Message-ID: <3731687.1075841113258.JavaMail.evans@thyme> Date: Mon, 28 Jan 2002 07:25:25 -0800 (PST) From: sarah.palmer@enron.com To: sarah.palmer@enron.com Subject: Enron Mentions (major papers only) -- 01/28/02-01/27/01 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 Accounting for Enron: Obstruction Charges Likely to Be First Step in Enron = Criminal Case The Wall Street Journal, 01/28/2002 ENRON'S MANY STRANDS: EARLY SCRUTINY 10 Months Ago, Questions on Enron Came and Went With Little Notice The New York Times, 01/28/2002 A Fog Over Enron, And the Legal Landscape The New York Times, 01/27/2002 ENRON'S MANY STRANDS: THE PROSECUTOR Noted Brooklyn Prosecutor Joins U.S. Inquiry Into Enron Collapse The New York Times, 01/28/2002 THE FALLOF ENRON Convictions for Enron Execs Would Be Hard Won Los Angeles Times, 01/28/2002 Building the House of Enron: As Enron's Derivatives Trading Comes Into Focu= s, Gap in Oversight Is Spotlighted The Wall Street Journal, 01/28/2002 ENRON'S MANY STRANDS: SEEKING EVIDENCE Hard-to-Miss Box of Scraps Catches F.B.I. Agent's Eye The New York Times, 01/28/2002 ENRON'S MANY STRANDS: LEGAL STRATEGY SHREDDED PAPERS KEY IN ENRON CASE The New York Times, 01/28/2002 ENRON'S MANY STRANDS: THE VICE PRESIDENT Cheney Is Set to Battle Congress To Keep His Enron Talks Secret The New York Times, 01/28/2002 Enron and the Lawyers The New York Times, 01/28/2002 Enron Case Attracts Lawyers Like a Flame Attracts Moths, More Than You Can = Shake a Stick at The Washington Post, 01/28/2002 Greed, Pain, Excesses. Oh, What a Lovely Issue. The New York Times, 01/27/2002 How a Top Medical Researcher Became Entangled With Enron The New York Times, 01/28/2002 While Enron's future is uncertain, its trademarked name could live on for a= decade. The New York Times, 01/28/2002 A Suicide and a Resignation as the Formal Inquiries Get Under Way The New York Times, 01/27/2002 Police Probe Ex-Enron Executive's Death --- Baxter, an Apparent Suicide, Wo= rked to Sell Assets Of Energy-Trading Firm The Wall Street Journal, 01/28/2002 ENRON'S MANY STRANDS: THE SUICIDE Despite His Qualms, Scandal Engulfed Executive The New York Times, 01/27/2002 The Astros Should Give Some of the Money Back The New York Times, 01/27/2002 Planet Of the Privileged The New York Times, 01/27/2002 I Am Woman, Hear Me Roar in the Enron Scandal The New York Times, 01/27/2002 Private Enterprise, Public Outrage Los Angeles Times, 01/28/2002 _____________________________________________________________________ Accounting for Enron: Obstruction Charges Likely to Be First Step in Enron = Criminal Case By Wall Street Journal staff reporters Richard B. Schmitt, Gary Fields and = John R. Wilke 01/28/2002 The Wall Street Journal A6 (Copyright (c) 2002, Dow Jones & Company, Inc.) WASHINGTON -- Federal prosecutors likely would file obstruction-of-justice = charges first in any criminal case arising from the collapse of Enron Corp.= , as they look to build a broader indictment based on possible securities f= raud, insider trading and tax fraud, lawyers close to the case said.=20 Obstruction charges, including any allegations of deliberate destruction of= evidence, could come as soon as this summer and likely would be filed in f= ederal court in Houston, these lawyers said. Such initial criminal charges = could provide prosecutors with powerful leverage against defendants whose c= ooperation might then be sought to pursue any inquiry into any underlying c= rimes, these people said. Enron's spectacular collapse last month triggered more than a dozen civil, = criminal and congressional investigations and already has had significant p= olitical repercussions. But for officers and executives of the Houston-base= d energy-trading company and its former auditor, Arthur Andersen LLP, the s= takes are highest in the Justice Department's wide-ranging criminal investi= gation.=20 One crucial factor for these men and women could be the dates that any alle= ged obstruction and fraud occurred. Penalties for most federal white-collar= crimes were stiffened Nov. 1, in some cases nearly doubling prison sentenc= es and fines.=20 A senior Justice Department official refused Friday to discuss possible cha= rges or other details of the case, except to confirm that it could unfold r= elatively quickly. Others close to the case cautioned, though, that with in= vestigators still grappling to determine just what happened, few firm decis= ions have been made about legal tactics or where initial charges should be = filed.=20 An attorney for Enron said discussion of criminal charges against the compa= ny is premature. The company has been cooperating with federal investigator= s looking into document shredding by its employees, and a report by a speci= al committee of Enron's board looking into the debacle is expected out soon= , possibly this week.=20 "I think it is grossly unfair to draw any conclusions at this early stage. = There is no evidence at all, at least on the part of Enron, that any shredd= ing of documents was criminal in any way. I think before anybody rushes to = judgment, they should see what the FBI concludes," said Robert Bennett, an = Enron attorney here.=20 "This board of directors is trying very hard to reorganize this company, an= d bring it out of bankruptcy so stakeholders can get paid back and so 20,00= 0 employees can keep their jobs," he added.=20 In any event, prosecutors face enormous hurdles. Complex white-collar crime= cases can take months, if not years, to untangle, and figuring out what oc= curred at Enron -- with its hundreds of offshore companies and affiliates a= llegedly set up to sweep debt from Enron's books and juggle tax liabilities= -- could prove especially difficult. At the same time, proving criminal in= tent in such cases can be tough, and often must be established with circums= tantial evidence; what's more, defendants in such cases sometimes argue tha= t they reasonably relied on the advice of lawyers in their actions and deci= sions, which can make it difficult to establish criminal intent.=20 Auditors and lawyers in such cases rarely face prosecution. But Arthur Ande= rsen and Vinson & Elkins, Enron's longtime legal counsel, have been sharply= criticized for failing to probe more deeply into concerns about possible f= raud. Arthur Andersen or its employees, in particular, could be liable if t= hey knowingly destroyed evidence. A Vinson & Elkins spokesman said the firm= 's work for Enron met "the highest professional and ethical standards." An = Arthur Andersen spokesman said the firm is cooperating in the probe, and no= ted that it had volunteered information to investigators about the destruct= ion of documents. "We are not speculating on outcomes," the spokesman said.= "We are focused on helping them to do their jobs."=20 While the investigations are still in their infancy, with new and startling= facts emerging almost daily, some defense lawyers and former prosecutors s= ay they wouldn't be surprised if the Justice Department brought initial cri= minal charges as soon as the summer.=20 The government's roadmap in such cases often includes early charges of obst= ruction for making false statements or destroying evidence. Obstruction cha= rges are relatively straightforward; prosecutors don't have to prove a defe= ndant was involved in any underlying crime, only that he or she lied, destr= oyed evidence or otherwise hindered prosecutors. And such defendants -- who= can face prison time -- often end up being valuable witnesses in guiding i= nvestigators through the morass as they attempt to build a broader case.=20 "The government loves the obstruction angle," said James Volling, head of t= he business-litigation group at Minneapolis's Faegre & Benson law firm. "It= doesn't come with all the baggage that securities claims often do. It is p= retty easy to establish the facts. That is something they clearly will purs= ue."=20 Beyond initial obstruction charges in the Enron matter, "there is a smorgas= bord of potential criminal charges," said Henry Hockeimer, a Philadelphia d= efense lawyer and former federal prosecutor. Already, shareholders have fil= ed civil suits alleging that Enron officers violated securities laws by not= disclosing material information about circuitous, off-balance-sheet partne= rship arrangements. They also have alleged that company officers sold more = than $1 billion of Enron stock using inside information that should have be= en disclosed to the public.=20 The same allegations could form the basis of criminal securities-fraud and = insider-trading charges if the government thinks it can prove the officers = acted while knowing what they were doing was wrong, or were warned and went= ahead anyway. Other possible claims include mail and wire fraud, and even = violations of the federal bank-fraud statute, if Enron or its officers kept= material information from its lenders.=20 The timing of specific acts could be an issue if charges are proven in cour= t because sentencing guidelines on hundreds of white-collar crimes got more= severe Nov. 1. For example, the maximum penalty for the basic crime of ins= ider trading or fraud in excess of $1 million has nearly doubled, from 37 m= onths in prison to 63 months. Enron is the first major white-collar crime i= nvestigation since the new guidelines became effective.=20 According to federal sentencing commission statistics, about 10,000 people = were sentenced to federal prison for financial crimes in 2000. If the new g= uidelines had been in place, a third of them would have received more priso= n time and those sentences would have been an average of 40% longer.=20 ---=20 Question of the Day: What will be the biggest fallout from the Enron disclo= sures? Visit WSJ.com/Question to vote. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 National Desk; Section A ENRON'S MANY STRANDS: EARLY SCRUTINY 10 Months Ago, Questions on Enron Came and Went With Little Notice By FELICITY BARRINGER 01/28/2002 The New York Times Page 11, Column 1 c. 2002 New York Times Company A paramount virtue in journalism is being the first to reveal startling fac= ts. Editors notice. Colleagues notice. Competitors notice.=20 Except when they do not. Ten months ago, Bethany McLean of Fortune magazine became the first journal= ist to highlight hard questions about Enron's balance sheet. The most start= ling fact she revealed was the absence of crucial information in the compan= y's financial reports. ''How exactly does Enron make its money?'' she wrote= .=20 Her questions were so pointed that Enron's chief executive, Jeffrey K. Skil= ling, called her unethical for failing to do more research. Three Enron exe= cutives flew to New York in an unsuccessful effort to convince her editors = that she was wrongheaded. Enron's chairman, Kenneth L. Lay, called Fortune'= s managing editor, Rik Kirkland, to complain that Fortune was relying on a = source who stood to profit if the share price fell.=20 The lobbying by Enron had no effect on what Fortune published, highlighted = on its cover with the headline, ''Is Enron Overpriced?'' Then inertia did w= hat corporate pressure could not do -- it buried the article. Only TheStree= t.com picked it up and peppered Enron with critical reporting.=20 Even Ms. McLean left leads that were not pursued. She knew, she said, that = Enron's chief financial officer, Andrew S. Fastow, was a principal in two p= artnerships alluded to in the financial statements. But she left it out of = her article.=20 ''I knew it was weird, but the accountants had signed off on it,'' she said= . If the accountants, Arthur Andersen, and Enron's board had not questioned= it, she reasoned, why should she? Not until October did The Wall Street Jo= urnal link Mr. Fastow's partnerships to Enron's write-off of $1.2 billion i= n shareholder equity.=20 As Mr. Kirkland said, Ms. McLean's report ''was prescient, but it kind of w= ent out and sank.''=20 ''We didn't have the goods, as it were,'' Mr. Kirkland said. Only last fall= , when Enron began to collapse, did more reporters pay attention to the art= icle and to its author. Ms. McLean herself has returned to reporting on Enr= on.=20 Ms. McLean, who is 31, is now the financial reporter everyone loves to lion= ize. Her photogenic smile and the analytical ability honed at Goldman, Sach= s have won her appearances on PBS's ''NewsHour With Jim Lehrer,'' CNN's ''G= reenfield at Large'' with Jeff Greenfield, and two NBC News shows. NBC, For= tune executives said, has offered her a consulting contract.=20 The arc of Ms. McLean's experience with Enron illustrates the dynamics of f= inancial journalism, which tends to be sucked into the gravitational pull o= f the stock markets. Companies with highflying stocks tend to get positive = coverage; those whose stocks slide tend to provoke critical assessments.=20 Other magazines like Business Week and even Fortune had written glowing acc= ounts of Enron's transformative effect on energy markets, and the trajector= y of its stock price, which rose about 50 percent in 1999 and about 90 perc= ent in 2000. As Ms. McLean was working on her article, in the midst of the = California power crisis, Business Week published a cover article entitled: = ''Enron, the nation's largest energy merchant, won't let California stand i= n its way.''=20 But as the share price rose, Enron's financial reports stayed opaque. One w= ould almost have to have written them to understand them. And few financial= reporters have written corporate financial reports.=20 Ms. McLean is part of that small group. For three years after she graduated= from Williams College with a double major in math and English, she worked = for investment banking division of Goldman, Sachs. ''You work literally 100= hours a week, sitting at your computer doing a lot of calculating, a lot o= f spread sheets,'' she said on Friday.=20 She would review the books of companies being offered for sale and write me= morandums describing their virtues and faults. ''I learned,'' she said, ''t= hat numbers can lie.''=20 She also had an epiphany about accounting and its potential for abuse. ''Wh= en you come out of a liberal arts background,'' she said, ''you want to kno= w why something is the way it is.'' In accounting, ''there is no reason why= . There is no fundamental truth underlying it. It's just based on rules.''= =20 ''These rules create an incentive to get around rules,'' she said. ''This m= eans getting away from any accounting portraying the fundamental economic r= eality of a company.''=20 Ms. McLean had never practiced journalism. But after three years at Goldman= , in a culture where she was never comfortable, she decided to send her res= ume to several newspapers. She had no takers. Then a friend sent her resume= to Fortune. There, she joined its corps of fact-checkers, soon becoming fa= mous for giving no quarter.=20 The fame stemmed from her tug of war with Andrew S. Grove, then the chief e= xecutive of Intel. He had written an article about how he had decided among= possible treatments for his prostate cancer. Ms. McLean, then 25, challeng= ed him on his data. And she was right. Both agree on this, though neither r= emembers the exact details. ''She did a super job,'' Mr. Grove wrote in an = e-mail message last week. ''She was a royal pain but not one person subsequ= ently challenged any facts in my article.'' Later he sought her out to than= k her.=20 The incident brought her to the attention of John Huey, then the magazine's= managing editor. Ms. McLean was promoted and slowly mastered the writing s= ide of the business (paying her editors back for their labors by regularly = beating them at pool).=20 Five years later, she was tackling Enron, nervously. She had felt indirectl= y rebuked when her earlier critical financial analysis of I.B.M.'s earnings= had no effect on investors or I.B.M.'s share price. Remembering how her ju= dgment had not been validated, she was afraid Mr. Skilling, the Enron chief= executive, was right when he implied she had failed to do the work require= d to understand Enron's financials.=20 But events proved him to be wrong. He was not wrong, however, when he told = her that similar questions were being asked ''by people who want to throw r= ocks at the company.'' The first person to flag Ms. McLean to the odd finan= cial statements had been someone who had bet against Enron stock.=20 Almost all the reporting on the company at that point was favorable. As Jam= es S. Chanos, a short seller who is president of Kynikos Associates, a hedg= e fund in New York, said in a recent interview, ''The stock price conveys l= egitimacy.''=20 Short sellers like Mr. Chanos, who pointed Ms. McLean toward Enron, are amo= ng the few skeptics in a business where most interest groups -- analysts, i= nvestment bankers, shareholders and executives -- profit from a bull market= .=20 Ms. McLean went on to report about soy milk and Prozac, not Enron. ''The ne= xt line of reporting wasn't clear,'' she said.=20 But Peter Eavis of TheStreet.com continued to question the valuation of Enr= on's investment portfolio. Last summer, he reported investor uncertainty ab= out ''how much Enron's earnings have been aided by deals'' by entities like= ''LJM Capital Management, whose general partner is Enron's chief finance o= fficer, Andrew Fastow.'' Even the revelation of Mr. Fastow's dual loyalties= provoked little attention.=20 Maybe, as Mark Roberts, the research director of Off Wall Street Consulting= in Cambridge, Mass., said, ''The whole thing was so opaque and so difficul= t to conceive and so well hidden that it was just beyond the tools of journ= alists.''=20 Certainly, after the Sept. 11 terrorist attacks, journalists were distracte= d. But, in the following weeks, investors were not. As Enron's stock price = kept declining, they asked more questions like Ms. McLean's, and they did n= ot like the answers. ''What led to all the revelations and the beginning of= the end,'' Mr. Roberts said, ''was a crisis of confidence.=20 Ms. McLean is unsure what lessons journalists will learn from covering Enro= n. ''If we all are more cynical about companies and know that accountants c= an't be trusted and boards can't be trusted, is that a good thing?'' she as= ked. Photos: Bethany McLean became the first journalist to ask questions about E= nron's finances in an article, ''Is Enron Overpriced?'' in Fortune magazine= . (Frances Roberts for The New York Times)=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Money and Business/Financial Desk; Section 3 A Fog Over Enron, And the Legal Landscape By DIANA B. HENRIQUES with KURT EICHENWALD 01/27/2002 The New York Times Page 1, Column 3 c. 2002 New York Times Company ''ROTTEN.'' ''Horrible.'' ''Indefensible.'' ''Shocking.''=20 With those words, securities law experts around the country condemned the w= ay Enron had structured and sold a partnership called LJM2, which offered i= nvestors a chance to profit from confidential information about Enron's inv= estment plans -- and gave the partnership investors more information about = the company's finances than Enron's shareholders received. ''This is potentially the most serious revelation about Enron to date,'' sa= id Joel Seligman, a securities law historian and dean of the Washington Uni= versity Law School. ''You can't overstate how shocking it is.''=20 But did the arrangement, however unfair it seems to stockholders, actually = violate the nation's securities laws and regulations? That is far more diff= icult to answer, legal scholars say -- and far more important. For them, th= e fundamental question about the sprawling Enron scandal is whether it is a= case of strong laws being violated by bad people, or of weak laws renderin= g such violations unnecessary.=20 ''If a company of this size, advised by top-tier accountants and law firms,= could conclude that our laws permit some of what happened here, then our l= aws are inadequate,'' said Richard C. Breeden, a former chairman of the Sec= urities and Exchange Commission. ''Clearly it violates the spirit and inten= t of securities laws and the whole concept of full and fair disclosure.''= =20 The quandary is particularly acute in the case of this partnership, because= it seemed to thrive on arrangements -- procedural barriers known as ''Chin= ese walls'' -- that were actually intended to protect investors. These lega= l barriers prevented investment bankers who were privy to information about= the partnership from legally sharing that information with shareholders. I= nstead, investors remained in the dark about Enron's actual financial condi= tion.=20 But the partnership, lawyers and finance experts say, raises novel question= s about the effectiveness of other parts of the securities laws, as well. T= hese include prohibitions against trading on inside information; rules agai= nst selectively disclosing information to some shareholders and not others;= efforts to police corporate conflicts of interest and the wisdom of removi= ng restrictions on the roles that investment banks can play.=20 ''No matter how good you make the laws, there will always be a small group = of people who will push them,'' said John Pound, a former finance professor= at Harvard and the president of Integrity Partners, an investment manageme= nt firm in Boston. ''But the Enron case has raised a lot of useful and impo= rtant policy questions that will need to be addressed. And the Chinese-wall= issue is a perfect example of that.''=20 ENRON'S swift fall, culminating in its bankruptcy filing in early December,= came after the company revised its past financial statements to more accur= ately reflect partnership deals like the LJM2 arrangement. The company and = its auditor, Arthur Andersen, are the subjects of both criminal and regulat= ory investigations, and are being examined by nearly a dozen Congressional = committees.=20 One important focus of those investigations is the way that partnerships li= ke LJM2 contributed to the company's collapse. Confidential records of that= specific partnership, disclosed in The New York Times on Friday, show that= Enron tried to attract investors by dangling the prospect of potentially r= emarkable returns, driven by access to inside information about Enron's fin= ancial dealings.=20 Potential investors were told, in detail, about the company's off-the-books= transactions and assets, information that Enron had not disclosed to its p= ublic shareholders. Indeed, partnership investors knew that Enron controlle= d at least 50 percent more assets than the company had disclosed in its aud= ited financial statements, filed with the S.E.C. and provided to public sha= reholders.=20 That lopsided flow of information strikes many legal experts as a direct ch= allenge to traditional thinking about Chinese walls, the common nickname fo= r the procedures that assure that the confidential information Wall Street = firms obtain from their corporate investment banking clients remains confid= ential, even within the firm itself.=20 Chinese walls came into being in the late 1960's, as a regulatory response = to the increased complexity of Wall Street firms and a more vigorous S.E.C.= response to insider trading, said Michael A. Perino, a securities law prof= essor at St. John's University.=20 Their purpose, quite simply, was to prevent an investment banker from using= confidential information about a corporate client to make trades in that c= lient's stock -- trades in which the banker would have an advantage over ot= her investors.=20 In 1988, at the end of a decade punctuated by insider trading scandals, Con= gress made such ''informational partitions'' mandatory, citing the need to = prevent Wall Street insiders from taking advantage of Main Street investors= .=20 But in this case, it appears that the protection backfired, legal experts s= aid. Investment bankers who worked on the Enron partnerships were privy to = information that may have raised doubts about the information Enron had pro= vided to public investors -- but they were forbidden by law from raising an= y red flags.=20 ''The purpose of the Chinese wall is to help public investors, but this wor= ked backwards,'' said Mr. Pound, the former Harvard professor. ''What amaze= s me is that the people who knew they had information adverse to the public= investors would not feel a need to find a way, within the institution, to = address that issue -- to go up in the institution high enough to say, 'We h= ave a policy problem here.' ''=20 The LJM2 partnership points up Chinese-wall problems that courts and regula= tors have been struggling to resolve for years, said John C. Coffee Jr., a = securities law expert at Columbia University Law School.=20 If the investment banking divisions of a brokerage firm had information tha= t raised questions about the value of a public company's stock, there is no= thing under the current law that the bankers could do to help the firm's re= tail investors. But there are more limited actions the firm could take, Mr.= Coffee said.=20 ''They can't go out and privately tell their clients the full information t= hey have received without being part of an insider trading scheme,'' Mr. Co= ffee said. ''But they could arguably use the information to withdraw their = recommendation on the stock.'' That, he added, ''will cause some consternat= ion and adverse publicity that would alert the market to a problem.''=20 OTHER legal experts worry that the investment banks dealing with Enron were= constrained by conflicts between their role as lenders and their work as u= nderwriters.=20 This conflict, too, has roots deep in American financial history. In the de= cade before the 1929 crash, banks would sometimes help a failing company se= ll stock to the bank's customers to raise money to repay the bank's loans. = As part of the New Deal, Congress passed the Glass-Steagall Act, which prev= ented banks from providing both underwriting and traditional banking servic= es.=20 But long before Congress officially repealed Glass-Steagall in 1999, both b= anks and Wall Street firms found legal detours around the prohibition. Now,= some securities law experts said, Congress may need to take a fresh look a= t whether these dual roles in any way affected the flow of significant info= rmation to public investors in Enron.=20 One specialist in corporate law, who spoke on condition of anonymity becaus= e his firm is an Enron creditor, said, ''In a case like this, this perverse= effect should be discussed at the very highest levels in the firm.''=20 Mr. Breeden, the former S.E.C. chairman, said no direct parallels to the cl= assic pre-1929 conflicts have appeared. But Enron's evolution ''was a very = subtle situation, and very complex,'' he said.=20 ''In any case,'' he added, ''the public should be able to conclude where th= e investment banks' greatest interests lie.''=20 That investors in the LJM2 partnership apparently got information that publ= ic investors could not get -- because Enron had moved certain operations of= f its balance sheet -- also underscores the importance of preventing select= ive disclosure by corporations, one former S.E.C. commissioner said.=20 Until last January, corporate executives would routinely hold private brief= ings for analysts, slipping them details that were not available to public = investors. To ''level the playing field,'' the S.E.C. enacted Regulation FD= , which forbids such selective disclosure.=20 It is not clear from available documents whether partnership investors cont= inued to learn about Enron's finances after the new rule went into effect. = ''But if they did, that raises blazing questions of selective disclosure,''= the former commissioner said. More broadly, he said, regulators should det= ermine whether other corporations that use off-balance-sheet entities are g= iving investors in those entities more information than public stockholders= receive.=20 SHELDON ELSEN, a securities lawyer at Orans Elsen & Lupert in New York, sai= d the structure of the LJM2 partnership ''really presents some very troubli= ng problems.''=20 ''I don't know that there is anything illegal here,'' Mr. Elsen said, ''but= there is a terrible odor about it.''=20 James Moriarty, a Houston lawyer who has represented plaintiffs in a number= of securities fraud cases, said: ''That they would tell the truth to the r= ich investors, and lie to their stockholders, is outside the realm of the c= omprehensible.''=20 Enron might argue that the information potential partnership investors got = was not important enough to require disclosure. But lawyers said the fact t= hat Enron disclosed the information to them at all would be evidence in its= elf that such details were material.=20 ''Given that they give the information to somebody else as part of their ba= rgain to raise money for another deal, there is a strong likelihood that it= would reach the materiality level,'' said Stanley Arkin, a corporate and s= ecurities lawyer in New York.=20 But the information gap between partnership investors and public stockholde= rs is just one of the conflicts that litter the Enron battlefield, legal ex= perts say.=20 Congress is already wrestling with the potential conflicts that confront ou= tside accounting firms, like Arthur Andersen. The firms act both as indepen= dent auditors -- which companies must have, by federal law -- and consultan= ts on tax and technology issues.=20 But that, too, just scratches the surface. The LJM2 partnership, like sever= al others set up by Enron, was run by a general partnership, LJM2 Capital P= artners, and managed by a second partnership, LJM2 Capital Management. The = people behind both partnerships -- the ''principals'' -- were all Enron exe= cutives, including Andrew S. Fastow, Enron's chief financial officer, and M= ichael J. Kopper, managing director at Enron's global equity markets group.= =20 ''Investors should be aware that there will be occasions where the general = partner and its affiliates may encounter potential conflicts of interest in= connection with the partnership's activities,'' the partnership sales docu= ments said. It explained that the principals ''are employees at Enron and o= we fiduciary duties to Enron and its subsidiaries; such fiduciary duties ma= y from time to time conflict with fiduciary duties owed to the partnership = and its partners.''=20 Enron's board specifically approved Mr. Fastow's role by exempting him from= the corporate conflict-of-interest policy -- a step that Mr. Breeden found= inexplicable.=20 ''The very notion that the chief financial officer of a major corporation c= ould have divided loyalties to this degree of magnitude is something I woul= dn't have believed any board of directors would allow -- or that any C.F.O.= would accept,'' Mr. Breeden said. ''The C.F.O. is the financial conscience= of the company, the guardian of the numbers. If he has a conflict, how can= the system work?''=20 HE proposed requiring that when any corporate board or chief financial offi= cer approves a conflict exemption, that action must be reported immediately= to the S.E.C., and thus to the public.=20 What is known about Enron's partnership arrangements so far, he said, revea= ls an even more profound conflict between management and shareholders. Beca= use Enron had guaranteed the solvency of certain partnerships, obligations = that were not disclosed on its balance sheet were secretly but steadily ero= ding its financial health.=20 ''It is as if Enron and its top officers had set up a loaded machine gun an= d aimed it at the company -- and the shareholders didn't know it,'' Mr. Bre= eden said.=20 With so much turmoil still surrounding the investigation -- and with so muc= h uncertainty about exactly what went wrong -- few legal scholars are willi= ng to predict exactly what steps lawmakers and regulators may take to preve= nt the next Enron.=20 But two things seem certain, they said.=20 The first is that these fresh disclosures about how Enron's partnerships we= re structured and sold will expand the number of defendants named in the sh= areholder lawsuits aimed at trying to recover some of investors' market los= ses, which have been estimated at more than $60 billion.=20 Every large institution -- whether an underwriter or partnership investor -= - that was aware of material information withheld from Enron investors coul= d find itself in court, securities lawyers said. Already, they said, lawyer= s who specialize in suing corporations are discussing which investors, inst= itutions and advisers are potential defendants.=20 ''The image I have in my mind is a long, long line of the wealthy and the p= owerful who made money out of these deals, all set up to hand it over to th= e people who lost everything in their Enron investments,'' said Mr. Moriart= y, the Houston lawyer. ''This is what the Marines like to call a target-ric= h environment.''=20 The second consequence is likely to be systematic Congressional action to a= mend the nation's securities laws, said Mr. Seligman, the law school dean a= nd regulatory historian.=20 The securities laws enacted in the New Deal were ''a response to the genera= l public belief, after the 1929 crash, that there were two securities marke= ts -- one for privileged insiders and one for everyone else,'' Mr. Seligman= said. Enron's LJM2 partnership ''smacks of that world,'' he added. And whe= n the American public believes two such markets exist, he said, ''Congress = -- every time, regardless of party or president -- has acted to address tha= t concern.'' Photos: The Enron towers in Houston. Scholars say the company's actions rai= se troubling questions about securities regulations in general. (James Estr= in/The New York Times)(pg. 1); An excerpt from a document on Enron's LJM2 p= artnership. The partnership offered investors a chance to profit from inter= nal information -- not available to stockholders -- about Enron's investmen= t plans.; Joel Seligman, above, dean of the Washington University Law Schoo= l, and Richard C. Breeden, left, a former chairman of the Securities and Ex= change Commission, say revelations about an Enron partnership are likely to= lead to action by Congress. (Marilynn K. Yee/The New York Times)(pg. 13) D= rawing (The New York Times/Illustrations by Christophe Vorlet)(pg. 13) Char= t: ''Legal Review'' The business activities of Enron -- from the way it str= uctured and sold some private partnerships to what it did and did not discl= ose to various parties -- raise questions about some basic protections of A= merican securities law. Among the issues that must now be reassessed are th= ese: ''Chinese wall''requirements The information that Wall Street firms re= ceive while working as investment bankers for public companies may not be s= hared with other parts of the firm that trade or sell those companies' stoc= ks. Conflict-of-interest policies Companies must inform investors about imp= ortant conflicts of interest that arise in the course of business operation= s. Insider-trading bans People who obtain important confidential informatio= n about a company may not use it to trade the company's stock if doing so w= ould violate their legal obligations to other investors or to the source of= the information. Selective disclosure rules Since last January, companies = have been barred from providing important information to some investors but= not to others. The Glass-Steagall Act Until its repeal in 1999, Wall Stree= t firms were barred from serving both as traditional bankers, making loans,= and as underwriters, selling stock. (pg. 13)=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 National Desk; Section A ENRON'S MANY STRANDS: THE PROSECUTOR Noted Brooklyn Prosecutor Joins U.S. Inquiry Into Enron Collapse By PHILIP SHENON 01/28/2002 The New York Times Page 10, Column 3 c. 2002 New York Times Company WASHINGTON, Jan. 27 -- The Justice Department has named a leading organized= -crime prosecutor from New York to its investigation of the collapse of the= Enron Corporation, department officials said.=20 The prosecutor, Andrew Weissmann, chief of the criminal division of the Uni= ted States attorney's office in Brooklyn and the lead prosecutor in the 199= 7 trial that ended with the imprisonment of the reputed head of the Genoves= e crime family, is described by colleagues as a tenacious investigator and = litigator. Department officials said they hoped the appointment of Mr. Weissmann would= be seen as additional evidence that the Justice Department's Enron inquiry= would be aggressive, despite the many ties between the Bush administration= and senior Enron executives who were among the largest contributors to Pre= sident Bush's 2000 campaign.=20 Attorney General John Ashcroft has recused himself from the case because he= accepted contributions from Enron in a failed campaign for re-election to = the Senate.=20 Mr. Weissmann will report to Leslie R. Caldwell, a career federal prosecuto= r in the United States attorney's office in San Francisco who has been name= d to head the Enron investigation. Ms. Caldwell, chief of the securities fr= aud division in the prosecutor's office in San Francisco, has a reputation = for toughness and for helping juries make sense of complicated criminal cas= es.=20 Mr. Weissmann, 42, has handled a variety of cases in Brooklyn but is best r= emembered for his prosecution of organized-crime figures, most notably Vinc= ent Gigante, the reputed head of the Genovese crime family.=20 Mr. Weissmann won a 1997 conviction of Mr. Gigante on charges of murder-con= spiracy and racketeering, overcoming defense claims that Mr. Gigante was in= competent to stand trial. Mr. Gigante was known for walking around Greenwic= h Village in a bathrobe and pajamas, which resulted in his being dubbed the= Oddfather.=20 Mr. Weissmann, a graduate of Princeton University and Columbia Law School, = was born and raised in New York. He has worked in the United States attorne= y's office in Brooklyn for 10 years, the last two as chief of the criminal = division. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Financial Desk THE FALLOF ENRON Convictions for Enron Execs Would Be Hard Won ERIC LICHTBLAU; DAVID G. SAVAGE TIMES STAFF WRITERS 01/28/2002 Los Angeles Times Home Edition A-1 Copyright 2002 / The Times Mirror Company WASHINGTON -- Although Enron Corp. may have destroyed thousands of document= s, misled shareholders and left the retirement accounts of many of its empl= oyees nearly worthless, legal experts say the prospect of serious criminal = convictions of corporate executives is far from certain.=20 Despite some recent success in corporate fraud cases, prosecutors must over= come daunting hurdles, including changes in federal regulation of insider t= rading, the vagaries of securities law and the sometimes conflicting agenda= of congressional investigators, according to law professors, attorneys who= specialize in white-collar crime and law enforcement officials. Evidence that Enron destroyed documents related to the company's meteoric c= ollapse offers the most compelling prospect for a criminal case, suggesting= possible obstruction of justice charges, legal experts and law enforcement= officials agree.=20 But it could take years for authorities to build more serious charges of co= nspiracy, insider trading or securities fraud against Enron's higher-ups, a= nd even then it may prove tough to return convictions, experts predicted.= =20 "Financial fraud cases are very hard to prove. [Executives] can say they ma= de bad business judgments, but you have to prove unanimously and beyond a r= easonable doubt that they deliberately intended to deceive" the public and = their shareholders about the company's finances, said Columbia University l= aw professor Jeffrey N. Gordon.=20 Even as FBI investigators began descending on Enron's Houston headquarters = last week to probe possible crimes, they probably will confront several leg= al and political realities that could work to Enron's advantage. Among the = potential roadblocks:=20 * The entire U.S. attorney's office in Houston has pulled out of the invest= igation because too many prosecutors are related to Enron employees, forcin= g the Justice Department to create a special task force that must start fro= m scratch in probing the energy company's labyrinth of partnerships.=20 * Democrats already have called for an independent counsel to probe Enron's= well-documented political connections to the Bush administration, but the = demise of the outside counsel law in 1999 has muddied the process for deter= mining how and when to appoint an outside counsel.=20 * A recent rule change at the Securities and Exchange Commission, authorizi= ng prearranged sell-offs of executives' stock, gives added insulation to al= legations of insider trading and could provide former Enron Chairman and Ch= ief Executive Kenneth L. Lay and other executives with a built-in defense.= =20 * And Congress' zeal to conduct high-profile hearings on Enron could compli= cate the use of testimony from witnesses who become part of the criminal pr= obe, as happened in the Iran-Contra scandal. In that case, charges against = Oliver L. North and John M. Poindexter were thrown out in 1990 because thei= r prosecutions were deemed tainted by immunized congressional testimony.=20 Coordinating Immunity Offers=20 Justice Department officials have begun discussions with Congress on how to= coordinate immunity offers that Congress might make to witnesses, such as = David B. Duncan, the partner at accounting firm Andersen who oversaw the En= ron account. Duncan, who since has been fired, invoked the 5th Amendment la= st week before a congressional committee rather than answer questions about= the destruction of Enron documents.=20 The department hopes to blunt the effect that any congressional immunity de= als would have on future criminal cases.=20 "We never like to see potential witnesses paraded before Congress, but that= 's always a danger in a case like this," acknowledged a law enforcement off= icial who asked not to be identified.=20 Enron spokesman Eric Thode said it would be premature to discuss any crimin= al allegations, noting: "We'll just let the investigations take their cours= e, and, of course, we're cooperating fully."=20 Despite the obstacles that prosecutors face, authorities are buoyed by the = recent progress they have made in several other high-profile financial frau= d cases.=20 In Pennsylvania, the former chief financial officer of apparel maker Leslie= Fay Cos. was sentenced last week to nine years in prison for inflating the= company's earnings by $81 million. The scheme forced the company into Chap= ter 11 bankruptcy protection for four years.=20 In San Francisco, former executives at health services giant McKesson Corp.= , are facing civil and criminal charges for allegedly concocting bogus reve= nue figures. The losses for the company's shareholders: $9 billion.=20 And in New Jersey, in a case with even more telltale similarities to Enron,= the former chairman and vice chairman of Cendant Corp.--a franchiser whose= brands include Howard Johnson, Avis and Century 21--are awaiting trial on = charges of conspiracy and securities fraud.=20 Authorities allege that Cendant, in perhaps the longest-running scheme of i= ts kind, was "cooking the books" for more than a decade, with former Chairm= an Walter A. Forbes reaping $30 million as the company's stock soared amid = misleading financial reports.=20 Once irregularities in the company's accounting were exposed in 1998, the v= alue of Cendant's stock plunged $14 billion in a single day.=20 Cendant and accounting giant Ernst & Young, accused of whitewashing the irr= egularities, agreed last year to pay a near-record total of $3.2 billion to= shareholders who claimed they were defrauded by the scheme.=20 But Forbes and former Vice Chairman E. Kirk Shelton, who have declared thei= r innocence in the affair, are not expected to go to trial until late this = year, about 4 1/2 years after the scandal first broke. That arduous legal p= ath is testament to the difficulty of bringing such complex financial fraud= cases, law enforcement officials say.=20 "It's a brutally hard case," said one official close to the Cendant prosecu= tion. "It takes a special accounting knowledge, it's an incredible paper tr= ail, and you have to have cooperators. We had [three] people pleading guilt= y, all the ones just below the top. . . . Without them, it would be a much = more formidable task" to prosecute the company's top executives.=20 Reports of widespread shredding of Enron documents give authorities substan= tial leverage to try to persuade witnesses to cooperate, experts said.=20 "As a prosecutor, you are looking for evidence that the senior people had k= nowledge of the scheme," said San Francisco attorney Stephen Meagher, a for= mer prosecutor of white-collar crime cases.=20 "And typically, when you find documents were being destroyed, that answers = the question. That means certain people were aware of problems and they wer= e determined to destroy the evidence. It's the prosecutor's dream come true= because it shifts the burden to the other side. They have to explain what = they were trying to hide."=20 Duncan, the Andersen auditor, has spoken with federal investigators at leas= t twice, a sign that he may be willing to cooperate in exchange for a plea = deal.=20 It remains to be seen whether Duncan or someone at Enron turns out to be th= e star witness prosecutors are seeking. But Columbia Law School professor J= ohn C. Coffee, a securities specialist, noted that "historically in white-c= ollar crime cases, you have a trail of falling dominoes, and you start low = and offer leniency to cooperate and get evidence against the higher-ups. I = think you're going to get a whole succession of people cutting deals here."= =20 The danger, however, is that such witnesses have a potential credibility pr= oblem: If they admit to destroying documents, will a jury believe their tes= timony fingering higher executives?=20 "Those aren't necessarily the most credible witnesses on the stand," said P= aul Fishman, a former Justice Department official who specializes in white-= collar defense.=20 Sending a Strong Message=20 Beyond the obstruction issue, law enforcement officials say possible charge= s against executives at Enron and Andersen could include securities fraud, = insider trading, wire and mail fraud, conspiracy and even racketeering.=20 The case, if it can be proved, would hinge on a simple premise: that execut= ives fooled the public and its shareholders into thinking the company was m= ore profitable than it was--and enriched themselves in the process as the c= ompany's stock went up in value.=20 The corporation itself faces possible indictment and criminal penalties, bu= t legal observers said anything short of indicting top Enron executives cou= ld be seen as a failure in the eyes of the public.=20 "Indicting a bankrupt company achieves next to nothing," Coffee said.=20 Indeed, Duke University law professor James D. Cox said indicting Enron exe= cutives would send a strong message.=20 "If they are serious about eliminating financial fraud, this is the battle = the government needs to take on," he said. "This looks to be a case of purp= oseful manipulation of earnings and purposeful concealment of debt. They cr= eated a truly false facade."=20 Class-action lawsuits against Enron maintain that Lay made more than $100 m= illion from stock sales before the company's value plummeted. But Lay's law= yers have maintained that many sales were from prearranged sell-offs, which= could give him insulation under a rule adopted by the SEC in 2000 regardin= g what constitutes insider trading.=20 The so-called 10b5-1 rule holds that even if insiders possess sensitive cor= porate information, they can legally buy and sell company stock so long as = it is part of a prearranged trading plan. The SEC and various courts have w= rangled over how the new rule should be interpreted, and allegations of ins= ider trading against Lay and other Enron executives could prove "a key test= ," said Jill Fisch, a corporate and securities law expert at Fordham Law Sc= hool.=20 Fisch compared the Enron probe to the financial scandal that led to the con= viction of former junk bond kingpin Michael Milken and other Wall Street tr= aders in the 1980s.=20 As in the Milken case, Fisch said, she believes Enron is "an impure case on= a lot of legal questions." But, she added, the public backlash--fueled by = headlines about document shredding--may be enough to drive the investigatio= n in the absence of clear law. PHOTO: Former Enron CEO Kenneth L. Lay and other executives face allegation= s of insider trading.; ; PHOTOGRAPHER: BRETT COOMER / For The Times; PHOTO:= Andersen auditor David B. Duncan pleaded the Fifth last week before a cong= ressional panel.; ; PHOTOGRAPHER: Associated Press=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Building the House of Enron: As Enron's Derivatives Trading Comes Into Focu= s, Gap in Oversight Is Spotlighted By Michael Schroeder Staff Reporter of The Wall Street Journal 01/28/2002 The Wall Street Journal C1 (Copyright (c) 2002, Dow Jones & Company, Inc.) WASHINGTON -- As the significant role that derivatives played in Enron Corp= .'s downfall comes into focus, lawmakers and regulators are lining up in fa= vor of more oversight of these risky investments.=20 While the Houston-based company's core energy operations involved natural-g= as and electricity transmission, its largest and most-profitable business w= as trading derivatives -- unregulated financial instruments that derive the= ir value from an underlying commodity or wager on the future. Now, informat= ion is surfacing that Enron's derivatives trading may have been used to mas= k weakness in the company's other businesses such as fiber-optic bandwidth,= retail gas and power, and water systems. "Enron was more of a hedge fund than an energy company," said Rep. Richard = Baker (R., La.), chairman of a Financial Services Committee panel that is l= ooking into the derivatives issue, in an interview.=20 After listening to testimony at his committee's Enron hearing last week, Se= nate Governmental Affairs Chairman Joseph Lieberman said he would hold a he= aring specifically on the need for derivatives regulation. The Connecticut = Democrat was responding in part to the testimony of San Diego University la= w professor Frank Partnoy, who outlined a series of methods that he said En= ron used "to create false profit and loss entries for the derivatives Enron= traded."=20 To ensure that Enron met Wall Street quarterly earnings estimates, it used = derivatives and off-balance-sheet partnerships, or so-called special-purpos= e vehicles, to hide losses on technology stocks and debts incurred to finan= ce unprofitable businesses, Mr. Partnoy said. In addition, he said, "it app= ears that some Enron employees used dummy accounts and rigged valuation met= hodologies." The entries, he said, "were systematic and occurred over sever= al years, beginning as early as 1997."=20 Based on independent research and conversations with Enron traders, Mr. Par= tnoy said he learned that some traders apparently hid losses and understate= d profits, which had the effect of making derivatives trading appear less v= olatile than it was. Randall Dodd, director of the Derivatives Study Center= , an independent, nonpartisan Washington group, said in an interview that h= e has reached similar conclusions. Mr. Dodd is advising three government ag= encies and three congressional committees investigating Enron.=20 Declining to address specific allegations, Enron spokesman Vance Meyer said= in a statement, "Derivatives were not our business. They complemented our = core business of buying and selling natural gas and power." Mr. Meyer also = said: "I think it's safe to say that we are not going to agree with every v= iew about Enron presented in the congressional hearings, but we do respect = the process and hope, when all is said and done, that something positive wi= ll come out of it."=20 In 1989, the energy company, originally a utility that produced and transpo= rted natural gas and electricity, had begun shifting its focus to energy tr= ading. The derivatives included not only Enron's very profitable trading op= erations in natural-gas derivatives, but also the more-esoteric financial i= nstruments it began trading recently -- such as fiber-optic bandwidth and w= eather derivatives.=20 During 2000 alone, Enron's derivatives-related assets increased from $2.2 b= illion to $12 billion, with most of the growth coming from increased tradin= g through its EnronOnline, an Internet trading system, according to Enron's= financial reports. Mr. Dodd figures that if Enron were a bank, it would ra= nk as the 10th largest derivatives dealer.=20 Innovations in technology and finance have helped obliterate clear distinct= ions between banks, brokerage firms and newer hybrids, such as Enron. But f= inancial regulators hew to decades-old divisions of authority, continuing t= o keep a close watch on banks, brokerage firms and conventional exchanges, = while leaving new entrants such as Enron to police themselves.=20 In late 2000, Congress passed legislation that exempted from regulation ove= r-the-counter derivatives, which are contracts arranged among sophisticated= buyers and sellers such as banks, Wall Street firms and public companies. = The measure had support from both parties, as well as the Federal Reserve a= nd the Clinton administration.=20 Advocates of derivatives say the instruments give companies, investors and = lenders a way to reduce their exposure to many kinds of financial risks. Mo= st regulators and financial-industry executives insist that the country's f= inancial system remains sound.=20 But the Enron scandal spotlights an enormous void in the nation's system of= financial regulation, and it is rekindling a thorny debate over just how t= hat gap should be filled.=20 As a publicly traded company, Enron routinely provided the SEC with general= information about its finances but wasn't obliged to divulge to any agency= detailed information about its over-the-counter trading activities.=20 In the wake of Enron's bankruptcy, federal energy regulators say they plan = rules for energy-derivatives accounting. Treasury Secretary Paul O'Neill sa= id derivatives regulations may need modernizing.=20 "In this case, I think it's fair to say it may be that our rules and regula= tions have gotten behind practices," Mr. O'Neill said in a recent interview= on the "Charlie Rose Show."=20 ---=20 Enron assembled a complex structure of partnership deals. In the end, it ca= me tumbling down. See an interactive graphic at WSJ.com Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 National Desk; Section A ENRON'S MANY STRANDS: SEEKING EVIDENCE Hard-to-Miss Box of Scraps Catches F.B.I. Agent's Eye By MICHAEL BRICK 01/28/2002 The New York Times Page 10, Column 1 c. 2002 New York Times Company HOUSTON, Jan. 27 -- Agents of both the F.B.I. and the Securities and Exchan= ge Commission have expressed interest in reviewing the remains of documents= that a former Enron executive said were recently shredded at the company's= headquarters.=20 An F.B.I. agent here approached lawyers for shareholders who are suing Enro= n to discuss the documents, the lawyers said. The shareholders' lawyers had= displayed a box of shredded documents last Tuesday. The agent also talked = to lawyers representing Enron. The S.E.C. also has pursued the matter by is= suing a subpoena to the former executive, Maureen Castaneda, people familia= r with that investigation said. The S.E.C. had already issued subpoenas to more than 30 Enron employees in = a variety of departments, according to several people, including an Enron e= mployee who received one in December. The subpoena to Ms. Castaneda was iss= ued last week, when she discussed the documents in interviews with ABC News= and The New York Times.=20 It is not clear what the documents said or why they were shredded. The fede= ral judge in the shareholder lawsuits, Melinda Harmon, ordered an accelerat= ed schedule of information gathering last week. Shareholders' lawyers had a= rgued for haste, and they said they had reason to believe destruction of do= cuments was continuing.=20 An Enron spokesman said the company is cooperating with investigations abou= t the shredded documents. ''It's a good time to let the facts come from the= proper authorities investigating this,'' Mark Palmer, a spokesman for Enro= n, said. ''We are the ones that called the Justice Department.''=20 The documents were generally shredded horizontally rather than vertically, = so it is possible to make out words and even sentence fragments. The shreds= include accounting records, and some bear the names of the off-the-balance= -sheet partnerships that have been linked to transactions allowing Enron to= keep some of its problems hidden.=20 Shareholders' lawyers have said they might eventually try to reassemble the= documents, but it is unclear whether government investigators will make a = similar effort.=20 Mr. Palmer said he did not know whether Enron usually shredded documents ho= rizontally. The company has said it repeatedly ordered employees not to des= troy documents that could be relevant to investigations. It announced on Oc= t. 31 that the S.E.C. had upgraded its inquiry to a formal investigation.= =20 Knowingly destroying records that have the potential to be of interest to g= overnment investigators would be a crime. Investigators did not signal that= the documents discussed by Ms. Castaneda were definitely of interest until= after the shredding took place and became public.=20 Ms. Castaneda made her comments last Monday. The next day, the S.E.C. notif= ied shareholders' lawyers, who have been working with her, that a subpoena = had been issued for Ms. Castaneda's appointment books, all documents concer= ning entities that have had dealings with Enron and all documents related t= o Enron other than her pay stubs.=20 The F.B.I. agent approached the lawyers for Enron and those for its shareho= lders in the courthouse last Tuesday to discuss the box of shredded paper t= hat the shareholders' lawyers had put on a table in the courtroom. A lawyer= for Arthur Andersen, Enron's accounting firm, suggested in court that the = shredded documents should be turned over to the Justice Department.=20 The F.B.I. agent did not take the documents, so they remained in the posses= sion of Milberg Weiss, one of the law firms suing Enron. A spokesman for th= e firm said it would work with Ms. Castaneda's lawyer to comply with the su= bpoena.=20 One possible reason the agent may have left the documents alone is that if = they were taken for a criminal investigation, they might be subject to gran= d jury secrecy rules. Such rules would not apply in a civil investigation. = Thus, investigators in a civil inquiry, such as S.E.C representatives, can = share the information with F.B.I. and other criminal investigators. But cri= minal investigators might be prevented by grand jury secrecy from sharing t= he documents with S.E.C. investigators.=20 A lawyer for Ms. Castaneda declined to comment. Photo: Strands of paper displayed by lawyers for shareholders suing Enron s= how that despite shredding many words can still be read. (James Estrin/The = New York Times)=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Business/Financial Desk; Section A ENRON'S MANY STRANDS: LEGAL STRATEGY SHREDDED PAPERS KEY IN ENRON CASE By KURT EICHENWALD 01/28/2002 The New York Times Page 1, Column 1 c. 2002 New York Times Company For all its eye-popping revelations, the Enron case presents an enormous ch= allenge to government investigators, one that could require years of diggin= g to unravel. At this point, no one knows for sure whether the actions that= led to the collapse of the company constituted financial crimes, and, if t= hey did, which should be the focus of the investigation.=20 For that reason, legal experts said, the best things that happened for the = criminal investigators in the case were the decisions by employees at Enron= and its auditor, Arthur Andersen & Company, to begin shredding documents. Unlike the financial investigations, which will require forensic accountant= s to unwind complex transactions, the document shredding gives investigator= s comparatively simple cases of possible obstruction of justice. In such ca= ses, witnesses are confronted, evidence is collected, the law is checked, a= nd the decision whether to seek an indictment is made.=20 As a result, these experts said, the focus in the earliest days will be on = pursuing possible criminal cases from those events.=20 The government's intent will be to use the leverage of potential indictment= s to push possible defendants into the role of witnesses to get evidence fo= r the broader financial investigation. ''The potential obstruction of justi= ce is critical to the progress of this investigation,'' said Efrem M. Grail= , a former prosecutor who is a partner with the Pittsburgh law firm of Reed= Smith. ''It is easier for the government to make an obstruction of justice= case than it is to make a case that people violated criminal securities la= w or criminal fraud statutes.''=20 It is critical to start with such limits, legal experts said, to make sure = that the case does not go off track, especially in its earliest days.=20 ''It's essential that the government disciplines itself during the investig= ation and reins in the scope of the inquiry,'' said Chris Bebel, a former f= ederal prosecutor and former lawyer with the Securities and Exchange Commis= sion. ''Otherwise, it is going to get bogged down in a sea of documents and= conflicting statements about complex transactions.''=20 According to people who have spoken with government officials involved in t= he case, there is strong pressure from senior Justice Department officials = to show some quick results from the investigation. That pressure will incre= ase the attention focused on matters like document destruction, where the f= acts are relatively easy to establish.=20 Until now, the most public investigations have been those conducted by a se= ries of Congressional committees. But none of them have the power to bring = charges in the case. That responsibility falls instead to prosecutors worki= ng on a special Justice Department task force and to a group of agents with= the Federal Bureau of Investigation.=20 On the regulatory side, one investigation is being handled by the enforceme= nt division at the S.E.C. The Labor Department is also reviewing whether En= ron violated any rules while the stock price was plunging when it told empl= oyees that they could not sell company shares from their retirement account= s.=20 For government investigators, the scandal presents a difficult challenge. I= n contrast with other well-known white-collar investigations, this inquiry = begins with the government's having little guidance on where it should be l= ooking.=20 Unlike the insider trading scandals on Wall Street in the 80's -- which beg= an with revelations from Ivan F. Boesky, a stock trader -- the Enron inquir= y has no central witness to provide a map of criminal activity. Unlike the = Treasury market scandals that enveloped Salomon Brothers in the early 90's,= the Enron investigation begins with no admission from the company that it = did anything improper. Unlike the price-fixing cases at the Archer Daniels = Midland Company, later in the 90's, the Enron case does not have years of i= ncriminating tape recordings provided by a cooperating witness.=20 ''In this case, unlike in those in the past,'' said Stephen Meagher, a form= er federal prosecutor who handled white-collar cases in San Francisco, ''th= ere are many dimensions, and you just don't have a clear trail to a central= theory of the prosecution.''=20 As a result, the government begins the first major corporate scandal of the= new millennium with no strong handle on whether the trouble was brought ab= out by criminal activity or folly. The distinction is critical. Experts say= any criminal case stemming from the Enron collapse would be related to som= e sort of fraud: tax fraud, wire or mail fraud, securities fraud.=20 But to get such an indictment, prosecutors would have to prove that the peo= ple charged had criminal intent -- that they knew they were engaging in fra= ud when they were committing the acts in question.=20 In other words, if Enron executives or advisers filed or disseminated infor= mation about the company that has since proved to be false, the government = must be able to demonstrate that they knew about the falsehoods at the time= . In this case, establishing such proof could be challenging.=20 According to internal Enron documents, every major transaction between the = company and the series of partnerships that played a role in the collapse w= ere supposed to have been reviewed by senior company managers and by Arthur= Andersen, the company's auditor.=20 If information about such deals was presented to Andersen truthfully, and t= he accountant rendering the opinion was clear of any undisclosed personal o= r financial conflicts, those rulings by the accountants will be some of the= most important weapons in any defense lawyer's argument against indictment= .=20 Enron officials would effectively be left saying that they had relied on th= e professionals, and the professionals would maintain that they had offered= unbiased judgments -- even if those judgments subsequently proved to be wr= ong. But here again, legal experts said, the document destruction will prob= ably prove to be critical in giving investigators a means of combating that= challenge.=20 ''Without document destruction, the auditors would have been explaining tha= t they made judgment calls,'' said Franklin B. Velie, a former federal pros= ecutor now with the law firm of Salans Hertzfeld & Heilbronn in New York, '= 'and the company would have been saying that they relied on the auditors.= =20 ''It would be hard to know whether this was a horrible mistake or a crime. = With document destruction, the path for the investigators seems a lot clear= er.'' Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 National Desk; Section A ENRON'S MANY STRANDS: THE VICE PRESIDENT Cheney Is Set to Battle Congress To Keep His Enron Talks Secret By ELISABETH BUMILLER 01/28/2002 The New York Times Page 1, Column 1 c. 2002 New York Times Company WASHINGTON, Jan. 27 -- Vice President Dick Cheney said today that the White= House was prepared to go to court to fight the release of documents demand= ed by Congress as part of the investigation into any influence the Enron Co= rporation had in formulating the Bush administration's energy policy.=20 Mr. Cheney said that the General Accounting Office, the agency demanding th= e documents, was overstepping its authority and that he had a right to keep= the documents secret to preserve his ability to get ''unvarnished'' advice= from outside consultants. David M. Walker, the head of the General Accounting Office, responded this = evening in an interview that it was now ''highly likely'' that he would fil= e a lawsuit against the Bush administration if Mr. Cheney did not turn over= the documents by the end of this week. Of the vice president's assertion t= hat the agency was overstepping its bounds, Mr. Walker, the comptroller gen= eral of the United States, replied, ''Talk is cheap.''=20 It would be the first time that the accounting office, the investigative ar= m of Congress, sued another government department for not cooperating with = an inquiry.=20 In interviews on the ABC program ''This Week'' and ''Fox News Sunday,'' Mr.= Cheney said that it was the right of the president and vice president to k= eep secret meetings like those that Mr. Cheney and his energy task force ha= d over the last year with Enron executives as the administration devised it= s energy policy.=20 ''What I object to,'' Mr. Cheney said on ''Fox News Sunday,'' ''and what th= e president's objected to, and what we've told G.A.O. we won't do, is make = it impossible for me or future vice presidents to ever have a conversation = in confidence with anybody without having, ultimately, to tell a member of = Congress what we talked about and what was said.''=20 At issue is how much Enron, a major contributor to the Republican Party, in= fluenced the Bush energy plan, which eases environmental rules, opens publi= c land to drilling and provides tax incentives to energy companies for expl= oration. Enron and the White House have acknowledged that Enron executives = met five times with Mr. Cheney or members of his staff about energy last ye= ar, and documents from the meetings could show whether the administration p= olicy mirrored any specific recommendations of Enron's.=20 A lawsuit would increase pressure on Mr. Cheney, who is under criticism fro= m Democrats for his relationship with Enron, the giant energy trading compa= ny that filed for bankruptcy protection and that has ties to officials in t= he Bush administration.=20 ''Now, the fact is, Enron didn't get any special deals,'' Mr. Cheney said o= n ABC. ''Enron's been treated appropriately by this administration.''=20 Mr. Cheney also said that turning over the documents would be detrimental t= o the presidency.=20 ''We've seen it in cases like this before, where it's demanded that preside= nts cough up and compromise on important principles,'' Mr. Cheney said. As = a result, he said, ''we are weaker today as an institution because of the u= nwise compromises that have been made over the last 30 to 35 years.''=20 Some Republican strategists have begun to worry that Mr. Cheney's stance is= contributing to perceptions that the White House has something to hide on = the issue. The New York Times/CBS News Poll published today showed that a m= ajority of Republicans believed that the administration had not been forthc= oming about its dealings with Enron.=20 Mr. Walker, a member of the Reagan and first Bush administrations, who was = appointed by President Bill Clinton in 1998 to a 15-year term as comptrolle= r general, said that he did not agree with Mr. Cheney's position that he wa= s allowed to keep the meetings secret because of his position as vice presi= dent.=20 ''This is not about the vice president's constitutional position,'' Mr. Wal= ker said. ''It's about his capacity as chairman of the national energy poli= cy development group. From Day 1, this has not had anything to do with the = constitutional position of the vice president. I know they want to present = it that way because they think people will be more sympathetic, but that's = not factually accurate.''=20 Mr. Walker said that it was his view that the White House had put Mr. Chene= y in charge of energy policy for that very reason -- to claim executive pri= vilege and avoid oversight of the group by Congress. ''But that's a loophol= e big enough to drive a truck through,'' Mr. Walker said.=20 Mr. Walker also took issue with an assertion by Mr. Cheney that the account= ing office was pursuing the information only because of the political heat = generated by the Enron scandal. In the ABC interview, Mr. Cheney said that = the accounting office first pursued the documents last summer but then rele= nted under the administration's stance that the information was privileged.= =20 ''The G.A.O. sort of backed off,'' Mr. Cheney said. ''They in effect said, = 'Well, maybe we aren't going to pursue it at this point.' What's re-energiz= ed it now is the question of Enron, and some efforts by my Democratic frien= ds on the Hill to try to create a political issue out of what's really a co= rporate issue.''=20 At least 10 Congressional committees are investigating the Enron debacle.= =20 Mr. Walker responded that Mr. Cheney's statement was ''absolutely false'' a= nd said that the accounting office had been prepared to go to court in Sept= ember, before the attacks on the World Trade Center and the Pentagon occurr= ed. He decided, he said, to wait until the crisis had abated before pursuin= g the matter.=20 An administration official said today that it was likely that any court fig= ht over the documents would take years, and that the White House was convin= ced it had a strong case.=20 White House officials continue to say that the Enron debacle is a financial= scandal, not a political one, and point out that the president's approval = ratings remain high, above 80 percent. White House officials also say that = even if Mr. Cheney turns over the documents, this will only whet the Democr= ats' appetite. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Editorial Desk; Section A Enron and the Lawyers 01/28/2002 The New York Times Page 14, Column 1 c. 2002 New York Times Company In the Enron scandal, the accounting industry has been the profession takin= g the most heat. Before the dust settles, however, it seems inevitable that= more questions will be raised about the role that lawyers played in Enron'= s alleged misdeeds.=20 Some of those concerns are already being raised about Vinson & Elkins, Enro= n's law firm. When the time came for a review of some of the company's ques= tionable partnerships, Enron's internal whistleblower, Sherron Watkins, a v= ice president, urged the company's chairman, Kenneth Lay, not to assign the= task to Vinson & Elkins, since it had approved some of the very partnershi= ps that needed to be investigated. Even so, the assignment was given to tha= t very law firm, which concluded that problems with the partnerships were j= ust cosmetic. It is likely that investigators will want to examine the lega= l work of Vinson & Elkins, and whether it told Enron about the law firm's p= ossible conflict in the matter. Other law firms and lawyers will no doubt also be caught up in the investig= ation. Much of the Enron scandal involves complex financial arrangements th= at teams of lawyers helped to cobble together, and to which law firms gave = their professional imprimatur. If any of these arrangements were in fact il= legal, the lawyers may have been in the best position to know.=20 The Enron scandal is already producing cries for reform in the accounting i= ndustry. Senator Barbara Boxer wants to prohibit accountants from consultin= g for companies they audit, as Anderson did for Enron. The accounting indus= try is reportedly in talks with the Securities and Exchange Commission abou= t ways accountants can better regulate themselves.=20 It would be gratifying to report that the legal profession had been similar= ly moved. Despite the recent revelations, the organized bar appears to be r= egressing on the subject of financial fraud. Last August, an ethics commiss= ion presented the American Bar Association with proposals for easing the or= ganization's model rules on lawyer-client confidentiality so that lawyers n= eed not remain silent while their clients engage in illegal activity. The A= .B.A. adopted one proposal permitting lawyers to speak out to prevent clien= ts from committing crimes reasonably certain to result in death or serious = bodily harm. But it defeated a second proposal that would have let lawyers = break confidentiality to prevent their clients from committing fraud reason= ably certain to substantially injure the financial interests of another.=20 The A.B.A. is meeting again this week in Philadelphia. Despite the interven= ing Enron scandal, there is apparently little chance it will reconsider its= financial fraud vote and some chance it will reverse last August's reform.= Even though the association's model rules are largely advisory, this would= be precisely the wrong message right now.=20 As scrutiny turns from accountants to lawyers in this scandal, the legal pr= ofession should be looking for ways to assure Americans that when fraudulen= t activities are under way that threaten their livelihoods, their investmen= ts and their pensions, lawyers will be on their side, not on the side of th= e criminals. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Financial HEARSAY The Lawyer's Column Enron Case Attracts Lawyers Like a Flame Attracts Moths, More Than You Can = Shake a Stick at James V. Grimaldi Washington Post Staff Writer 01/28/2002 The Washington Post FINAL E02 Copyright 2002, The Washington Post Co. All Rights Reserved Here we go again. Another parade of lawyers. A gaggle of attorneys. A flock= of law firms. This is a lawyer full-employment act. A "Who's Who" of litig= ators. A full-court press. The lawyers are hiring lawyers. Hang on, sports = fans. Buckle your seat belts. It's going to be a bumpy column.=20 If we're pulling out all the cliche{acute}s, we must be talking a Washingto= n scandal. If it's the scandal du jour, it must be Enron Corp.=20 Thank goodness. This column will write itself. Even the cliche{acute}s will= write themselves. Where do we begin? We begin at the eye of storm, with En= ron. Of course, we need a massive legal personality to fill the role of chi= ef defender of the alleged corporate plunderer. Robert S. Bennett of Skadde= n, Arps, Slate, Meagher & Flom fits the bill. We just love our blustery Bob= Bennett. We've missed his work defending President Clinton during sex scan= dals. So it was a delight to see him ride out of the corral with both guns = blaring, firing at the media and the Congress as Enron's lawyer.=20 But you could just hear a sigh of sadness in the media, though, when report= ers realized that David Boies would not represent Andrew Fastow, the chief = financial officer who is the supposed mastermind of the partnerships under = the microscope. No, it is just a member of Boies's firm, Boies, Schiller & = Flexner, who is representing Fastow.=20 No slouch himself, Richard Drubel of the firm's New Hampshire office will h= andle Fastow's civil defense. Who is Drubel and how did he get the call? Tu= rns out that he worked at Susman Godfrey, one of Enron's Houston firms, and= Drubel was friends with Fastow there. While known for plaintiff suits, Sus= man Godfrey also has defended Enron.=20 Fastow's case apparently is so complex that he has two other lawyers and la= w firms -- David Gerger of Foreman, DeGeurin, Nugent & Gerger, who is worki= ng the Justice Department angle, and Lawrence Iason of Morvillo, Abramowitz= , Grand, Iason & Silberberg, who is handling the Securities and Exchange Co= mmission aspect of the investigation.=20 Arthur Andersen has Daniel Kolb and Michael Carroll of Davis Polk & Wardwel= l. David Duncan, lead partner of Andersen's Enron auditing team until he wa= s fired, has retained Robert J. Giuffra Jr. and Gandolfo V. "Vince" DiBlasi= of Sullivan & Cromwell.=20 Vinson & Elkins, Enron's primary outside law firm with which Enron has many= close ties, has turned to a big-gun litigator for its defense: John Villa = of the District's Williams & Connolly, the lawyer and firm that lawyers and= law firms turn to when they're in trouble.=20 I think we've run out of space. Somehow we'll get to the rest of the Enron = lawyers. Let's stretch this out over several columns. There's plenty of tim= e. This isn't going away. We could devote a couple of columns to the plaint= iffs' attorneys. More to come. Stay tuned. To be continued.=20 Antitrust Follies=20 Looking for a little something different? Something not as untoward as the = Enron debacle? A little bit lighter fare? Then I suggest you turn to the an= titrust division of the U.S. Justice Department, and the Federal Trade Comm= ission. Can we find better vaudeville in town than the antics of antitrust = chief Charles James and FTC Chairman Timothy Muris?=20 You missed the show? It was Jan. 17 when James and Muris called in the news= media at the FTC to announce a deal between the Justice Department and the= FTC on how to divvy up antitrust review of industry mergers. Now, this sho= uld have been a no-brainer. The old system is so convoluted and confusing t= hat Hearsay does not understand how it works.=20 But we'll try to explain it anyway.=20 There are a handful of industries in which both the FTC and Justice Departm= ent have expertise. So when a hot merger comes up, and the staff of each ag= ency wants a piece of it, the assistant attorney general for antitrust and = the FTC chairman have to sort it out. This had been done in an ancient ritu= al that included a series of athletic events such as arm wrestling, mud wre= stling, greased-pig wrestling and a bull-riding competition, and an essay c= ontest.=20 Okay, we're making that up. Well, most of it. The agencies really do write = essays explaining why they are best to review the mergers. And there really= has been a lot of wrangling over who would get to review a merger. The "di= scussions" would last more than two weeks sometimes, and that's almost half= the 30 days in which investigators must decide whether to launch a more de= tailed review, called a "second request" for documents. Delays of more than= 15 days occurred 32 times in 2000.=20 The system needed to be fixed.=20 So, what did James and Muris do?=20 First, they came up with what on its face seems like a sensible plan: The J= ustice Department would get oversight for media, telecommunications and ent= ertainment industry mergers, while the FTC would get health care, energy an= d electricity cases.=20 So, they have that good idea. But there's a problem. They devise it in secr= et. They don't tell many people about it, to keep it a big surprise, or in = hope that opponents won't be able to stop it. They don't even share the pla= n with all the other members of the Federal Trade Commission. They keep man= y of the stakeholders out of the process. And finally -- and this is the fu= nniest part -- they keep members of Congress out of the loop.=20 This happened once before at the antitrust division. Last time, it was when= the Justice Department abandoned the plan to break up Microsoft Corp. Hell= o? Is anybody home? Did you forget that this is a democracy, with three bra= nches of government and all?=20 At this point, we reveal that Hearsay is biased: We prefer things be done i= n the open, in public, where there is a vigorous debate and hashing out of = all of the ramifications. In the marketplace of ideas, the strong ones prev= ail. If this truly were a good idea, it would have prevailed. This did not = have to be controversial.=20 One member of our democracy is Sen. Ernest F. "Fritz" Hollings (D-S.C.). He= is chairman of the Senate Commerce Committee. That's a pretty important co= mmittee. Lots of bills important to the Bush administration go through that= committee. James and Muris didn't tell Sen. Hollings about their big plan.= That did not please the senator. And, as the senator might say, he squeale= d like a pig stuck in a gate.=20 His hootin' and hollerin' were enough to halt a signing ceremony scheduled = for 1 p.m. Jan. 17 as the media waited in a room nearby. In fact, Muris sig= ned it anyway. James did not. Reporters had press packets, complete with st= atements hailing the deal. Now it had to be called off.=20 Someone pass the popcorn. This is getting good. Who would have thought that= the Bush administration antitrust team would be so entertaining?=20 The news conference was abruptly canceled without explanation. Later, spoke= swoman Gina Talamona offered a statement saying the plan was a good one, bu= t Justice Department staff would meet and confer with Congress.=20 So how is the conferring going? Here is a report from a meeting on Thursday= , as provided by Hollings's press man, Andy Davis. "DOJ staff admitted that= they had not consulted with consumer groups in any way before formulating = their proposal," Davis said in an e-mail. "Additionally, they had no statis= tical data to demonstrate each agency's expertise. Instead, they relied sol= ely on anecdotal evidence."=20 Hmmm. Doesn't sound like a very good first meeting.=20 In the meantime, perhaps James and Muris could read up on the U.S. Constitu= tion. There's a very sobering line in there about appropriations coming fro= m Congress.=20 What were they thinking? Well, this is a pattern that seems to be developin= g with our antitrust enforcers. Unlike Robert Pitofsky, the previous FTC ch= airman, who made an effort to develop consensus on policy questions, James = and Muris seem to like to keep their best ideas hidden from the public, pol= iticians and the media. Pitofsky spent more than a year in public developin= g his plan to require spinoffs of companies and divisions before mergers ar= e approved.=20 One person involved with the process, however, offers this commentary about= Hearsay's thesis: "That's absurd." Rather than a marketplace of ideas, thi= s is a power play, according to the source. This person says that Pitofsky = and James's predecessor, Joel Klein, attempted to craft such a deal but fai= led. The mistake, this person suggests, was to go public with the plan.=20 The idea that secrecy is better than openness is very sad.=20 In some ways, the handling of this resembles James's failure to get nine st= ates to sign the Microsoft agreement. Most of those attorneys general, with= the exception of California's and Massachusetts's, were eager to settle th= e case. But James failed to build a consensus and moved forward without the= m. In swinging toward Microsoft's position, James appeared to do little to = try to address problems that several key attorneys general had with his dea= l. As a result, damage has been done to the years of work to build amicable= relations between federal and state antitrust enforcers.=20 Too simplistic? Maybe. After all, Hearsay doesn't pretend to be as smart as= Muris and James.=20 Look at this way: From a spectator's standpoint, it has been quite a show.= =20 Big Billings=20 So, you think Sen. Robert G. Torricelli (D-N.J.) got off scot-free? Hardly.= The penalty is steep when you're under investigation, even when charges ar= en't filed.=20 Torricelli's latest congressional filing shows that his legal bills totaled= more than $1.37 million in 13 months.=20 The bills will continue to accumulate as the Senate Ethics Committee consid= ers U.S. Attorney Mary Jo White's three-year investigation into his politic= al fundraising. The case closed this month without charges against the sena= tor, but seven people were convicted of making illegal contributions to his= 1996 campaign.=20 So far, Torricelli has the bills covered: He's raised about $1.54 million.= =20 Who wins? The lawyers, of course. In the fourth-quarter filing, the first-p= lace finisher is Ted Wells Jr. of Paul, Weiss, Rifkind, Wharton & Garrison,= whose firm billed $195,750. Second place goes to Abbe David Lowell of Mana= tt, Phelps & Phillips, which billed $20,000.=20 Other billers for the final three months of 2001 include Sidley Austin Brow= n & Wood ($10,000), Zuckerman Spaeder ($10,000), Pierce Atwood ($10,000), a= nd Winston & Strawn ($10,000). Torricelli's ex-wife, Susan Torricelli, also= got a piece of the legal defense fund: $5,000.=20 Hearsay tries to build consensus every other Monday in Washington Business.= Send your cliche{acute}s to hearsay@washpost.com. http://www.washingtonpost.com=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Accounting for Enron: White House Resists Detailing Cheney, Enron Discussio= ns By Jeanne Cummings Staff Reporter of The Wall Street Journal 01/28/2002 The Wall Street Journal A4 (Copyright (c) 2002, Dow Jones & Company, Inc.) WASHINGTON -- The Bush administration, struggling to manage the political f= allout of the collapse of Enron Corp., is walking a tightrope between aggre= ssive disclosure of government ties to the firm and adamant opposition to r= eleasing the details of Vice President Dick Cheney's private meetings with = Enron officials.=20 In an appearance on Fox News yesterday, Mr. Cheney said the White House wil= l go to court to block the General Accounting Office, Congress's investigat= ive arm, from learning what was discussed in six meetings he and his staff = held this past year with executives of the Houston energy-trading concern, = which filed for U.S. bankruptcy-court protection this past month. Three of = those meetings occurred while the vice president's office was drafting the = administration's national energy policy. Meanwhile, on Friday, the Office of Management and Budget asked the General= Services Administration to re-evaluate all government contracts with Enron= and its auditors, Arthur Andersen LLP. An OMB senior aide said the work co= uld include as many as 100 contracts with a total value of about $70 millio= n.=20 Both actions come as public polls suggest Enron could become a political is= sue for President Bush and his party going into the midterm elections this = fall. A New York Times poll released yesterday found 58% of respondents sai= d they think the White House is mostly telling the truth but probably is hi= ding something. Republican veterans in Washington worry that the White Hous= e showdown over the meetings between Mr. Cheney and his staff with Enron of= ficials could nurture those suspicions.=20 Chief of Staff Andrew Card said on NBC's "Meet the Press" that a compromise= is still possible with the GAO. But Mr. Cheney said the White House decide= d in August that it would fight the disclosures in court rather than yield = on the principle that the vice president should be able to receive private = advice from outside experts while formulating policy. The Enron saga, he sa= id, shouldn't be allowed to "undermine" the White House's position.=20 "The president's bound and determined to defend those principles and to pas= s on this office, his and mine, to future generations in better shape than = when we found it," the vice president said. "For us to compromise on this b= asic, fundamental principle would, in effect, do that. It would further wea= ken the presidency, and we don't want to do that."=20 Further, Mr. Cheney characterized the GAO as a pawn of Rep. Henry A. Waxman= (D., Calif.), who has taken the lead on Capitol Hill in scrutinizing Enron= 's sway on the administration's energy policy, which was released this past= spring.=20 On Friday, Mr. Waxman's office released records that suggest a State Depart= ment energy plan was amended by the White House to add a provision urging t= he U.S. government to use its influence with India to maximize development = of natural gas in that country, where Enron has a natural-gas-fired power p= lant. The draft was changed after a meeting between the vice president's of= fice and Enron officials, according to Mr. Waxman's staff.=20 OMB Director Mitch Daniels's call for a review of all Enron and Arthur Ande= rsen government contracts was prompted by disclosures of shredded documents= , even after an investigation into Enron's financial accounting was launche= d by the Securities and Exchange Commission. Mr. Daniels said both firms no= w may be ineligible for government work based on a Federal Acquisition Regu= lation provision that says a business contracting with the government must = have a "satisfactory record of business ethics and integrity."=20 Mr. Daniels said the GSA should analyze whether Arthur Andersen and Enron a= re qualified for future contracts, and "consideration should be given to th= e initiation of suspensions or disbarment proceedings for all, or a part, o= f Arthur Andersen and Enron as appropriate."=20 Arthur Andersen spokesman Patrick Dorton said, "We have a demonstrated trac= k record of excellent performance for government clients. We will certainly= address any questions and would welcome the opportunity to discuss our str= ong history in government consulting."=20 An Enron spokesman said he was unaware of any formal investigation but woul= d respond to any request for information.=20 The two firms' government work doesn't appear to constitute a large part of= their businesses. Enron, once the largest energy trading business in the w= orld, has a $25 million contract to run the utilities at Fort Hamilton in B= rooklyn, N.Y., which army officials said is already under review.=20 Senate Judiciary Committee Chairman Patrick J. Leahy (D., Vt.) in the past = week questioned the appropriateness of an Arthur Andersen contract with the= Federal Bureau of Investigation since the auditing firm is now part of a J= ustice Department criminal probe of the Enron collapse. The $700,000 manage= ment-consulting contract is for work Andersen is doing to help reorganize t= he FBI and could provide them with access to confidential and sensitive doc= uments, Mr. Leahy said. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Week in Review Desk; Section 4 Ideas & Trends: Power House Greed, Pain, Excesses. Oh, What a Lovely Issue. By RICHARD L. BERKE 01/27/2002 The New York Times Page 1, Column 1 c. 2002 New York Times Company WASHINGTON -- ONCE they express their requisite sympathy for stockholders a= nd investors in Enron, many Democrats are downright giddy over the company'= s implosion. Not since Watergate and Richard M. Nixon's cozying up to corpo= rate bigwigs wielding bags of money, they say, has their party had such an = ideal vehicle to arouse the citizenry and skewer a Republican president as = favoring monied interests.=20 ''It's Teapot Dome,'' said Jim Hightower, the former Texas agriculture comm= issioner who has built a career on speaking for the disenfranchised. ''It's= a perfect populist crusade.'' Though, unlike the Harding administration sc= andal, no one in this administration is known to have acted illegally regar= ding Enron. Stanley B. Greenberg, who helped devise a populist theme for Al Gore in the= 2000 presidential campaign, said the Democrats' rallying cry in the Novemb= er elections should be: ''The greed is real. The pain is real. The excesses= are real.''=20 And the reality is that the issue could be potent for the Democrats, though= some are wary of rushing headlong into making Enron a political issue and = caution that the company spread its bounty to both parties. Yet Enron was f= ar more generous to Republicans and has closer ties with Republican officia= ls in government.=20 Republicans are especially vulnerable because Enron reinforces the long-hel= d perception that their's is the party of big business and the rich. The Wh= ite House is already a target because the administration is stocked with of= ficials formerly involved with the oil industry in Texas. Even religious co= nservatives, a powerful constituency for the Republican Party, are grousing= that their president is showing more fealty to corporate titans than Chris= tian leaders.=20 Adding to the image of a party more attuned to corporate interests than ord= inary Americans was the recent election of Marc Racicot as Republican Party= chairman. He refused to sever his ties to a law firm that has lobbied exte= nsively for Enron and other companies. The latest New York Times/CBS News P= oll, published today, underscores the image of a White House run by the upp= er crust. It reports that 61 percent of Americans say big business has too = much influence in the administration. And 50 percent said the administratio= n's policies favor the rich; only 14 percent said they favor the middle cla= ss.=20 Democrats may have the best opportunity to capitalize on Enron if they do n= ot retreat to the simplistic anti-big business slogans of decades past. Nea= rly a century ago, President Theodore Roosevelt scored by demonizing the St= andard Oil Company as representing the evils of the newly sprouting corpora= te giants -- and shattering it into 34 pieces.=20 While the age of trustbusting is long gone, Democrats could portray Enron a= s symbolizing the evils of a new corporate economy fostered by giant stock = purchases and multinational companies. They can expand their argument and p= oint to other disastrous business collapses, like Kmart, as evidence that c= orporations are running roughshod over working people. ''If they're smart, = the Democrats' strategy should be to make Bush into another shifty-eyed J. = R. Ewing,'' said Kevin Phillips, the political analyst who wrote ''The Poli= tics of Rich and Poor.'' ''If they dig deep enough, they can strike gold: t= hat this guy has been up to his neck in every facet of the oil business in = Texas, and it often hasn't reflected well in his judgment.''=20 But turning Enron into a big-business-versus-the-little-people bonanza for = the Democrats could be more knotty than it seems -- and not just because En= ron spread its largess to Democrats as well.=20 For one thing, Democrats can no longer fully disassociate themselves from i= ndustry. President Clinton courted big business -- and it was his White Hou= se that presided over an era of prosperity for corporate America.=20 There is also a history of populist crusades falling flat. Most recently, v= oters were not altogether convinced in the 2000 campaign when Mr. Gore ridi= culed the Bush tax cut proposal as ''a form of class warfare on behalf of b= illionaires.''=20 In the 1980's, the Democrats' drive to make villains of junk bond trading f= irms backfired, as did President Harry S. Truman's brazen seizure of big st= eel companies in 1952. ''Standing up for the little guy will always be part= of Democratic Party politics,'' said Senator Evan Bayh of Indiana, chairma= n of the centrist Democratic Leadership Council. ''But we suffer from the s= tereotype of resenting people who have been successful even if they have do= ne nothing wrong. We don't want to play into that stereotype.''=20 There is no question that Enron can help Democrats stir up the party faithf= ul, just like Whitewater galvanized hard-core conservatives. The question i= s whether the Democrats can broaden the appeal of the issue.=20 To do so, they cannot merely repeat the party's mantra that Republicans fav= or the rich, but would have to take the argument to the next step: not only= that Republicans are responding to corporate interests, but that they are = doing so at the expense of ordinary citizens. Even some religious conservat= ives have accused the administration of overlooking their interests in favo= r of big business. Many were furious when, at the Republican Party's winter= meeting in Austin, Tex., this month, the party installed Lewis Eisenberg, = an abortion rights activist who has contributed to Democrats, to head the p= arty's drive to raise money. Mr. Eisenberg's appeal: he's close to business= and knows how to get big donations.=20 ''It was a terrible appointment,'' said Gary Bauer, a conservative who ran = for the Republican presidential nomination in 2000. ''Couldn't they find a = chief fund-raiser who actually agreed with the party's platform?''=20 On the other side of the political spectrum, Mr. Hightower said it would no= t be sufficient for Democrats to assure voters that ''we're on your side.''= He said the party needed to take its argument several steps forward. ''We = need to wrap up not just the corruption of money in politics but the actual= damage to people and pensions and the disrespect for workers and the flim-= flam of the new economy,'' he said.=20 Recognizing that such populist appeals could succeed, Mr. Bush, in a striki= ng change of tone, said last week he was outraged by the conduct of Enron, = and noted that his own mother-in-law had lost more than $8,000 in Enron sha= res.=20 AS part of their offensive, Republicans are seeking to shift the spotlight = to Democrats who took Enron donations, and they portray the Enron debacle a= s a business scandal with no partisan bounds. In fact, White House official= s are questioning why regulators in the Clinton administration did not pick= up on the transgressions at Enron.=20 Dismissing the Democrats as trying to politicize the Enron collapse, Dan Ba= rtlett, the White House communications director, said, ''The American peopl= e are savvy enough to understand the difference between political rhetoric = and fact -- and the fact is that the administration did not make any attemp= ts to help Enron.''=20 James Carville, the Democratic consultant, countered that the question is n= ot whether the administration acted to save Enron. ''It's not what they did= when they went belly up,'' he said. ''It's what they did when Enron had mo= ney.''=20 But, like many other Democrats, Mr. Carville is not free of Enron entanglem= ents. He said he agreed to deliver a speech last October for the corporatio= n for his usual big fee. The company went belly up, so he never could offer= his words of wisdom. But chances are, his remarks would not have been abou= t corporate greed. Photo: Tourists can still gather on the south side of the White House, but = vehicles have been rerouted off E Street and concrete barriers have been in= stalled. (Stephen Crowley/The New York Times)=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Business/Financial Desk; Section C How a Top Medical Researcher Became Entangled With Enron By JO THOMAS with REED ABELSON 01/28/2002 The New York Times Page 1, Column 3 c. 2002 New York Times Company HOUSTON, Jan. 26 -- Travelers at the airports here notice the children, fra= il and bald, on their way to the University of Texas M. D. Anderson Cancer = Center, but thousands more arrive unseen, by car. There were 20,000 new pat= ients last year, including 500 children. Most were from Texas, but others c= ame from across the nation and the world, hoping for a cure.=20 In the five years since Dr. John Mendelsohn, a respected cancer researcher,= became president of M. D. Anderson and began courting wealthy donors, poli= ticians and volunteers, the cancer center's research budget has grown 71 pe= rcent and the number of patients has increased by 49 percent. Prominent in = both Houston and the medical community, he is well spoken, and persuasive, = about the needs of M. D. Anderson and the promise of his own research. Last= fall, when former President George Bush, a longtime supporter, became chai= rman of the board of visitors, the center raised $10.3 million in a single = gala at Enron Field. Now, at what should be the pinnacle of his career, Dr. Mendelsohn finds him= self in the middle of accusations surrounding two controversial companies: = Enron, whose collapse is the subject of intense scrutiny by Congress and re= gulators, and ImClone Systems, a biotechnology company that is being accuse= d of misleading investors about the possible approval of a drug that Dr. Me= ndelsohn was instrumental in developing. Dr. Mendelsohn serves on the board= s of both companies.=20 In an interview this week, Dr. Mendelsohn spoke of his involvement with bot= h companies. Despite criticism about his ability to serve as a director, re= presenting shareholders' interests, Dr. Mendelsohn defended his independenc= e and integrity in his involvement with both companies.=20 While Dr. Mendelsohn's role at ImClone has received less scrutiny, his dire= ctorship at Enron has been attacked as symbolic of the lack of independence= on the board.=20 Joining Enron's board in May 1999 and serving on the audit committee, Dr. M= endelsohn had a pivotal role in overseeing the company's relationship with = its auditor, Arthur Andersen, and the integrity of the company's financial = statements.=20 In addition to questions about whether he had the expertise to serve on the= committee, there are concerns that, as a fellow member of the Houston elit= e with Enron's chairman at the time, Kenneth L. Lay, he was reluctant to qu= estion management and someone who appeared to be a fellow visionary. Mr. La= y and his company were also generous contributors to M. D. Anderson.=20 ''It's beyond clubiness,'' said Richard H. Koppes, a former shareholder act= ivist who is now a lawyer at Jones, Day, Reavis & Pogue, noting that people= who see one another at social events are frequently unable to criticize ea= ch other. ''These people are human,'' he said.=20 Dr. Mendelsohn brushed aside criticism that he was not independent because = the cancer center had received donations from Enron. Officials at the cente= r said it had received $92,508 from the Enron Foundation and the company si= nce Dr. Mendelsohn joined Enron's board. Mr. Lay, who resigned on Wednesday= as Enron's chairman and chief executive, and the Linda and Ken Lay Family = Foundation also gave M. D. Anderson $240,250 since Dr. Mendelsohn became pr= esident.=20 ''Some of the articles have made it sound like M. D. Anderson was very depe= ndent on Enron philanthropy to do its work,'' Dr. Mendelsohn said. ''That's= far from the case. We've gotten more than that from other companies and pr= ivate donors.''=20 He added: ''During that same period we've gotten pledges and gifts of more = than $233 million. Every gift is important, but our operating budget is $1.= 4 billion.''=20 As the president of M. D. Anderson, Dr. Mendelsohn is the public face of th= e institution and serves as its primary fund-raiser. This week, Dr. Mendels= ohn said he spent a third of his time raising money to increase the cancer = center's quality and size.=20 In his role, Dr. Mendelsohn developed close ties to former President George= Bush and his wife, Barbara, who lost a child to leukemia. They used their = joint 75th birthday party in 1999 to raise $10.1 million for the cancer cen= ter.=20 The Bushes also attended last November's benefit gala, joining 1,900 guests= . A few weeks before that, George Mitchell, a Texas real estate and natural= gas magnate, and his wife, Cynthia, gave M. D. Anderson $20 million to hel= p build a $174 million basic science research building.=20 And Dr. Mendelsohn has also played a prominent role in Washington, where he= has advised President Bush on issues like stem-cell research and the appoi= ntment of Dr. Andrew C. von Eschenbach, the director of prostate cancer res= earch at M. D. Anderson, as head of the National Cancer Institute.=20 At the time Mr. Lay named Dr. Mendelsohn to the Enron board, he praised him= as ''a visionary in the Houston medical community.'' Both men served on th= e board of the Greater Houston Partnership. Last year, Dr. Mendelsohn appea= red with Jeffrey K. Skilling, then chief executive of Enron, at a Houston p= anel on the future of technology.=20 It seemed like a natural alliance, Dr. Mendelsohn said, because M. D. Ander= son was ''an important contributor to the well-being of Houston'' and Enron= was one of the city's major companies. ''They invited me on the board to t= ake advantage of certain experience I've had, and I was pleased to accept,'= ' he said.=20 He was soon active in many of the board's most controversial decisions -- t= he approval in June and October 1999 of the partnerships with the company's= chief financial officer at the time, Andrew S. Fastow, and the decision to= suspend the company's own code of ethics so Mr. Fastow could serve as the = general partner of the partnerships. As a member of the audit committee, Dr= . Mendelsohn was also responsible for reviewing the transactions between th= e partnerships and Enron in February 2000 and February 2001.=20 ''I can't get into details about Enron, because there are a lot of matters = under investigation,'' he said.=20 But Dr. Mendelsohn has been criticized for not having the appropriate finan= cial background to serve on Enron's board, especially its audit committee. = Patrick McGurn, a vice president at Institutional Shareholder Services, whi= ch advises large investors on corporate governance, said that, when it come= s to business, there were limits on the capabilities of even the smartest d= octor. ''At a certain point in time, you are a doctor, and that's your trai= ning,'' he said. ''You're probably a businessman secondarily.''=20 As head of M. D. Anderson, Dr. Mendelsohn said he was well qualified to be = an Enron director: ''I am the head of a large organization with a large bud= get and have had to deal with budget and growth issues. I've relied on supe= rb business people to work with me. I haven't arranged complicated derivati= ve deals, but I have been involved in management and growth.''=20 Dr. Mendelsohn has not been the only beneficiary of Enron at M. D. Anderson= , but he is the most visible. His predecessor, Dr. Charles A. LeMaistre, 77= , who was president of the cancer center for 18 years, is also an Enron dir= ector. In 1993, the Enron Foundation pledged $1.5 million to a building cam= paign, and the Enron Corporation Cancer Screening/Early Detection Clinic wa= s named in honor of Dr. LeMaistre. So far, officials said, the Enron Founda= tion has paid $900,000 of what it promised.=20 At ImClone, where he has been a director since 1998, Dr. Mendelsohn's prese= nce has added to the company's credibility. Within medical circles, he is h= eld in high regard. ''He is an eminent researcher and has a reputation of b= eing an excellent leader and administrator,'' said Diana Petitti, vice chai= rwoman of the National Cancer Policy Board, where Dr. Mendelsohn is also a = member.=20 Much of the company's promise has to do with the potential of what could be= a revolutionary cancer treatment, C-225, the experimental drug whose devel= opment Dr. Mendelsohn pioneered. ImClone's stock price took off when the dr= ug seemed to work in clinical trials. The decision, in September, by Bristo= l-Myers Squibb to pay as much as $2 billion for a 20 percent stake in ImClo= ne and rights to the drug, named Erbitux, seemed to confirm that optimism.= =20 In late December, the stock, which had peaked earlier in the month at $75.4= 5, plunged after ImClone announced that the Food and Drug Administration ha= d refused to even consider the company's application for permission to mark= et the drug. Although company executives contended that the agency's only r= eal concern was a lack of certain documentation, The Cancer Letter, a newsl= etter in Washington, obtained a copy of the F.D.A.'s letter to ImClone and = reported that the agency's concerns had been more extensive, even as ImClon= e continued to assure people it was in sync with the agency. On Jan. 18, Co= ngress announced an investigation.=20 The shares, which had recovered somewhat, fell 16 percent on Friday, to $16= .49, after the company said it had received inquiries from both the Justice= Department and the Securities and Exchange Commission.=20 Dr. Mendelsohn was among the shareholders who had cashed out a portion of t= heir stock when Bristol bought its stake. Dr. Mendelsohn said he was told a= t a board meeting to sell 20 percent of his stock, the percentage Bristol w= as buying. He exercised options on 90,226 shares and received $6.3 million = of the $149.7 million the original stockholders received from Bristol, all = of whom had the option to sell some of their stock at $70 a share. His busi= ness partners, who had borrowed to invest even more heavily in ImClone, rec= eived the lion's share.=20 As a scientific adviser to ImClone, Dr. Mendelsohn's role in promoting ImCl= one and the drug is unclear. Although his involvement added credibility in = the early years, according to Jason Kantor, an analyst with J. P. Morgan, t= he participation of Dr. Leonard B. Saltz in the clinical trials at the Memo= rial Sloan-Kettering Cancer Center in Manhattan had more weight in persuadi= ng people the drug might be effective.=20 Dr. Mendelsohn denied he was overly enthusiastic about the drug's promise. = ''Personally, I've never done anything but describe the merits of the antib= ody and its results,'' he said. ''I've given lots of lectures. I stressed, = and it's in print, that this is an experiment.''=20 ''I get a lot of calls from people asking me, 'Should I invest? Should I in= vest?' '' he continued. ''I always say it's an experiment. It's well along,= but until we prove to the F.D.A. that this is a satisfactory anticancer ag= ent, it's an experiment.''=20 Dr. Mendelsohn said he had been careful to avoid any conflict of interest w= ith ImClone. ''I give a lot of speeches,'' he said, ''and I always state th= at I am on the board of ImClone and I own stock in the company. I always sa= y this.'' He said he always took note of these connections in his publicati= ons about the drug. He takes no money from the corporation for his own rese= arch, and he does not prescribe C-225 to his own patients.=20 But Dr. Mendelsohn is a paid consultant to ImClone, creating what corporate= governance experts view as another threat to his ability to serve as an in= dependent director. Last year, he was paid $12,000 for his work as a scient= ific adviser, he said, more than the $10,000 he received as a director. He = also received 30,000 stock options, which are not vested.=20 And Dr. Mendelsohn serves as an adviser to other companies, including Brist= ol-Myers and assorted biotechnology concerns.=20 Although Dr. Mendelsohn does not serve on the boards of any other companies= , he is on the board of a new venture capital fund, the Scientia Health Gro= up, which plans to invest in health-related ideas and involves ImClone's ma= nagement. ''I have only a modest knowledge'' of the fund, he said, noting i= t had only one meeting.''=20 Dr. Mendelsohn acknowledged that the role of a director is much less appeal= ing these days. His directorships at Enron and ImClone are taking so much o= f his time, he said, ''I'm probably not going to be on any other board.'' Photo: Dr. John Mendelsohn, president of the University of Texas M. D. Ande= rson Cancer Center in Houston. Dr. Mendelsohn is on the boards of Enron and= ImClone Systems. (F. Carter Smith for The New York Times) Chart: ''Dr. Joh= n Mendelsohn'' BORN -- Aug. 31, 1936, Cincinnati. HOMETOWN -- Houston. EDUC= ATION -- B.S. in bio-chemical sciences, Harvard University, 1958; Fulbright= scholar; M.D. from Harvard Medical School, 1963. CAREER HIGHLIGHTS 1970-19= 85 -- University of California San Diego Medical School faculty; became dir= ector of school's cancer center in 1976. 1985-1996 -- Chairman of departmen= t of medicine, Memorial Sloan-Kettering Cancer Center. 1996-present -- Pres= ident of University of Texas M.D. Anderson Cancer Center. FAMILY -- Anne, w= ife; 3 sons. BOARD MEMBERSHIPS -- Enron; ImClone Systems (pg. C2)=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Business/Financial Desk; Section C Patents While Enron's future is uncertain, its trademarked name could live on for a= decade. By Sabra Chartrand 01/28/2002 The New York Times Page 9, Column 1 c. 2002 New York Times Company ENRON'S future as a business enterprise is uncertain, but its name could li= ve on for 10 years -- as a trademark, at least.=20 Enron moved a step closer to winning a trademark for its tilted ''E'' logo = last week when the United States Office of Patents and Trademarks published= the company's application in the office's Official Gazette. Such publicati= on is a routine part of the process, providing notification of pending trad= emarks and giving the public a chance to oppose them if a case can be made. Trademarks are valid for 10 years, and can be renewed for 10-year periods t= hereafter. Five years after a trademark is granted, however, the owner must= file an affidavit stating that the trademark is in use. So if Enron dissol= ved completely, it would be difficult for the company to maintain its trade= marks or win renewals.=20 In the application published last week the company requested a trademark on= the stylized ''E'' in June, specifying that ''the word 'Enron' and the low= er element of the letter 'E' are blue, the middle element of the letter 'E'= is green, and the top element of the letter 'E' is red.''=20 Despite the company's having filed for bankruptcy in early December, Enron = has so many pending trademark applications that the trademark office contin= ued throughout December and January to churn out requests for further infor= mation, amendments and publication notices. On Jan. 15, the agency awarded = a trademark to Enron for ''E Enron, Enron Field,'' a logo that refers to th= e Houston sports stadium and is intended to cover ''information relating to= sporting events and related activities by means of a global computer netwo= rk.''=20 Some of Enron's trademarks and pending trademarks appear to be better candi= dates for selling or transferring to another company than others. Ten days = after Enron declared bankruptcy, its application for a trademark on the ter= m ''Espeak'' was approved and another for ''Ethink'' passed a final review.= A third, for ''Emeet'' was being opposed. All the trademarks were intended= to cover ''an employee communication program via transmission of messages = among computer users, namely, an online electronic forum for knowledge shar= ing, idea generation, creative problem solving and collaboration.'' Theoret= ically, any number of companies might be interested in taking them off Enro= n's hands.=20 But for the moment, Enron has no plans to abandon its trademarks or pending= applications.=20 ''I know that for now, such rights are being maintained,'' said Scott Brown= , a Houston lawyer who handles Enron's trademark applications. ''One thing = we're doing on the trademark side is making sure we don't lose any marks du= ring the bankruptcy period,'' Mr. Brown said. ''I think the bankruptcy cour= t would govern any continuing work on behalf of Enron.''=20 That might include processing applications for a number of advertising slog= ans, like ''One Stop Energy Shop'' and ''Puts the Energy into E-Commerce.''= Enron has also asked for trademarks on catch phrases like ''Investing Our = Energy in Your Business'' and ''Click on Your Power'' for its energy manage= ment services. Some slogans -- like ''Enron Earth Smart Wind,'' for electri= cal power distribution -- might seem to make sense only to the people who d= reamed them up.=20 Other pending trademarks include ''Enron Etelligence,'' ''Enron Envest'' an= d ''Enron Enpower'' -- all intended to promote Enron's ''financial risk man= agement for energy related facilities.''=20 Investors hoping to recoup money from any of Enron's remaining assets proba= bly should not look to the company's patent portfolio.=20 When Enron declared bankruptcy, it held 20 patents that had been assigned t= o it by various inventors. Much of the value is tied to the shelf life of t= hose patents, and most were issued in the 1980's -- meaning they are due to= expire in the next few years. The first to lapse will be patent 4,629,657 = for a ''biaxially oriented polypropylene film construction for special lami= nation,'' which was granted in 1986 and will expire in 2004.=20 Seventeen of the patents were issued between 1986 and 1990, and several of = those were assigned to the Enron Chemical Company and the Enron LNG Develop= ment Corporation. The Enron Corporation was formed in 1985 with the merger = of Houston Natural Gas and an Omaha company called InterNorth. The two earl= ier companies won 26 patents between 1976 and 1985, and Enron may have inhe= rited some or all of those. But since they were granted 17-year terms, the = last will expire this year.=20 Many companies count patents as intangible assets, which generate income th= rough licensing fees and royalties. The value, of course, derives from the = fact that a patent grants exclusive rights to the holder for 17 to 20 years= , depending on when it was issued. Most of Enron's patents are unlikely to = have much appeal to competitors or clients because they are already too old= to offer long-term exclusivity. And it is possible that many of them will = expire before all the legal proceedings around Enron come to an end.=20 The value of the Enron patents is also limited by the fact that they do not= cover universal technologies. The two dozen inventors working on behalf of= Enron conducted research in very specific areas. Only certain investors or= licensees would probably be interested in a ''ship-based system for compre= ssed natural gas transport'' (patent 5,803,005), a ''direct fuel-fired furn= ace arrangement for the recovery of gallium and germanium from coal fly ash= '' (patent 4,643,110) or a ''method of forming a press-fitted pipe joint'' = (patent 4,769,897). Photo=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 National Desk; Section 1 ENRON'S MANY STRANDS: THE WEEK THAT WAS A Suicide and a Resignation as the Formal Inquiries Get Under Way By TOM REDBURN 01/27/2002 The New York Times Page 32, Column 1 c. 2002 New York Times Company Until Friday, the Enron affair seemed to be a scandal focused on lost money= , tainted politics and misleading accounting. But then it turned tragic.=20 At the end of a week of high drama in Houston and Washington, J. Clifford B= axter, a former Enron vice chairman, was found dead in his locked car not f= ar from his home in a Houston suburb. It was ruled a suicide. Friends and associates said that Mr. Baxter, who left the company in May, h= ad clashed last spring with Jeffrey K. Skilling, who was Enron's chief exec= utive at the time.=20 Mr. Baxter had ''complained mightily'' about the ''inappropriateness'' of E= nron's financial practices, according to Sherron S. Watkins, the whistleblo= wer whose August letter to Kenneth L. Lay, the Enron chairman, outlining th= e accounting practices that ultimately brought down the company surfaced ea= rlier this month.=20 Mr. Baxter was said by friends to be distraught in recent days over his ina= bility to end the abuses that led to the collapse of the company.=20 ''It makes it real,'' a neighbor of Mr. Baxter said -- ''it'' being the Enr= on scandal, no longer esoteric.=20 THE CHAIRMAN QUITS -- Under pressure from creditors, Mr. Lay ended his long= tenure as leader of the company he created and began his new career as a d= efendant in lawsuits, a witness before Congressional committees and a poten= tial target of criminal investigations.=20 The questions about Enron's partnerships and accounting practices confronti= ng Mr. Lay, who is scheduled to testify before Congress on Feb. 4, hark bac= k to the classic Watergate query: What did he know, and when did he know it= ? In Houston, the further question on the minds of Enron workers, and forme= r workers, is: Why did he continue to encourage employees to buy Enron stoc= k after he knew that doubts had been raised about the company's books?=20 Mr. Lay, who used to trade birthday cards with President Bush, won't be vis= iting his old friend at the White House. The president, traveling in West V= irginia, told reporters that he was outraged that Enron executives misled t= heir employees and investors -- including his mother-in-law, who lost $8,09= 6, the White House said.=20 Just before Mr. Lay resigned, a former Enron employee, Maureen Castaneda, r= evealed that people working in the accounting unit had been shredding Enron= documents for weeks.=20 CONGRESSIONAL INQUIRIES BEGIN -- Two panels of lawmakers held the first of = what are expected to be many hearings by the 11 subcommittees looking into = Enron's failure and its implications.=20 A House subcommittee released evidence suggesting that scores of people wer= e involved in the destruction of documents at the Houston office of Enron's= auditor, Arthur Andersen. Andersen officials continued to say the primary = blame for the shredding belonged to David B. Duncan, the partner responsibl= e for the Enron account. Lawmakers were skeptical of that account, but Mr. = Duncan declined to testify, invoking his Fifth Amendment right against self= -incrimination. Lawmakers are expected to ask questions about document dest= ruction at Enron during hearings in early February.=20 CAMPAIGN FINANCE REFORM ADVANCES -- The quest to ban the unlimited contribu= tions to the political parties known as soft money was revived last week by= Enron's collapse and the tales of how it spread nearly $6 million in campa= ign donations across Washington since 1989. More than half of the contribut= ions were soft money.=20 Advocates of overhauling the nation's campaign finance laws gained enough s= upport to force a House vote on legislation that would make the most wide-r= anging change in the law since the Watergate era. The insurgents made their= move, a defeat for the House Republican leadership, on the second day of t= he new Congressional session, collecting the final signatures needed on a p= etition to send the bill to the floor.=20 For all the expressions of outrage on Capitol Hill at last week's hearings,= critics argued that Congress shared responsibility for Enron's demise. Of = the 248 senators and members of Congress serving on the investigating commi= ttees, 212 have received campaign contributions from Enron or Arthur Anders= en. In recent weeks, many politicians have scrambled to erase any financial= connections to Enron. They have donated the company's contributions to cha= ritable causes or to a fund established to assist former Enron employees.= =20 CONNECTIONS TO BUSH OFFICIALS -- Former Enron employees said that they had = warned senior executives of evidence that a major division of the company h= ad overstated its profits by hundreds of millions of dollars. For three yea= rs, the division's No. 2 executive was Thomas E. White, who left Enron last= June to become Secretary of the Army.=20 Mr. White, who owned more Enron stock than any other senior official joinin= g the Bush administration, disclosed that he held between $25 million and $= 50 million in Enron stock and a like amount in stock options when he joined= the administration. Mr. White, who also said he had had 30 ''personal'' co= ntacts with Enron employees since last June, sold the shares over an extend= ed period of time under a government ethics agreement.=20 Associates of Karl Rove, President Bush's top political adviser, revealed t= hat Mr. Rove had recommended the Republican strategist Ralph Reed to Enron = for a lucrative consulting contract as Mr. Bush was weighing whether to run= for president. The move was intended to keep Mr. Reed loyal to the Bush ca= mpaign, they said, without putting him on the Bush payroll. Both Mr. Reed a= nd Mr. Rove said the Enron contract had nothing to do with the Bush campaig= n.=20 WALL STREET'S SKINNY -- Confidential partnership records showed that Enron = executives wore two hats, offering Wall Street deal makers, banks, insuranc= e companies, and wealthy investors detailed information about Enron's inner= workings and off-the-books holdings that was denied to company shareholder= s. With the information, Enron enticed the investors to pour cash into one = of the partnerships that helped wreck the company by dangling the prospect = that they could double their money in less than a year.=20 Finance experts called the deal shocking, but probably legal, and said it d= emonstrated the unintended consequences of securities laws meant to level t= he market playing field, rather than tilt it toward privileged investors. T= OM REDBURN Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Police Probe Ex-Enron Executive's Death --- Baxter, an Apparent Suicide, Wo= rked to Sell Assets Of Energy-Trading Firm By Wall Street Journal staff reporters Rebecca Smith, Alexei Barrionuevo an= d Tom Hamburger 01/28/2002 The Wall Street Journal A3 (Copyright (c) 2002, Dow Jones & Company, Inc.) The former Enron Corp. executive who was found dead Friday had been engaged= in the difficult task of trying to sell off assets as the company's financ= es started to take a turn for the worse.=20 Police investigators in Sugar Land, Texas, said they are continuing their i= nvestigation into the death of former Enron Vice Chairman J. Clifford Baxte= r, who quit the company in May before a string of negative events became pu= blic and propelled the Houston energy company into U.S. bankruptcy court la= st month. Mr. Baxter was found at 2:23 a.m. Friday morning in his 2002 black Mercedes= Benz with a gunshot wound to the head. The car, which police said containe= d a handgun, was parked in a median about a mile from Mr. Baxter's newly bu= ilt home that he shared with his wife and two children in the affluent plan= ned community of Sugar Land, about 30 miles southwest of Houston.=20 Police quickly put out a press release with the headline "Suicide," only la= ter in the day changing it to read "Death Investigation." Following an auto= psy, the Harris County Medical Examiner's office said Mr. Baxter's death wa= s consistent with a suicide. But police spokeswoman Pat Whitty said yesterd= ay that "in spite of the fact the medical examiner believes it's a suicide,= we're still processing the car, gun, hair and fibers . . . to ensure it wa= s a suicide." Authorities haven't released the note.=20 Those who knew Mr. Baxter, who was 43 years old, expressed shock and disbel= ief that he should have taken his own life. A former U.S. Air Force captain= and investment banker, Mr. Baxter joined Enron in 1991 and quickly became = a leading dealmaker for the company, according to one person who worked clo= sely with him. When Enron later became burdened with poorly performing asse= ts, he was charged with helping dispose of assets, particularly ones overse= as.=20 In that latter role, Mr. Baxter would have been privy to a wealth of inform= ation on Enron's hundreds of partnerships and special entities, through whi= ch the company pumped up profits and kept debt off its balance sheet. Peopl= e close to the matter say Mr. Baxter found it difficult to sell many of the= se assets and was bothered by the fact so many were worth less than their b= ook value.=20 Some of the partnerships that apparently came to his attention were ones in= which other senior officers may have had an ownership interest. Federal in= vestigators are looking into arrangements that involved Enron's former chie= f financial officer, Andrew Fastow, and possibly others, including the form= er corporate treasurer, Ben Glisan.=20 Those who knew Mr. Baxter say he regarded himself as the "integrity guy" at= Enron. His name appears in a memo written to former Enron Chairman Kenneth= Lay in August by whistle-blower Sherron Watkins warning about a potential = conflict-of-interest disaster that could be awaiting the company because of= the partnerships. Ms. Watkins said Mr. Baxter complained "to all who would= listen."=20 Like others at Enron, Mr. Baxter was being sought by federal investigators = who are trying to unravel Enron's complex financial arrangements. Mr. Baxte= r had been given legal representation, paid for by Enron, through the law f= irm of Swidler Berlin Shereff Friedman.=20 Mr. Baxter's attorney, Michael Levy, also is representing Enron's chief acc= ounting officer, Rick Causey. Mr. Levy declined to discuss the case but ins= tead criticized reporters and politicians for sullying Enron's name. He sai= d the case "can only truly be understood after months of careful and delibe= rative investigation. Putting this kind of media spotlight on the topic doe= sn't help answer those questions any faster."=20 On Wednesday, Mr. Levy was contacted by investigators from the House Energy= and Commerce Committee who requested an interview with Mr. Baxter. However= , no interview date had been set. Earlier this month, Mr. Baxter also recei= ved a subpoena for Enron-related documents from a Senate Government Affairs= subcommittee. It is unclear which, if any, documents he may have turned ov= er to the panel.=20 Just what Mr. Baxter's mental state was prior to his death is uncertain. Pe= ople who knew him said he continued to work out and spent time on his 72-fo= ot Viking yacht, the Tranquility. He continued to do community work, notabl= y for Junior Achievement.=20 Yet one friend said Mr. Baxter obviously was shaken by what happened at Enr= on, a company he felt he had helped build. "It wasn't unusual for Cliff to = be dramatically affected by things," this person said. "That was just his w= ay. He would obsess over details. That's why he was such a good investment = banker.=20 "He was trying to get some distance from the situation," this person added,= "but his personality wouldn't let him."=20 Mr. Baxter was seen as particularly close with former Enron Chief Executive= Jeffrey Skilling, who plucked the one-time PaineWebber dealmaker out of En= ron's Washington, D.C., office where he worked for the natural-gas side of = the company. Mr. Skilling, impressed by Mr. Baxter's talent as a negotiator= , brought him to Enron's Capital and Trade Resources unit -- the engine of = the company's go-go growth during the 1990s.=20 Mr. Baxter left Enron to work at Koch Industries, a conglomerate with a hea= vy interest in energy, in 1995 for less than three months in the company's = equities group, which was based in Wichita, Kan. But he returned to Enron a= nd in 1998 was instrumental in the purchase of Portland General Electric, a= n Oregon utility. This was supposed to have been Enron's springboard into t= he Western power market, especially California, which had just been deregul= ated. But the plan never panned out, and Mr. Baxter soon found himself look= ing for a buyer for Portland General.=20 On Friday, four policemen stood guard on the steps of Mr. Baxter's red bric= k house in Sugar Land, a town named for the cane fields it once contained. = They turned away reporters seeking comment from Mrs. Baxter and family frie= nds on hand.=20 Neighbors said the Baxters kept pretty much to themselves and often were aw= ay.=20 Mr. Baxter spent most weekends on his motorboat and one neighbor said the f= amily spent most of last summer cruising the Caribbean, arriving back home = just a few days before school started for Mr. Baxter's fifth-grade daughter= and high-school-aged son. "When he retired, we figured we would see a lot = more of him," said Tom Swonke, a next-door neighbor. "But we didn't."=20 After the scandal broke, one Enron official pointed out, Mr. Baxter would s= ometimes chat with Mr. Skilling and others he had worked with, and they buo= yed each other's spirits. But those conversations evidently became less fre= quent when attorneys advised senior Enron executives facing potential class= -action lawsuits and criminal inquiries that they shouldn't be in contact a= ny longer.=20 One person who was close with Mr. Baxter at Enron noted he had seemed "in p= retty good shape the last time I talked to him," a few days before his deat= h. Still, this person said, Mr. Baxter had lamented of late: "This is all g= oing to have a really bad ending."=20 ---=20 John R. Emshwiller and Thaddeus Herrick contributed to this article. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 National Desk; Section 1 ENRON'S MANY STRANDS: THE SUICIDE Despite His Qualms, Scandal Engulfed Executive By JIM YARDLEY and SHAILA K. DEWAN 01/27/2002 The New York Times Page 33, Column 1 c. 2002 New York Times Company HOUSTON, Jan. 26 -- Cliff Baxter was supposed to be on a boat right now, fl= oating on some endless expanse of blue water beneath endless blue skies. Th= at was the party line when he left Enron last May as vice chairman, and if = former colleagues now say it was never that simple, they nonetheless expect= ed him to be living the good life.=20 The son of a police sergeant, Mr. Baxter was getting out of Enron as a rich= man at a time when his vision for the company apparently clashed with thos= e of many of its top executives. He had helped create the company's centerp= iece business, its energy trading operations, and had risen to vice chairma= n, a grand title for a man from ordinary beginnings. He had a loving wife and two children and a big new house in an exclusive s= uburb. He could afford to do anything, or nothing at all.=20 But if Mr. Baxter left Enron months before trouble engulfed the company, th= ose troubles seemed to be engulfing him when he was found dead early Friday= morning, shot once in the head. An autopsy was completed on Friday, and th= e death has been ruled a suicide, a representative of the Harris County Med= ical Examiner's Office said today.=20 Mr. Baxter had been subpoenaed by Congress to testify about Enron, and inve= stigators hoped he would be a helpful witness against his former peers sinc= e his name had surfaced as someone who had complained ''mightily'' about th= e financial partnerships now at the center of the company's collapse. He ha= d also been named as a defendant in a shareholder lawsuit.=20 His anguish became evident to those who bumped into him in recent weeks. Pe= ople who saw him at the Houston Yacht Club, where until recently Mr. Baxter= kept a boat, Tranquility Base, noticed that his salt-and-pepper hair had t= urned mostly white between December and January, said the club's president,= Chuck Buckner.=20 ''Cliff was a guy who clearly seemed to be very concerned that people would= think ill of him whether he'd done anything wrong or not,'' said Mr. Buckn= er, a partner with Ernst & Young. At the club's Christmas party in December= , Mr. Buckner said, he and Mr. Baxter spoke only in general terms about Enr= on.=20 ''I thought he was a man who'd got out on time, but a man who'd be concerne= d about what happened to the company,'' Mr. Buckner said. ''He worked reall= y hard. This was the son of a policeman. This wasn't a rich kid.''=20 The mail carrier in the neighborhood, Veronica DeLaCruz, said that Mr. Baxt= er's mail had been full of certified letters from law firms in Houston and = elsewhere in recent months, and that his wife regularly signed for them. Bu= t in recent weeks, as the certified letters kept coming, no one came to the= door to sign.=20 ''They were very, very to themselves,'' said a next-door neighbor who spoke= on the condition of anonymity. ''They spent most of their time on their ya= cht.''=20 Police investigators in Sugar Land, the affluent Houston suburb where Mr. B= axter's body was discovered inside his parked Mercedes-Benz, have refused t= o reveal the contents of a suicide note he left behind, but CNBC has report= ed that Mr. Baxter wrote that he was distraught over Enron's disintegration= and the prospect of having to testify against friends there.=20 His reputation among friends and colleagues was of a man of high integrity = who could be an intimidating negotiator, sometimes arrogant and brash in a = typically Enron mold. He liked expensive cars and motorcycles, and one form= er colleague, Michael P. Moran, recalled seeing a Ferrari, a Lexus, an S.U.= V. and more in his parking spot.=20 ''He was really pretty typical of what the Enron culture was, although he w= as a very principled individual,'' said Mr. Moran, a retired general counse= l of Enron's natural gas pipeline group who is now serving on the creditors= ' committee overseeing the bankruptcy.=20 Mr. Moran said he was shocked by Mr. Baxter's death because he had had neit= her financial problems nor a major hand in the company's decline. But, he s= aid, Mr. Baxter had always been concerned about the fate of workers when he= was buying or selling companies.=20 ''The thought has crossed my mind,'' Mr. Moran said, that the suicide came = because ''he was so disturbed by all the things that were going on.''=20 Before he left Enron, Mr. Baxter, like many of the company's executives, wa= s active in charity work, particularly for Junior Achievement of Southeast = Texas. Jerry V. Mutchler, the group's president, described him as ''very gr= egarious, a very big thinker and one of those people who thought you should= give back.''=20 Mr. Mutchler said Mr. Baxter had raised hundreds of thousands of dollars fo= r the group because he wanted to help make certain young people ''understoo= d the values of the free enterprise system.''=20 Doug Leach, a vice president of Enron Global Markets, said one of Mr. Baxte= r's fund-raisers for Junior Achievement was called Birdies for Charity. A p= utting green was set up in the Enron lobby for employees who passed by. ''T= hey would pay to make a putt, and Enron would match the funds,'' Mr. Leach = said. ''He held his own as a putter. He had fun, he got into it.=20 ''That's the part of Cliff I got to know, and that's why this is so sad.''= =20 Mr. Baxter grew up in working-class Amityville, N.Y., on the south shore of= Long Island, one of six children of a father who was a local police sergea= nt and a mother who worked for the Town of Babylon. He graduated with honor= s from New York University, became a captain in the Air Force and earned a = master's degree in business at Columbia University.=20 Arriving at Columbia Business School as a married father recently discharge= d from the Air Force, Mr. Baxter did not fit the typical profile of an inco= ming student.=20 Dan Nagao recalled that Mr. Baxter had approached him in an accounting clas= s after noticing in the student directory that Mr. Nagao, too, had served i= n the military. They became friends, Mr. Nagao said, and he recalled that M= r. Baxter had joined a rock band as a guitarist, hustled fellow students in= pool and joined investment and entrepreneurial clubs on campus.=20 For years, Mr. Baxter and Mr. Nagao stayed in touch, talking, exchanging e-= mail messages, swapping Christmas cards. Mr. Baxter talked about his two ch= ildren and his wife, Carol, whom he had met while in the Air Force, but rar= ely about his job. Only last year, after Mr. Nagao asked Mr. Baxter what he= did for Enron, did Mr. Baxter state, almost sheepishly, that he was the co= mpany's vice chairman.=20 This year, though, Mr. Nagao said the usual Christmas card with the long, h= andwritten note and the photo of his family did not arrive from Mr. Baxter.= ''It was something simple, but I remember mentioning to my wife that it wa= s odd,'' said Mr. Nagao, who runs a human resources consulting company in P= alo Alto, Calif.=20 ''I thought, maybe he's busy, maybe he's traveling. I was thinking of calli= ng him, and just asking him, 'Hey, is everything O.K.?' I regret not doing = that now.''=20 When Mr. Nagao learned of his friend's death on Friday, he was shocked. ''I= don't know what happened, and I would hate to even guess,'' he said. ''We = thought that Cliff would survive anything.'' Photo: A visitor arrived at the Sugar Land, Tex., home of the former Enron = vice chairman J. Clifford Baxter, who committed suicide early Friday. (F. C= arter Smith for The New York Times)=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Sports Desk; Section 8 Sports of The Times The Astros Should Give Some of the Money Back By GEORGE VECSEY 01/27/2002 The New York Times Page 6, Column 1 c. 2002 New York Times Company ANY day now, the geniuses who run baseball are going to accept the court ru= ling that they cannot whack the Minnesota Twins this year.=20 ''Never mind our whining about bad teams, shaky finances, unstable future,'= ' they will instruct their staffs. ''Go out and hustle those season tickets= .'' Selling baseball is going to be a trifle hard in Houston, since folks do no= t have as much money as they thought they did. Thousands of people have los= t salaries, stock value and pensions because of the friendly folks from Enr= on.=20 And anybody who can scrape together a few dollars for a ticket to an Astros= game must contemplate walking into Enron Field, named for a company synony= mous with pumped-up stocks and the shredding of documents.=20 Who wants to go to a ballpark with a name that stinks?=20 Baseball, ostensibly the American pastime, the last bastion of the cheap se= at, the place where people can go and boo, is now stuck with a name that re= presents the dangerous friendship between rapacious business and complaisan= t government.=20 Give it back. That was my first thought when I realized Enron had paid $100= million for 30 years to flash its name in lights across the new downtown b= aseball palace.=20 Most emphatically, the Astros should not cut a check directly to Kenneth L.= Lay, Enron's resigned chairman and chief executive. Instead, the club shou= ld put the money into an account for all the people whose life savings went= down the drain after the big people sold their stock and got out, leaving = the little people once again to hold the bag.=20 The account might provide only quarters per family, but it would be a gestu= re. At the least, the Astros would not be keeping money that had been spent= to glorify Kenneth L. Lay and his house of cards.=20 It's blood money, really.=20 Unfortunately, when I raised the question of giving back the money and the = name, the Astros said they could not.=20 ''We don't have any options,'' said Pam Gardner, the team's president of bu= siness operations. ''We honor contracts. When you deal with bankruptcy cour= ts, it's difficult.''=20 According to Gardner, Enron is ''current on payments'' to the club, but she= said, ''We're watching the situation carefully.''=20 Apparently, the naming rights to the ballpark can be considered an asset in= bankruptcy procedures. Anybody foolish enough to take over the hollow shel= l of an energy company, even on a penny-for-dollars basis, might be able to= stick its own corporate logo on the ball park.=20 Repo Stadium, sponsored by your friendly local repossession agents. That ha= s a certain ring to it.=20 In the meantime, families and charities, and hospitals and the arts are hur= ting because they trusted this company that blustered about its smarts and = hinted broadly at close ties to power.=20 ''This is a very sad time in Houston,'' Gardner said. ''This has been devas= tating to the community.''=20 What stops the management of the Astros from deciding it does not want to b= e linked to this Enron fiasco? Lawyers, Gardner said.=20 There is no clause in the contract allowing the team to lop off the name in= case of adverse publicity and failure to say nothing of the blatant possib= ility of bad faith.=20 ''We do not have that unilateral ability,'' Gardner said.=20 How smart could the Astros' lawyers be? Enron is hardly the first company t= o go down after making a grandiose commitment to naming rights. There is a = long list of airlines, 90-day dot-com wonders, banks and other companies th= at put their names in lights and then tapped out, leaving behind irrelevant= logos on downtown skylines. It's an epidemic.=20 These failures ought to be a warning about the risks of increasing synergy = among major companies. Take money from an energy company and take the chanc= e of becoming a joke. Buy into a baseball team and suddenly you're a lodge = brother to Carl Pohlad and Bud Selig and other owners who perform favors fo= r each other and do not seem to comprehend the meaning of the phrase confli= ct of interest.=20 Come to think of it, having a naming-rights nightmare in Houston just might= fit into the grand poor-mouth strategy of Commissioner Selig and his merry= band: ''See, we told you so. Baseball really is in a terrible way.''=20 Maybe the Astros' owners are legally stuck with the name while Congress and= the courts and maybe even the feds look into the scandal. But I propose a = course of passive resistance.=20 The Astros should eliminate the copious use of that disgraced name all over= its promotions and brochures. Order new cocktail napkins with no Enron Fie= ld on them. Tell the public-address announcer to never utter that name agai= n. Play hardball. Do the bare minimum. Don't insult people who were impover= ished by flim-flam executives and their docile accountants.=20 Come to think of it: if an energy company can fail, so can electricity itse= lf. The Enron signs should develop a serious short circuit. What's Enron go= ing to do, sue? Any lawyers they can afford are surely busy on more importa= nt fronts.=20 The Astros may not be able to dismantle the sign just yet, but at least the= club should cut the power on a shameful name. And when the time comes, the= club should donate some money to people who were harmed by Enron. Photo: The naming rights to the Astros' stadium, for which Enron paid $100 = million for 30 years, could be an asset in bankruptcy court. (F. Carter Smi= th for The New York Times)=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Editorial Desk; Section 4 Planet Of the Privileged By MAUREEN DOWD 01/27/2002 The New York Times Page 13, Column 5 c. 2002 New York Times Company Oh, the pull of Planet Enron.=20 The atmosphere there was so rarefied that its inhabitants were blissfully o= blivious to how privileged they were. It was a lovely place, sort of like Aspen with oil rigs. The skiing was gre= at because there was always a pristine powder of newly shredded financial r= ecords on the slopes.=20 There was offshore drilling off every shore and offshore subsidiaries on ev= ery corner.=20 A red flag fluttered on Planet Enron, but nobody paid attention.=20 Journalists in Washington were hunting for Dick Cheney for months, even as = he was completely visible and accessible on Planet Enron, where he lumbered= down golden boulevards.=20 Phil and Wendy Gramm, the king and queen of the Enron prom, cruised around = in their white stretch limo, rewarded for years of service, exempting and d= eregulating.=20 Paul O'Neill was also ubiquitous there, his face emblazoned and his words e= nshrined on the currency, which begins with $1,000 bills. The motto: ''Comp= anies come and go. It's part of the genius of capitalism.''=20 Mr. O'Neill was not Treasury secretary up there, though, merely a private c= itizen. Kenneth Lay, still smarting that the president decided not to name = him Treasury secretary on Earth, anointed himself with the title on Enron.= =20 The Bushes summered there, and W. and Jeb dropped by when they needed campa= ign cash. But lately, they began putting brown paper bags over their heads = when they visited so no one would notice them hobnobbing with Kenny Boy.=20 Everyone was upwardly mobile on Planet Enron, a world more consumed with ha= vens than have-not's.=20 There were, blessedly, no lower classes or riffraff. Denizens were blue blo= od or blue chip but never blue. There were the born rich, and there were th= e new rich the born rich made rich. The congenitally rich create the crony = rich by ushering them onto the boards and payrolls of oil and energy compan= ies and defense contractors.=20 There was no conflict of interest on Planet Enron, only confluence of inter= est. No income tax, only insider tips. No S.E.C. or G.A.O., just C.E.O.'s, = S.U.V.'s and N.O.B.D.'s (not our bankruptcy, dear). Q.E.D.=20 All meetings on Planet Enron were held in secret, and everyone liked it tha= t way. Auditing was considered rude. It was a very empathetic place.=20 On Planet Enron, it seemed only fair that chairman-for-life Kenneth Lay sho= uld reward himself with $51 trillion in a severance package, as opposed to = the $51 million he was seeking on Planet Earth.=20 On Planet Enron, Secretary of the Army Thomas White could whine that he cam= e out with only $12 million from sales of the company's stock. He bravely s= aid he ''would persevere.''=20 On Planet Enron, Karl Rove could expect people to mist up at the poignant t= ale of how he made mere millions instead of more millions when government e= thics rules forced him to sell all of his stocks. And he could ingratiate h= imself with the conservative leader Ralph Reed by offering him a piece of t= he Enron rock.=20 On Planet Enron, the president, his words muffled by the brown paper bag on= his head, could strike a chord complaining that his mother-in-law had lost= $8,000 on Enron stock when less connected mortals lost their entire retire= ments.=20 It was a beautifully sheltered place (and not just in the Caymans sense). A= place where inhabitants deluded themselves that their accomplishments and = windfalls -- Ivy League degrees, energy company sinecures, lucrative consul= ting contracts, advisory board booty -- were the result of merit and hard w= ork.=20 But then turmoil struck. The planet has been overrun by the Wrong Kind: gov= ernment lawyers bearing subpoenas and grand juries poking around. The thin = and tony air has become noxious with the threat of litigation and incarcera= tion.=20 Dick Cheney is still there, but he's hiding in a secure location. Now he ha= s caves on two planets.=20 President Bush, distancing himself by light-years, has ordered the U.S. gov= ernment to look into cutting off all business with the planet.=20 On Friday, the once-serene orb imploded with the news of the sad death of a= leading citizen, who shot himself in his Mercedes after telling friends he= did not want to have to turn against his own.=20 But Planet Enron is bigger than one company or one tragedy. It's a state of= mind, a subculture, a platinum card aristocracy. Its gravitational pull ha= s long proven irresistible. Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Week in Review Desk; Section 4 The Nation I Am Woman, Hear Me Roar in the Enron Scandal By JILL ABRAMSON 01/27/2002 The New York Times Page 3, Column 1 c. 2002 New York Times Company WASHINGTON -- AS the klieg lights went up on the Enron hearings, many of th= e familiar elements of Washington scandal were on display -- charges of inf= luence peddling, expressions of shock from outraged lawmakers and wall-to-w= all lawyers in dark suits.=20 But there was one novelty. Enron, unlike so many other Capitol messes, feat= ures powerful women in starring roles in a scandal that, at least so far, h= as nothing to do with sex. Nancy Temple, the Arthur Andersen lawyer and a leadoff witness, could even = emerge as a fall gal. She was raked over the coals by her House inquisitors= for sending directives that they believe Andersen employees construed as a= n invitation to shred thousands of Enron financial documents. Ms. Temple, w= ho sent her memos at a time when she knew the company could be sued for Enr= on's mounting accounting problems, denied wrongdoing.=20 Two women are vying for the part of the heroic whistle-blower. There is She= rron S. Watkins, the Enron executive whose memo warning the chairman, Kenne= th L. Lay, that their company might ''implode in a wave of accounting scand= als'' helped rocket the ruckus.=20 Maureen Castaneda, a former Enron executive, last week went public with all= egations of large-scale document shredding at Enron and provided actual pro= of. She had taken some of the shreds home to use as packing material, only = to discover that they were marked with the names Chewco and Jedi, two of En= ron's legally questionable partnerships.=20 Both women held fancy titles. Ms. Watkins was Enron's vice president for co= rporate development. Ms. Castaneda was director of foreign exchange and sov= ereign risk management.=20 In recent days, investigators from the Securities and Exchange Commission h= ave been talking with Martha P. Stuart about the role played by her law fir= m, Kirkland & Ellis, in helping to set up some of the partnerships at the c= enter of the inquiries.=20 The highest-profile women to figure in past Washington scandals, the White = House intern Monica Lewinsky and the law professor Anita Hill, became famou= s because they were in the middle of controversies involving charges of sex= ual misconduct. Both women were in relatively low-level government jobs at = the time of their fateful tangles with much more powerful men, President Bi= ll Clinton and Clarence Thomas, then a Supreme Court nominee.=20 Other women have been featured players in nonsexual scandals, but they didn= 't occupy positions near or in the executive suite. Iran-contra's Fawn Hall= was a White House secretary. So too, was Watergate's Rose Mary Woods, Pres= ident Richard Nixon's loyal employee, who was responsible for the famous 18= .5-minute gap on a crucial White House tape. (She said her foot accidentall= y hit the delete pedal as she was busily transcribing.)=20 Watergate did feature a professional woman, an ITT lobbyist named Dita Bear= d, in a bit part, but she missed a bigger role when she went to the hospita= l in order to avoid testifying before Congress about a memo she wrote.=20 Other supporting female scandal players have included the wives of official= s under fire, like Martha Mitchell, or subordinate aides, like Deborah Gore= Dean, a lieutenant to Housing and Urban Development Secretary Samuel Pierc= e, who was prosecuted for her role in an influence peddling scandal in the = 1980's.=20 ''The scandal glass ceiling seems to have been broken,'' declared Ellen Mil= ler, a senior fellow at The American Prospect, a liberal magazine, who was = an outspoken critic of campaign finance abuses during various fund-raising = scandals in the Clinton years. Is this progress? ''The story has changed. I= t's not about sex. It's about women as major players in powerful positions.= ''=20 In the Clinton years, a few cracks appeared in that glass ceiling. Three hi= gh-powered lawyers found themselves on the hot seat: Hillary Rodham Clinton= for her Rose Law Firm connections in Whitewater, and Zoe Baird and Kimba W= ood, whose nominations for attorney general fell apart in what became known= as Nannygate.=20 But Mrs. Clinton fell under scrutiny because of whom she was married to, an= d the problem that beset Ms. Baird and caused the White House to drop suppo= rt for Ms. Wood flowed from their domestic lives, not their professional wo= rk.=20 SUZANNE GARMENT, the author of ''Scandal: The Culture of Mistrust in Americ= an Politics'' (Random House, 1991) is not sure the development is a healthy= one.=20 ''It is very interesting that women have reached the point when they can be= at the center of scandal because of financial reasons instead of sexual re= asons,'' she observed.=20 ''But insofar as you think women have historically had a superior morality = to that of men, then it isn't a cause for celebration.''=20 Whether cause for celebration or worry, the change does reflect the rising = status of women in the legal and corporate worlds. They are now high enough= on the ladder to drive the action, as Ms. Temple may have done when she in= structed Andersen employees on the company's policy concerning the retentio= n (or destruction) of documents.=20 They are close enough to the corridors of power to hear secrets and technic= ally proficient enough to figure out what is going on, as Ms. Watkins did a= s she decoded Enron's impenetrable accounting (she had been an executive at= Andersen before joining Enron).=20 They may not consider themselves bona fide members of the club of top corpo= rate officials, however.=20 For example, while Ms. Temple did testify before a House subcommittee on ov= ersight and investigations, David Duncan, who was the lead Andersen partner= on the Enron audit team, refused to answer questions and invoked the Fifth= Amendment.=20 Ms. Temple may have less to hide -- or she may have felt less bound by the = corporate world's brotherhood of silence. Photo: A former Enron executive, Maureen Castaneda, with shredded Enron doc= uments. (ABC News)=20 Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 California; Editorial Pages Desk Private Enterprise, Public Outrage 01/28/2002 Los Angeles Times Home Edition B-10 Copyright 2002 / The Times Mirror Company I was shocked and disgusted but somehow not surprised by a detail of Kennet= h Lay's compensation structure nearly buried at the end of the story of his= resignation (Jan. 24). You reported that Lay had a credit line of $7.5 mil= lion from Enron, meaning he could borrow that much from the firm at any giv= en time for his personal use. He took advantage of this arrangement multipl= e times last summer, and then would repay the loan with his Enron stock, on= ly to take advantage of the credit line once again.=20 All this was happening in the months just prior to his famous September spe= ech exhorting his employees to buy the "undervalued" stock. Then Enron anno= unced its worst quarter ever. Finally, I understand Lay's motives--they wer= e in his own best interests. Of course. Lynn Lipinski=20 Culver City=20 *=20 Now that Lay has resigned as chairman of Enron, maybe the Bush administrati= on can hire its old buddy as a consultant on privatizing Social Security. A= ll that talent shouldn't go to waste.=20 Margaret Morris=20 Ventura Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09 Sarah Palmer Internal Communications Manager Enron Public Relations (713) 853-9843