on= e worker representative on the 15-member creditors' committee was inadequat= e.=20 * Enron said its investigation of papers shredded at the company's Houston = headquarters after it received subpoenas from federal investigators had tur= ned up no evidence that any relevant materials were destroyed. "Based on ou= r investigation so far, we are unaware of any improper shredding of documen= ts," Enron attorney Robert Bennett said last night. The FBI is continuing t= o interview everyone at Enron headquarters who had a role in shredding docu= ments. An Enron spokesman confirmed that the company continued shredding do= cuments until recently but maintained that they were payroll and other pers= onnel records unrelated to the investigation.=20 * Police in Sugar Land, Tex., said they could not disclose the contents of = the suicide note written by J. Clifford Baxter, a former senior Enron execu= tive, without the permission of the Texas attorney general.=20 At the Senate hearing, Sen. Dianne Feinstein (D-Calif.) and others said the= danger that Enron posed occurred before it collapsed, from its success in = lobbying state and federal regulators against disclosure of energy prices a= nd supplies.=20 That secrecy has allowed companies to dominate markets and "price-gouge" co= nsumers, Feinstein said. Enron's large role in trading financial energy con= tracts coupled with the company's control over "50 percent to 70 percent" o= f natural gas going into California gave the company the tools it needed to= set prices unfairly, she said.=20 In December 2000, Congress exempted such "derivatives" contracts -- which a= re used to hedge against price swings but also to speculate on price change= s -- from regulation by the Commodity Futures Trading Commission. Sen. Jeff= Bingaman (D-N.M.), chairman of the committee, said the Enron fiasco shows = the need for greater public disclosure about energy derivatives and how the= y are traded.=20 James E. Newsome, chairman of the Commodity Futures Trading Commission, sai= d that if Congress decides that energy derivatives need more oversight, his= commission should provide that oversight.=20 In announcing new hearings next Tuesday and Wednesday, the House Commerce s= ubcommittee on oversight and investigations sent out a new round of letters= requesting documents. Among them was one to Enron seeking copies of a repo= rt a New York law firm prepared last summer on problems with partnerships t= hen headed by Enron's chief financial officer, Andrew Fastow. Fastow sold t= hose interests last July 31.=20 The Internet magazine Salon reported last week that Jordan Mintz, an Enron = attorney, had asked the Fried Frank Harris Shriver & Jacobson law firm for = an opinion on the partnerships. Enron sources confirmed that an opinion was= prepared but would not provide details of its contents.=20 A Merrill Lynch spokesman said, in response to a report by Bloomberg News, = that executives at the brokerage firm invested in the LJM2 partnership, one= of the private entities run by Fastow.=20 "The investment partnership was reviewed and deemed appropriate by parties = on all sides of the transaction," the spokesman said. "Consistent with comm= on industry practice, it was offered to qualified external as well as inter= nal investors, and this is not a conflict of interest."=20 The partnership was one of many that helped Enron keep debt off its books -= - debt that investors, including those following the Merrill Lynch analysts= ' recommendations on Enron, were not aware of. The spokesman said the Merri= ll Lynch investors in the partnership didn't tell the analysts about their = investment.=20 Meanwhile, the Federal Election Commission said it was unclear what would b= ecome of the $430,000 remaining in Enron's political action committee coffe= rs at the end of 2001. The PAC made donations last fall to several members = of Congress who are now investigating the company. "We have never had to ad= dress anything like this before," said Kelly Huff, a spokeswoman for the el= ection panel. http://www.washingtonpost.com=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Accounting for Enron: Davis Polk Is Barred From Enron Work For J.P. Morgan = Chase Dow Jones Newswires 01/30/2002 The Wall Street Journal A4 (Copyright (c) 2002, Dow Jones & Company, Inc.) NEW YORK -- J.P. Morgan Chase & Co. needs to find a new lawyer in its high-= profile legal battle to force insurers to honor $1.1 billion in Enron Corp.= surety bonds.=20 A federal judge on Monday disqualified Davis Polk & Wardwell because the Ne= w York law firm also represents Chubb Corp., the parent company of Federal = Insurance Co., an insurer named as a defendant in the suit. U.S. District J= udge Jed S. Rakoff wrote in a nine-page opinion that Davis Polk has "entang= led itself in conflicts of interest" by advising Chubb and J.P. Morgan at t= he same time. On Dec. 11, Davis Polk helped Chubb file papers with the Securities and Exc= hange Commission that outline Chubb's obligations on $220 million worth of = Federal Insurance surety bonds related to Enron affiliates, the judge noted= . On the same day, Davis Polk, acting for J.P. Morgan Chase, filed the laws= uit in New York state court against Federal Insurance and eight other major= insurance companies over the surety bonds.=20 "It is doubtful that Chubb would have approved such wording [on the SEC fil= ings] if it had known that Davis Polk would simultaneously bring suit on th= ese bonds against Federal," the judge wrote.=20 A Davis Polk spokesman said: "We are obviously disappointed by the court's = decision. We believed that we had good grounds to proceed on behalf of J.P.= Morgan Chase bank under the applicable ethical standards, but we will of c= ourse abide by the decision of the court." Judge Rakoff ordered all proceed= ings in the case on hold for two weeks to allow J.P. Morgan time to obtain = new counsel or appeal the decision. J.P. Morgan Chase declined to comment. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Burden of Doubt: Stocks Take a Beating As Accounting Worries Spread Beyond = Enron --- Investors Ignore Good News About Economy; Banks Are a Focus of Se= lling --- `A Big Haircut' for Some By E.S. Browning and Jonathan Weil Staff Reporters of The Wall Street Journal 01/30/2002 The Wall Street Journal A1 (Copyright (c) 2002, Dow Jones & Company, Inc.) It's not the economy anymore, stupid. It's the accounting.=20 Yesterday was the day that the smoldering corporate accounting scandal, whi= ch started with Enron Corp. and quickly spread to Arthur Andersen LLP, reac= hed a wide group of U.S. companies and seriously singed their stock prices.= Accounting problems surfaced in sectors ranging from banking to oil, promp= ting fears of new mini-Enrons and spurring a sell-off of shares at the slig= htest whiff of such trouble. As a result, despite broadly upbeat economic news, the stock market took a = tumble, with shares falling to their lowest levels in three months.=20 Signs of toughening stances by auditors and regulators emerged, raising que= stions as to how many more corporate managements will be forced to restate = their earnings and abandon cozy accounting treatments that easily passed mu= ster a few months ago.=20 Stocks in the banking industry, for instance, fell sharply following word t= hat PNC Financial Services Group, a Pittsburgh-based banking group, was res= tating its 2001 results. Analysts immediately fretted that many other banks= could be hit. In addition, pipeline company Williams Cos. delayed an earni= ngs report to examine the impact of commitments to a former unit, and congl= omerate Tyco International Ltd. suffered on news that it had made a $20 mil= lion payment to an outside director and to a charity he controls. After the= markets closed, Houston energy producer Anadarko Petroleum Corp. announced= it made a billion-dollar mistake in the way it calculated the value of its= domestic oil and gas properties for the quarter ended Sept. 30, citing fau= lty tax assumptions.=20 The upshot: Tyco was down almost 20% for the day, PNC fell more than 9%, an= d Williams fell more than 22%. Together, the three lost $21 billion in mark= et value in one day.=20 On a day in which the big-picture economic news was good -- and other corpo= rate earnings were, in fact, up -- the Dow Jones Industrial Average neverth= eless fell 2.51%, or 247.51 points, to 9618.24, its lowest level since Oct.= 29. Trading volume was the highest it has been since the week the markets = reopened after the September terrorist attacks.=20 Behind the frantic trading is a watershed development in American business:= The fundamentals of the accounting profession have been called into questi= on. Where two decades ago, accountants were still held in high esteem, now = they rank in public opinion polls below politicians and even journalists. A= n opinion letter from a Big Five accounting firm, once viewed as a trusted = seal of approval, now may not carry the imprimatur of authority.=20 Some of the sell-off could be an overreaction. The U.S. continues to have o= ne of the world's most rigorous accounting systems, and most companies clea= rly function within the rules.=20 But just as investors ultimately turned away from overhyped tech stocks dur= ing the Internet bust, in the wake of Enron they clearly have no stomach fo= r any hint of accounting irregularities.=20 "The market has little or no tolerance for any of the unknowns associated w= ith . . . accounting right now," said Matthew Johnson, head of U.S. stock t= rading at New York brokerage firm Lehman Brothers. "It is just bar-the-door= s."=20 Amid a growing sense that bull-market excess made companies push accounting= rules to the limit in the late 1990s, regulators, accounting firms and rat= ing agencies have become more sensitive than ever -- raising the specter of= more bombshells. The Securities and Exchange Commission, for instance, las= t week reminded public companies of the need to clearly disclose financial = transactions, including off-balance-sheet financings, in their forthcoming = annual reports. Moody's Investors Service Inc., the big credit-rating agenc= y, has demanded that more than 4,000 bond issuers provide new information o= n off-balance-sheet arrangements that could involve financial risks. And au= diting firms are taking a tougher stance with clients.=20 In the case of PNC, the bank said it planned to restate its numbers in the = wake of an accounting probe by the Federal Reserve and the SEC.=20 "What is underlying this whole thing is a huge discrepancy concerning what = really constitutes earnings," said Henry Herrmann, chief investment officer= at mutual-fund group Waddell & Reed in Overland Park, Kan. "The market is = giving a big haircut to companies whose earnings numbers raise questions in= investors' minds."=20 Several of those companies said the attention is unfair. "Clearly we are in= an environment where people are intensely skeptical of Corporate America,"= said Dennis Kozlowski, Tyco's chairman and chief executive, who said his c= ompany's payment to the director was "appropriate" and had been fully discl= osed in Tyco's proxy statement. "Obviously, we believe the reaction in our = stock price was unjustified."=20 Williams executives have in the past said their accounting practices are mo= re open than Enron's. A spokesman said yesterday the company has "the finan= cial capability" to make good on its commitments to its former unit.=20 Investors also suspect that organizations assigned to make the rules, like = the Financial Accounting Standards Board, often act more like protectors of= the industry they watch. That, in part, is why Enron, like so many other c= ompanies, was allowed to exploit lax rules for "special-purpose entities" t= hat allowed it to keep tens of billions of dollars of debt off its balance = sheet. Losses related to this debt contributed to Enron's abrupt downfall.= =20 The consequences of those suspicions could be huge, both for the stock mark= et and the accounting profession. Politicians and investors, for instance, = are openly questioning whether the accounting industry should be allowed to= continue regulating itself.=20 The recession that began last year is helping drive accounting issues out o= f the woodwork. Analysts say it is a lot easier for companies to hide poor = performance through aggressive accounting during good times -- when stocks = are rising and the economy is booming -- than it is when the market is in t= he tank and the economy is slowing down.=20 When bear markets hit, companies like Tyco, which had relied on high-priced= stock acquisitions to fuel their growth, no longer have the currency to ke= ep buying other companies. And while investors and analysts often are willi= ng to let things slide during good times, they want real answers and inform= ation when stocks are going down and wiping out their portfolios.=20 Enron has added an unsettling new dimension. As complex and opaque as its f= inancial statements were, what many investors are starting to recognize is = that they don't understand the financial statements of many other companies= in which they have big stakes. Neither, they fear, do the rating agencies = ranking the quality of their debt or the Wall Street analysts and brokers w= ho are recommending the stocks.=20 Restatements have been on the rise for more than a decade, and the SEC now = has more accounting-fraud cases on its hands than ever before. According to= a study last year by the research arm of Financial Executives Internationa= l, a trade group in Morristown, N.J., there were 464 financial restatements= by companies from 1998 through 2000 -- more than in the previous 10 years = combined.=20 Enron, however, was the financial markets' equivalent of the perfect storm = -- a debacle so huge on so many different levels that it demanded the natio= n's attention. What's more, it exposed the degree to which hundreds of othe= r companies' accounting practices are similar in certain ways to Enron's.= =20 The large accounting firms, such as Andersen, say the problem lies not with= their conduct and priorities but with weaknesses in generally accepted acc= ounting principles themselves. Likewise, they say, if only they could be de= legated the job of fixing the system, then it could be fixed.=20 Until investors conclude it is fixed, though, the market may have to brace = for more days like yesterday.=20 In addition to the declines in the Dow Jones industrials, the broad Standar= d & Poor's 500-stock index dropped 2.86%, or 32.42 points. The Nasdaq Compo= site Index, dominated by technology stocks, fell 2.62%, or 50.92 points, to= 1892.99, leaving it down 3% for the year.=20 In a sign of how much times have changed, the normally staid banking group = fell far harder yesterday than technology stocks, which ordinarily are the = market's most volatile group. A widely watched index of the nation's major = bank stocks compiled by the Philadelphia Stock Exchange, for example, fell = more than 5% on the day, while the exchange's index of the nation's main co= mputer-chip stocks, which has been one of the market's most volatile groups= in recent weeks, fell only 2.4%.=20 The worry wasn't just that accounting issues could cause more high-profile = bankruptcies, although that certainly was on some people's minds. It was al= so that accounting issues could hold down earnings growth by forcing compan= ies to use more-conservative accounting practices.=20 Recalling that Enron investors suffered if they held onto the energy-tradin= g company's stock until they understood how bad the accounting problem was,= shareholders in other companies tarred by accounting questions tended to s= ell first and ask questions later.=20 Money flowed out of stocks and toward the relative safety of Treasury bonds= , pushing government securities' prices up sharply. The government bonds ro= se despite stronger economic news, which normally would push bonds down bec= ause it would spur expectations that the Federal Reserve has finished cutti= ng interest rates. The 10-year Treasury note rose 26/32, or $8.125 for each= $1,000 invested. Its yield, which moves inversely to price, fell to 4.97%.= =20 The renewed preoccupation with accounting problems shifted investors' atten= tion away from the two-day Federal Reserve meeting on monetary policy that = is to wind up this afternoon. After cutting its interest-rate targets 11 co= nsecutive times in an effort to stimulate the economy, the Fed is widely ex= pected to leave rates unchanged, the first time it has done that in more th= an a year. The Fed is expected to announce its decision and issue comments = on the economy at about 2:15 p.m. EST today.=20 But now, investors said, they want to see the economy actually respond, in = the form of improving corporate performance.=20 "The concern is that these accounting issues are going to cause the economy= to go into a double-dip" recession, in which the recovery stalls and the e= conomy sinks a second time, Lehman's Mr. Johnson said. "There is a concern = that there is more truth serum that has to be taken by companies."=20 In addition, some investors still caution that the economic recovery is wea= ker than many investors think.=20 "There has been a modest bounce in economic activity," Greg Jensen of Westp= ort, Conn., money-management firm Bridgewater Associates said in a report t= o clients, but "at this point, all we have done is return to Sept. 10 level= s. Prior to Sept. 11, we described the economy as `post-bubble and vulnerab= le,' and it still is."=20 What would spook both the stock and bond markets would be any hint from the= Fed that it sees a risk of inflation, which would require it to raise its = target interest rates.=20 As concerns have spread in recent weeks about an Enron effect on the broade= r market, some policy makers have started to fret.=20 "This runs the risk of truly undermining business and consumer confidence,"= New Jersey Democratic Sen. Jon Corzine said at a Senate Budget Committee h= earing last week. The senator, a former co-chairman of Goldman Sachs & Co.,= wondered aloud "about whether the concerns and the issues that have been r= evealed here are not more broadly applicable in the economy," and could the= n "lead to a rise in the cost of capital, lead to serious concerns about fo= reigners wanting to continue to invest in America in the way that they have= supported us with regard to our foreign trade balance."=20 Fed Chairman Alan Greenspan dismissed those worries at the same hearing, ho= wever. Still, Mr. Greenspan suggested that the fallout could transform the = way investors and companies interact.=20 "The reaction, I think, is going to create a really major rethinking in a l= ot of people about whether there is a spin game going on with respect to in= formation coming out of business into the investment community," the Fed ch= airman said. "I think we're going to find there's going to be a good deal l= ess of that and that the old issue of competing for reputation is going to = re-emerge," he added. "And I think you're going to find at some point that = there are going to be people out there who are going to say that `our accou= nts you can rely on.' And that probably will increase their price-earnings = ratios." Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Financial At Energy Firm, A Post-Enron Double-Check Christopher Stern Washington Post Staff Writer 01/30/2002 The Washington Post FINAL E01 Copyright 2002, The Washington Post Co. All Rights Reserved The shadow of Enron Corp.'s collapse spread yesterday to Williams Cos., an = Oklahoma energy-trading firm that postponed its quarterly earnings announce= ment after questions were raised about $2.4 billion worth of potential liab= ilities related to a telecommunications investment.=20 Executives at Tulsa-based Williams said they would need several weeks to fu= lly evaluate issues related to loan guarantees the company had provided Wil= liams Communications Group Inc. -- a former subsidiary that was spun off to= the public last April. The company was forced to take a closer look at its financial relationship = to the telecommunications firm after credit-rating agencies raised concerns= about potential liabilities previously reported only in footnotes.=20 A company spokesman said the review is directly related to a new, more aggr= essive approach by ratings agencies in the wake of Enron's collapse. Enron = had kept billions of dollars in liabilities off its balance sheet through p= artnerships and other financial arrangements.=20 "People began doing a better, more fuller job examining all our liability,"= said Williams spokesman Jim Gipson. Gipson added that the additional scrut= iny ultimately should have a positive impact on the industry and investors,= as people better understand the financial condition of companies.=20 News of Williams's postponed earnings announcement was not received well by= investors yesterday. Shares of the company fell $5.36, or 22.2 percent, to= $18.78.=20 Gipson said Williams has consistently disclosed the $1.4 billion in guarant= eed loans to the former subsidiary along with an additional $1 billion in g= uarantees related to leases for fiber-optic cable and the Williams Communic= ations headquarters. But the company did not count the obligations as liabi= lities, something that credit-rating agencies have said they may now requir= e.=20 "Recent events have caused us to reevaluate those obligations," Williams ch= ief executive Steven Malcolm said in a conference call yesterday. Among the= events Malcolm cited was the broad downturn in the telecommunications indu= stry, including Monday's announcement by Global Crossing Ltd., an internati= onal fiber-optics firm, that it had filed for bankruptcy because it was una= ble to continue paying interest on more than $12 billion in debt.=20 Some analysts said Enron's collapse, which has already hurt several energy = firms, may now reverberate through the weak telecommunications sector, wher= e many companies are struggling under mountains of debt.=20 "Rating agencies are more likely to downgrade a company or take a conservat= ive view of the company than they did 12 months ago," said Drake Johnstone,= an analyst with Davenport & Co. "A lot of these [telecommunications] compa= nies are clinging to the edge, and it doesn't take a hell of a lot to push = them into bankruptcy."=20 Shares of Williams Communications, which traded as high as $57 in 1999, fel= l 29 cents yesterday, or almost 18 percent, to $1.34.=20 Corporate credit firms threatened to strip the Williams energy company of i= ts investment-grade rating unless it finds a way to resolve questions of li= ability related to its investment in Williams Communications, Gipson said.= =20 The company had already announced a plan on Dec. 19 to firm up its balance = sheet by reducing its capital expenditures from $4 billion to $3 billion. I= t also said then that it may sell $250 million in core assets and an additi= onal $1 billion in equity. The combined savings and increased revenue would= be used to offset any liabilities related to the Williams Communications d= ebt.=20 Williams is among several energy companies that have invested in telecommun= ications in recent years. Enron spent more than $1 billion buying 18,000 mi= les of fiber-optic lines with a goal of creating a market among companies t= hat would bid for rights to transmit data and voice traffic.=20 But Enron was hardly the only company to invest in fiber-optic lines, and a= glut of capacity quickly developed. It is that glut that eventually sank o= ther companies, including Global Crossing, which invested billions on the b= et that demand would outstrip supply for fiber-optic capacity. Instead, the= opposite proved true, and tens of thousands of miles of fiber-optic lines = now lie unused.=20 Williams, founded in 1908 and publicly traded since 1957, hoped to take adv= antage of its old-economy business by installing fiber-optic cable along it= s gas pipeline rights of way. Eventually, the company completed a 33,000-mi= le network of its own, which is now a leading supplier of fiber-optic capac= ity to the media industry. Hundreds of television stations and film product= ion companies use Williams's lines to send video footage around the nation = and the world. http://www.washingtonpost.com=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Ex-Enron workers feel jilted by Bush=20 By JULIE MASON and ROMA KHANNA=20 Copyright 2002 Houston Chronicle=20 Jan. 30, 2002, 12:40AM WASHINGTON -- Listening to President Bush talk about homeland security and = the economy Tuesday night, Digna Showers felt something was missing.=20 One of 30 former Enron Corp. employees who took an exhausting 25-hour bus r= ide from Houston to meet with lawmakers, Showers said she wished Bush had a= ddressed the one issue they all came to talk about.=20 "I voted for him; my whole family voted for him. We think he's doing a good= job, but he is distancing himself from Enron right now," Showers said. "He= is a Texan, and he was our governor. I had hoped he would have said more."= =20 While Bush did not directly mention Enron in his State of the Union speech,= he called for more corporate accountability and reform to protect workers.= =20 Showers, an 18-year employee of Enron, estimates she lost $450,000 in her r= etirement account when she was laid off as an administrative assistant.=20 Her family's sole breadwinner, with a disabled husband at home, Showers now= can't pay for her husband's medicine.=20 "I could just cry, but I am not a crybaby," Showers said. "This has just be= en devastating."=20 Throughout a hall where the former Enron workers gathered to watch the spee= ch, the group shared stories of numbing personal and financial devastation = from the collapse of their one-time employer.=20 A single father who worked as an engineer lost his daughter's college fund;= a woman with a husband on dialysis lost her family's health benefits when = she was laid off from the corporation.=20 A common experience described by the former employees was going out on job = interviews, only to be grilled about Enron and never offered a position.=20 The former employees, organized for their trip by the Rev. Jesse Jackson an= d Houston Democratic Rep. Sheila Jackson Lee, also had sought an audience w= ith Bush.=20 Katherine Benedict, a former marketing executive at Enron, said the group w= as told no one at the White House would see them.=20 "We are trying to be a voice for the people who are hurting," Benedict said= . "All the stories you read are about the executives at Enron, but we are s= truggling and that's what we want to put out there."=20 More than 100 people made the trip from Houston, including former employees= , several spouses, local Houston Democrats and staff members from Jackson's= organization.=20 The ex-employees group, on a trip dubbed the "Journey for Justice" by Jacks= on, met Tuesday with seven key senators involved in the Enron investigation= .=20 Several were invited to return Monday to sit in the hearing room when forme= r Enron Chairman Ken Lay testifies before the Senate Commerce, Science and = Transportation Committee.=20 They also have been asked to return and give testimony before some of the o= ther committees probing the company's collapse.=20 Today, the group is scheduled to meet with lawmakers on the House side, inc= luding members of the Texas delegation, and participate in a prayer vigil b= efore the long ride back to Texas.=20 The three-pronged agenda they developed for the Washington trip calls for f= inancial assistance for needy former Enron employees, help with job referra= ls, and legislation to improve corporate accountability and protect employe= e savings programs.=20 Jackson Lee arranged for Jackson and one Enron employee to be in the chambe= r to hear the address.=20 All three said the president did not sufficiently address Enron's downfall = and the plight of its former employees.=20 "He did not offer relief or remedy," said Jackson. "He talked about full di= sclosure, and (Vice President Dick) Cheney, who has refused disclosure, was= sitting right behind him."=20 Debbie Perrotta of Kingwood was an Enron senior administrative assistant fo= r five years before the bankruptcy left her unemployed and without insuranc= e.=20 "He just did not offer us enough," Perrotta said of Bush. "He outlined prot= ections for the future, but this has been tough on us."=20 The grueling trip from Houston started Monday afternoon and took longer tha= n expected when the buses got off course. A planned stop in Atlanta was scr= atched, and the weary employees rolled into Washington about four hours lat= er than scheduled.=20 Back at the gathering of former Enron employees watching the speech on tele= vision, Dennis Vegas, a former vice president of communications at the comp= any, said that if Houston had been hit by a natural disaster, rather than a= corporate one, federal assistance would have been provided.=20 "If President Bush can at least address that message, and the House and Sen= ate take proactive measures, then we are moving in the right direction," Ve= gas said.=20 After arriving in Washington, the former employees were taken to the headqu= arters of the AFL-CIO, just across Lafayette Park from the White House.=20 There, the group -- red-eyed from exhaustion with another long day ahead --= ate a meal provided by the labor organization and watched Bush's speech on= an oversized television screen.=20 Sempra buys metals business from Enron 01/30/2002 Associated Press Newswires Copyright 2002. The Associated Press. All Rights Reserved. SAN DIEGO (AP) - Sempra Energy, the parent company of San Diego Gas and Ele= ctric Co., has agreed to purchase the metals-trading arm of Enron Corp. for= $145 million.=20 Sempra executives announced Tuesday that the company would acquired London-= based Enron Metals Ltd., which has annual revenues of more than $50 million= . The business trades industrial metals including aluminum, copper and tin. Sempra officials believe the deal would provide better services for their c= ustomers.=20 "There are natural synergies between the energy and metals-trading business= es," David Messer, president of Sempra Energy Trading, said in a prepared s= tatement.=20 "Some of the largest energy users are metals producers. We see tremendous o= pportunity to expand risk-management services for our current customer base= , as well as attract new customers with our ability to structure cross-comm= odity deals."=20 Enron purchased the metals company in July 2000 from Metallgesellschaft Ltd= . Enron Metals Ltd. has about 60 employees and its president, Thomas McKeev= er, will continue in his role, Sempra officials said.=20 The sale of the metals business will provide needed cash for Enron, which r= ecently declared bankruptcy. Enron and its auditor, auditor, Arthur Anderse= n LLP, are under investigation for allegedly shredding massive amounts of d= ocuments.=20 Sempra said the acquisition is subject to a final audit of the firm's asset= s but is expected to close by Feb. 4. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 DENMARK: Enron Wind "too risky" for German rival Nordex. 01/30/2002 Reuters English News Service (C) Reuters Limited 2002. COPENHAGEN, Jan 30 (Reuters) - German wind turbine maker Nordex said on Wed= nesday it had withdrawn from the bidding for Enron Wind, the wind turbine s= ubsidiary of collapsed Enron Corp , saying it was "too risky".=20 An industry source said earlier this week that five companies were in the r= unning for Enron Wind, valued at $300 million to $700 million. "We are not = a part in the final bidding round for Enron Wind. We have withdrawn, becaus= e we found it too risky," Carsten Pedersen, member of Nordex AG's managemen= t board, told Reuters by telephone. In December, Nordex expressed keen interest in acquiring the U.S.-based riv= al. Pedersen did not want to elaborate on why Nordex was no longer interest= ed in Enron Wind.=20 Unlike its parent, Enron Wind is making money and not included in Enron's D= ecember 2 bankruptcy filing.=20 The world's largest wind turbine maker Danish Vestas Wind Systems , frequen= tly named as a possible buyer of Enron Wind, on Tuesday declined to comment= whether the company has submitted a bid for Enron Wind.=20 In December, Vestas CEO Johannes Poulsen rejected the idea of Vestas buying= the U.S. group.=20 The industry source said it could take several weeks before a buyer of Enro= n Wind would be announced. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Editorial . . . And the Enron Pundits Howard Kurtz 01/30/2002 The Washington Post FINAL A23 Copyright 2002, The Washington Post Co. All Rights Reserved The debate about campaign finance reform can be boiled down to one question= : What exactly are corporations buying when they give millions of dollars t= o politicians?=20 Now, there's some heated talk about journalistic finance reform -- that is,= what are corporations buying when they lard their payrolls with prominent = media folks? And should columnists and commentators be taking cash from com= panies such as Enron, about which they later find themselves delivering str= ong opinions? The contretemps has exposed just how cozy the relationships are between som= e in the pundit class and the corporate world, in which $50,000 can change = hands for what the average cubicle dweller would consider remarkably little= work.=20 The journalists involved have, with varying degrees of candor, disclosed th= eir Enron ties while writing about the collapse of America's seventh-larges= t corporation. But they find themselves facing the sort of hostile question= s usually reserved for committee chairman who do legislative favors for big= -time donors.=20 I've been critical of journalistic buckraking since the mid-1990s, when I w= rote about a $30,000 speech that Sam Donaldson had given to an insurance gr= oup. The gilded trail of corporate honoraria quickly led to such luminaries= as David Brinkley, Robert Novak, David Gergen, Cokie Roberts, Christopher = Matthews, Larry King, Mark Shields, Fred Barnes, George Will and Michael Ki= nsley, who memorably said: "I didn't do it for years, but it became more so= cially acceptable." King likened it to "white-collar crime." Many refused t= o discuss it on grounds they weren't public officials.=20 The issue began to fade as a number of news organizations, including ABC an= d NBC, banned the practice. (The Washington Post had long barred honoraria = from corporations or trade groups that lobby Congress.)=20 But now, for those who took Enron money, there's no place to hide, the burg= eoning scandal having replaced the war as the Beltway's reigning obsession.= And the journalists involved (with one exception) have whacked Kenneth Lay= & Co. pretty hard.=20 New York Times columnist Paul Krugman, who got $50,000 from an Enron adviso= ry board before joining the Times, blamed the criticism on an "effort by co= nservatives to sling Enron muck toward their left." Unfortunately for this = argument, most of the Enron journalists are free-marketeers on the right.= =20 Wall Street Journal columnist Peggy Noonan, who received $25,000 to $50,000= for speechwriting help, told me: "I don't regret having done the work -- i= t was honest work, honestly done, hard work too, reported on my taxes, not = hidden in any way. . . . But my feeling is: I have to talk about my experie= nce in order to talk about Enron, and I have to talk about Enron because I = have strong feelings about what they did."=20 Lawrence Kudlow of CNBC and National Review said that he should have disclo= sed earlier that he'd gotten $50,000 for consulting and research, but he al= so said that he's tougher on the energy company because he feels betrayed.= =20 Weekly Standard Editor Bill Kristol, who received $100,000 from the advisor= y board, sees nothing wrong with such work. His role was disclosed in a Sta= ndard piece by another Enron beneficiary, contributing editor Irwin Stelzer= , who praised Lay and Enron for "leading the fight for competition."=20 Other than Stelzer, who failed to disclose the arrangement in articles for = the British press, the other writers can boast that their criticism of Enro= n demonstrates they can't be swayed by mere money. Of course, had Enron not= suffered a spectacular meltdown, we likely would not have known about most= of these financial ties -- and still don't know about other such moonlight= ing.=20 The Enron pundits have put themselves in a weird box. If they recused thems= elves and wrote nothing, as some critics suggest, then the company would in= effect have bought their silence. By writing on Enron, they risk the appea= rance of biting the hand that fed them just to flaunt their journalistic co= urage.=20 Perhaps what rankles most is the notion that Enron was trying to do what it= did with George W. Bush, John Ashcroft, Joe Lieberman, Lawrence Lindsey, R= alph Reed and about half of official Washington -- making an investment tha= t could pay off later on. What, after all, did the commentators do for Enro= n? "This was an advisory panel that had no function that I was aware of," K= rugman told his newspaper. Exactly.=20 It's hard for journalists who work for big companies, write books and appea= r on television to avoid all conflicts these days. But many of these commen= tators wax indignant when politicians of all stripes appear to be doing the= bidding of those who fill their campaign coffers. For media people to line= up at the same corporate trough is just asking for trouble.=20 The writer covers the media for The Post. He is the author of four books fo= r three publishers and hosts a weekly program on CNN. http://www.washingtonpost.com=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Style Greedy Liars? The Enron Scandal; TheBIGStory An Occasional Look at Stories = Everyone Is Talking About 01/30/2002 The Washington Post FINAL C16 Copyright 2002, The Washington Post Co. All Rights Reserved Last year Enron was the seventh largest U.S. company. Today it's bankrupt. = Thousands of Enron workers have lost their jobs. Some have even lost their = life savings. And maybe it didn't have to happen.=20 What went wrong? It's a story so complicated that investigators have just s= tarted unraveling the mystery. But lots of people think there's something p= retty simple at the bottom of the Enron mess: lies and greed. John Kelly ta= kes a look at the scandal. The Birth of Enron=20 Enron started life in Texas as a company that owned underground pipes and s= old natural gas to power plants. Then Enron expanded into all sorts of othe= r businesses. It sold natural gas, electricity, Internet connections and mo= re. It bought other companies and grew larger and larger.=20 Enron looked like a success, a company people wanted to work at and invest = in. But then . . .=20 Secrets & Lies=20 Companies are allowed to keep some secrets -- the recipe for a best-selling= soft drink, for example. But there are some secrets they can't keep, espec= ially if they're a "publicly held" company.=20 Publicly held means that the public can buy stock, or ownership, in the com= pany. When the company does well and makes a profit, the value of the stock= goes up. But when a company is badly run, the stock value goes down. By st= udying information provided by a company, people can decide which stocks th= ey should buy and which ones they should sell.=20 For years everyone thought Enron was one of the best companies in the Unite= d States. If you bought one piece -- or "share" -- of Enron stock in Januar= y 1998 it cost you about $20. By September 2000 that same share was worth n= early $90.=20 Enron's secret, officials say, is that it wasn't a well-run company. It was= losing money, not making money. And to hide that fact it created dozens of= partnerships. These secretive side deals allowed Enron to hide its debt. T= he idea seemed to be to convince people that it wasn't Enron that was in tr= ouble, it was these other groups. The problem: Those other groups were Enro= n. And Enron was like a shaky building about to collapse.=20 Rich Bosses, Poor Employees=20 As Enron's stock increased in value, the people who ran the company got ric= her and richer. They often were paid in stock, in addition to their salarie= s. Regular employees did well too -- at least on paper. They were allowed t= o buy Enron stock to save for retirement. In fact, it was encouraged: Last = October, Kenneth Lay, the head of Enron, sent an e-mail to workers saying t= hat the stock was a great deal and the company was going strong.=20 But it wasn't going strong. And Enron's bosses seemed to know that. For yea= rs they'd been selling some of their stock. It was almost as if they knew t= he value was going to drop. And it did drop. Last fall, when Enron announce= d that it had earned $586 million less over the past four years than it had= said at first, the stock value plummeted. It was a good time to sell Enron= stock.=20 At around that time, though, Enron employees weren't allowed to sell their = stock. They were frantic as they watched their life savings drip away. But = company bigwigs were allowed to sell their stock.=20 Today stock once valued at about $90 a share is worth about 45 cents.=20 Politicians' Problems=20 Enron didn't only spend money buying pipelines and other companies. It also= donated money to Republicans and Democrats to help those politicians pay f= or their election campaigns. This is legal, but a lot of people think it sm= ells fishy. They worry that a senator or representative who got a lot of mo= ney from Enron might hesitate to do anything that would upset the huge comp= any.=20 Think about it this way: If someone gave you a $10,000 "gift," would you th= ink they expected something in return?=20 President Bush received money from Enron. So did Attorney General John Ashc= roft while running for re-election to the U.S. Senate. (Ashcroft, now in ch= arge of prosecuting companies that cheat the public, has said he won't be i= nvolved in the Enron investigation.)=20 Because of these connections, and the fact that such a big company failed a= nd so many workers lost their jobs and their money, people are wondering wh= at the Enron investigation will reveal. http://www.washingtonpost.com=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 California; Editorial Pages Desk Open Cheney's Enron Baggage to Scrutiny 01/30/2002 Los Angeles Times Home Edition B-12 Copyright 2002 / The Times Mirror Company Re "Cheney Defends Refusal to Detail Energy Meetings," Jan. 28:=20 Vice President Dick Cheney feels previous administrations have "traded away= " authority and that the demand for more information regarding the White Ho= use/Enron dealings is a partisan "fishing expedition." Funny, this administ= ration seems to have exactly the opposite view regarding the treatment of t= he general public in its so-called war on terrorism, curtailing our civil l= iberties and casting a wide net to catch "evildoers." Regardless of what may or may not have happened in those energy meetings, t= here appears to be a stink bomb in the administration's Enron baggage, and = we the public want to know: Did they pack it themselves? Were they asked to= carry anything for anyone? Has it been in their possession at all times?= =20 Ged Kenslea=20 West Hollywood=20 *=20 Cheney regarding Enron: "There is no evidence to indicate anybody did anyth= ing wrong in the administration." And, of course, he doesn't think that we = can be trusted to make that determination after hearing all the details, so= he won't give them to us. Oh, why didn't I invest in the paper-shredding i= ndustry instead of Enron?=20 Bob Stroh=20 Fillmore=20 *=20 Congressional hearings have been convened to investigate the Enron tragedy = in what seems to be record-breaking time. When issues directly affect its m= embers, Congress can move with uncharacteristic speed. The far more urgent = concern of extending unemployment and health benefits for the growing joble= ss ranks, however, has been shunted aside for the umpteenth time. Could thi= s be because the Enron debacle provides greater political finger-pointing o= pportunities than the survival struggle of those less fortunate?=20 Jane Garcia=20 Los Angeles=20 *=20 "Enron Vision Proved Costly to Firm, State" (Jan. 28) portrays Enron as the= root of all electric-industry evil. It fails to portray what happened. Der= egulation is working in other states. California's Legislature dropped the = ball. AB 1890 was not a deregulation bill. It was called "industry restruct= uring" because the legislators would not let go and create a true market, a= s you allege Enron wanted. The joke of 1996 was that AB 1890 was "re-regula= tion."=20 You imply that Enron was the most influential lobbyist. In fact, California= utilities like Southern California Edison contributed large sums of money,= personnel and influence during that period, not to create the "perfect mar= ket" but to create legislation that would allow them to recapture 100% of t= heir stranded assets. Many lobbyists were heavily involved in that legislat= ive process, trying to secure legislated benefits for other narrow constitu= ents. For state Sen. Steve Peace (D-El Cajon) to now say, in effect, "Enron= made me do it" leads me to believe that he is not the brightest bulb in th= e Legislature.=20 David A. Rohy=20 Commissioner, California=20 Energy Commission, 1995-2000=20 San Diego=20 *=20 The American public should say thank you to Enron. The dramatic implosion o= f Enron reveals a fatal flaw of privatization and deregulation. The Califor= nia energy crisis is a good example of failed deregulation, where the state= opened the energy system to manipulation and price gouging. It drained the= state's resources from the three publicly traded utilities--as well as the= state's surplus--to the bone.=20 Hopefully, the Enron bankruptcy will slow down the bullet train of privatiz= ation and deregulation being pushed by the Republican Party. Imagine the su= ffering the public will face if the privatization of Social Security is suc= cessfully rammed through Congress on the coattails of the president's popul= arity. Enron's workers and retirees who are educated (attorneys, traders an= d various professionals) still lost their pensions. Average American worker= s don't stand a chance to protect their private Social Security accounts.= =20 Tereso Banuelos=20 Rancho Cucamonga PHOTO: Vice President Dick Cheney; ; PHOTOGRAPHER: Associated Press=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Attorney general's opinion is sought Media has asked to see suicide note=20 By ERIC HANSON=20 Copyright 2002 Houston Chronicle=20 Jan. 30, 2002, 12:04AM SUGAR LAND -- The Police Department says it will get an attorney general's = ruling -- a process that could take months -- before releasing the suicide = note written by a former Enron executive whose body was found in his car Fr= iday.=20 More than 60 news organizations, including the Chronicle, have asked the Su= gar Land police to release the note written by John Clifford Baxter under t= he Texas Public Information Act.=20 "The Police Department has completed its review of the note for investigati= ve and testing purposes and, at this stage, does not have any objections to= the release of its contents," said Joe Morris, Sugar Land's city attorney.= =20 However, Morris said there are confidentiality and right-to-privacy issues = and that the city wants a legal opinion from the Texas attorney general's o= ffice before releasing the note.=20 Rob Wiley, a Houston lawyer familiar with public-information law, said such= requests are decided on a case-by-case basis.=20 "The general criteria seem to be, is there an overwhelming public interest,= and whether that outweighs any privacy or investigative interest that migh= t be present," Wiley said.=20 Usually, he said, a suicide note is personal and releasing it serves no ser= ious public interest.=20 However, in some cases, usually involving the suicide of a public official = or newsworthy person, the attorney general has ruled in favor of releasing = suicide notes.=20 Wiley added that the attorney general could rule that parts of the note are= private and others public.=20 When someone requests information from a Texas government agency, the agenc= y has 10 business days to provide the information or seek an attorney gener= al's opinion on whether it is public information. Sugar Land officials rece= ived the first requests for the Baxter note Friday afternoon.=20 The attorney general then has 45 business days to make a ruling, although t= hat period can be extended by 10 business days.=20 Officials expect to send the request to Austin in a few days, said city spo= kesman Doug Adolph.=20 Baxter, 43, a former vice chairman of Enron, was found shot to death in his= Mercedes-Benz sedan, which was parked in the 5800 block of Palm Royale. A = .38-caliber pistol was found in the car. His funeral is scheduled for today= in his hometown, Amityville, N.Y.=20 Although the Harris County medical examiner has ruled the death a suicide, = Sugar Land police say their investigation is continuing.=20 But that does not mean the Police Department disagrees with the ruling, Pol= ice Chief Earnest Taylor said Tuesday.=20 "As is the case with most routine investigations, other forensic tests such= as ballistic tests, fingerprinting and hair and fiber analysis must be per= formed," he said. "These and other tests are thoroughly and methodically ev= aluated before closing an investigation."=20 Business/Financial Desk; Section C ENRON'S MANY STRANDS: AN EXECUTIVE'S DEATH Hometown Remembers Man Who Wore Success Quietly By ELISSA GOOTMAN 01/30/2002 The New York Times Page 7, Column 1 c. 2002 New York Times Company AMITYVILLE, N.Y., Jan. 29 -- When J. Clifford Baxter returned to this quiet= village in September for his 25th high school reunion, his success was no = secret. He arrived with a chauffeur, and afterward, he treated a group of 2= 0 or so classmates to drinks at Giacomo Jack's, a nearby restaurant.=20 But those who grew up playing football and climbing trees with Mr. Baxter, = 43, a former vice chairman of Enron, said they were shocked to learn that h= e committed suicide in Texas last week. Many of his friends said they had a= lso not realized the extent of his success: that since leaving Amityville, = a village on Long Island's South Shore, Mr. Baxter had climbed to a top pos= t at one of the country's largest companies. ''He looked great; he was in shape; he looked young for his age,'' said Tim= Schultz, a high school classmate. ''But I don't think many people, if any,= really knew how far he had come.''=20 In Amityville, an insular place where children run back and forth among nea= t, modest homes and spend their summers in or near the waters of Great Sout= h Bay, Mr. Baxter, who is to be buried here on Wednesday, will be remembere= d not for his successful career but as a loyal son who did not brag about h= is accomplishments and who always came home.=20 Almost everyone in Amityville seems to know the Baxter family: Mr. Baxter's= father was a sergeant in the village police department, and his grandfathe= r, a plumber, was a village trustee. People knew that Cliff, the youngest o= f six, was bubbly and smart.=20 But until recently, few people here seem to have given much thought to Enro= n, let alone realized that Mr. Baxter was among its top executives. ''I nev= er knew the name of the place,'' said Joe C. Slack, a village trustee and f= amily friend. ''I never gave much thought to it.''=20 Mr. Slack knew other things. He was invited, for instance, to the 80th-birt= hday party that Mr. Baxter held for his mother at a nearby catering hall. T= here were mussels and shrimp, Swedish meatballs and gracious toasts, and Mr= . Baxter surprised his mother with two gifts: a Lincoln Continental and a t= rip to Ireland, Mr. Slack said.=20 ''All of the sudden, bam,'' Mr. Slack said. ''You see this good-looking boy= in the paper, and you say, 'Holy mackerel.' ''=20 John Bochicchio, 43, a high school classmate, said he was struck at the reu= nion by Mr. Baxter's modesty, his generosity and his connection to his home= town. Mr. Baxter had mentioned he was interested in setting up a college fu= nd for Amityville high school students and donating money ''to fix up some = things in town,'' said Mr. Bochicchio, a bartender at Runyon's, a restauran= t not far from the high school.=20 ''He was really nostalgic,'' Mr. Bochicchio said. ''As successful as he bec= ame, he never forgot his roots. He loved Amityville.''=20 Mr. Baxter spent his childhood swimming at Amityville Beach, climbing the a= pple tree in his backyard and playing baseball on an abandoned cornfield on= Oak Street that is now filled with condominiums. ''The cornfield boys,'' h= e and his friends called themselves.=20 Mr. Baxter started playing guitar before high school. Later, in business sc= hool, he humored his classmates with a pointed rendition of ''Money for Not= hing,'' a hit by the group Dire Straits.=20 His intelligence was evident inside the classroom, where he once confidentl= y argued a point with a high school biology teacher until the teacher ackno= wledged that he had erred, and on the playing fields.=20 ''If the ball was out of bounds, he wouldn't just shout you down,'' said Ji= m Cheviot, 44, a classmate. ''It was an organized debate.''=20 Once, during a game of catch, Mr. Baxter initiated a conversation that Mr. = Bochicchio found so surprising he remembers it now -- more than 30 years la= ter.=20 ''He's telling me, 'Isn't it amazing about gravity? The earth is spinning, = and we can be out here catching a ball,' '' Mr. Bochicchio recalled. ''I'm = doing everything I can just to catch and throw it, and he's already into ph= ysics and Newton. Even then I knew this guy was different.''=20 But not too different. In his high school yearbook, a surprised-looking Mr.= Baxter, wearing an apron, is pictured during shop class, but not as most l= ikely to succeed.=20 ''He was so naturally smart,'' Mr. Bochicchio said. ''I'm not sure he pushe= d himself to the limit, it was so easy for him.''=20 As things became tougher, Mr. Baxter rose to the challenge. After leaving A= mityville, he graduated from New York University cum laude, with a degree i= n finance. He joined the Air Force, where he met his wife, with whom he had= two children, and became a captain.=20 Then came Columbia Business School, where he graduated as a co-valedictoria= n but stood out for being kind and approachable.=20 ''He was just warm and engaging and not in any way elitist or condescending= ,'' said Virginia Weiler, a classmate who is now an adjunct professor or ma= rketing at the University of Southern Indiana. ''He was so rare, too, espec= ially in the late 80's. He had a sense of propriety about him, and he was a= straight arrow, unlike the Ivan Boesky wannabes in our class.''=20 When Ms. Weiler learned about Mr. Baxter's death last Friday, she was horri= fied. Upon reflection, she came to the conclusion that he must have acted o= ut of conscience.=20 ''He was very much a man of principle and very much a man of honor,'' she s= aid. ''He was ethical and very much had that military bearing about him.''= =20 Alumni officials at the Columbia Business School and N.Y.U. said Mr. Baxter= was not actively involved in alumni affairs, making his appearances at hig= h school reunions all the more poignant.=20 ''I would have been surprised if he didn't come'' to the recent reunion, Mr= . Cheviot said. ''He never forgot where he came from.''=20 Early this week, Mr. Baxter's relatives received guests at the Powell Funer= al Home on Broadway. Mr. Baxter's coffin was draped with an American flag, = and next to a collection of bright flower arrangements stood a montage of h= is personal history: Mr. Baxter posing in a pale blue tuxedo, outfitted in = a black graduation cap and gown, sheepishly holding a birthday cake decorat= ed with a rainbow.=20 Many here refuse to believe what the medical examiner's office ruled the da= y after Mr. Baxter's body was found inside his car in the Houston suburb wh= ere he lived, with a gunshot wound to the head: that he had committed suici= de.=20 ''With all the goings-on, the shenanigans in that company, I find it diffic= ult to believe that it was a suicide,'' said John Mischenko III, 50, who gr= ew up down the street from Mr. Baxter and was friendly with one of his olde= r brothers. ''It just doesn't seem logical to me.''=20 Some friends said that Mr. Baxter had appeared more serious and subdued tha= n usual at the recent reunion but that he did not seem to be distressed.=20 When Mr. Cheviot marveled at the news that Mr. Baxter had already retired, = he did not boast, or wince. Instead, he explained he wanted to spend more t= ime with his family. ''Jim,'' he had said, ''I've been very fortunate.'' Photo: J. Clifford Baxter was not pictured as the most likely to succeed in= his Long Island high school yearbook. Mr. Baxter, who the authorities say = committed suicide, was photographed during shop class. (Amityville Memorial= High School Yearbook, 1976)=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Sarah Palmer Internal Communications Manager Enron Public Relations (713) 853-9843