Enron Mentions -- 01/07/02-01/05/02 ,
 Laid-off Enron employees caught by health insurance glitch
Associated Press Newswires, 01/05/2002

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

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

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

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

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

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

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

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

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

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

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

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

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

_________________________________________________________

Laid-off Enron employees caught by health insurance glitch

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

HOUSTON (AP) - A paperwork delay has caused the approximately 4,500 Enron C=
orp. workers laid off by the foundering energy giant to go without health i=
nsurance temporarily, forcing at least one ex-employee to put off cancer su=
rgery.=20
Many employees, including Mike Black, had planned to continue their Enron b=
enefits after their expiration last month under federal rules set up by the=
 Consolidated Omnibus Budget Reconciliation Act, or COBRA.
But Black, who had to cancel skin cancer surgery set for last Thursday, and=
 his fellow former Enron mates learned the company failed to complete all t=
he necessary paperwork in time for coverage to continue into January.=20
Enron planned to have COBRA information mailed to workers three weeks after=
 their termination, but spokeswoman Karen Denne said it's taken longer than=
 expected.=20
Ex-workers should receive the paperwork by Jan. 15, Denne said.=20
The delay has left Black, a systems programmer who can't afford the operati=
on without insurance, in limbo.=20
"I'm still waiting for my second unemployment check," Black said.=20
Black, 54, said he's been unable to get any COBRA information from Enron, t=
he insurance plan administrator or the insurance company.=20
It seems as if "they're all pointing fingers at each other," Black told the=
 Houston Chronicle.=20
Matt Isbell, president of consulting company COBRA Resources, said the prob=
lem is not unusual because of the complex process. Companies have 44 days t=
o notify an individual they can buy the coverage, Isbell said.=20
During that time, former workers are on their own until they receive COBRA =
coverage. After that, qualifying expenses are reimbursed.=20
Black's not willing to front his surgery costs, however, because COBRA coul=
d disappear altogether if Enron switches its bankruptcy filing from Chapter=
 11, or reorganization, to Chapter 7, which is liquidation.=20
Another worker, Candace Womack, didn't find out her insurance had lapsed un=
til New Year's Day, when she got out of the hospital from heart surgery and=
 needed to buy prescriptions.=20
Womack, who worked in software support, carried health insurance for her fa=
mily.=20
"I'm getting a little ticked about the situation," said Womack, 51, who add=
ed that she was able to sign up for COBRA coverage before she walked out th=
e door after she was laid off from another company in the mid-1990s.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09

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

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

Mike Black has skin cancer and was planning to have an operation Thursday.=
=20
But he had to cancel the surgery when he discovered his health insurance pl=
an is in limbo.
Like the rest of the 4,500 workers laid off from Enron Corp. Dec. 5, Black =
had health insurance coverage through the end of December and was planning =
to continue his coverage under the federal rules set up by the Consolidated=
 Omnibus Budget Reconciliation Act.=20
But he found out this week Enron failed to finish all the necessary paperwo=
rk so the laid off workers could participate in COBRA beginning in January.=
=20
COBRA requires employers to offer health insurance to their terminated empl=
oyees for up to 18 months. Though COBRA is very expensive - the employee pa=
ys the entire cost of the plan, which is usually subsidized by an employer =
- it is designed to provide seamless health care coverage for the recently =
laid off worker.=20
But Enron officials said the company hasn't been able to process the COBRA =
paperwork fast enough.=20
The company planned to have the COBRA information mailed to workers 21 days=
 after they were terminated but it's taken longer than Enron expected, said=
 Enron spokeswoman Karen Denne. The layoffs and bankruptcy filing were so s=
udden that the company didn't have time to prepare in advance.=20
Employees should receive the COBRA paperwork by Jan. 15, Denne said. If the=
y don't, they should contact the benefits office.=20
A benefits consultant in Houston said she isn't surprised about Enron's del=
ay. COBRA can be a "paperwork nightmare." Documentation has to be sent to n=
ot just all employees but to all the employee dependents who are covered, s=
he said, asking not to be identified.=20
But to employees like Black, the delay is devastating. When his insurance c=
overage couldn't be verified, Black said he couldn't afford to pay for the =
operation out of his own pocket.=20
"I'm still waiting for my second unemployment check," he said.=20
Black is frustrated because he can't get any information about COBRA insura=
nce from Enron. He said that when he calls the company's benefits office, e=
mployees there don't know the answers to his questions. Neither does the pl=
an administrator, and the insurance company seems to be in the dark, too, h=
e said.=20
It seems as if "they're all pointing fingers at each other," said Black, wh=
o was a systems programmer at Enron.=20
Enron could have done it faster, he said, suggesting that arranging COBRA c=
overage is low on the company's priority list.=20
It's not an unusual problem, said Matt Isbell, president of COBRA Resources=
, a company that conducts COBRA training seminars in Kalamazoo, Mich.=20
Companies have at least 44 days to notify an individual employee that they =
can buy COBRA coverage, Isbell said. And depending on a company's plan docu=
ments, that waiting period can be even longer if the clock doesn't start un=
til the last day of regular insurance coverage.=20
During that time, employees have to foot their own medical bills, he said. =
But once the employee applies for COBRA and pays for it, the bills are reim=
bursed.=20
Black knows that but he's worried that Enron may convert its bankrupty fili=
ng from a Chapter 11, which provides protection from creditors while underg=
oing reorganization, to a Chapter 7, which would liquidate the company. If =
that happened, health insurance would disappear and so would COBRA, leaving=
 the 54-year-old with a bunch of unpaid bills.=20
Candace Womack found out she had no insurance when her husband went to the =
pharmacy Wednesday to fill several prescriptions. Womack had just had heart=
 surgery and was released from the hospital New Year's Day.=20
Instead of paying the $10 co-pays, her husband had to pony up $250 to pay f=
or antibiotics and blood pressure medicine because Womack's insurance had b=
een canceled. Womack worked in software support for Enron until she lost he=
r job last month.=20
Now she's worried about how she'll pay for the follow-up medical visits to =
her surgeon.=20
Like many of the laid-off employees, Womack carried the insurance for her f=
amily. Her husband is self-employed, and it's usually much more expensive t=
o buy an individual insurance policy than it is to pay for a company subsid=
ized plan like Enron's.=20
"I'm getting a little ticked about the situation," said Womack, who is 51.=
=20
Womack said the disaster she faces now is in such sharp contrast to when sh=
e lost her job in the mid-1990s.=20
Then, she had been working for First Interstate bank and was able to sign u=
p for COBRA coverage before she even walked out the door.

Photo: Mike Black, a former Enron employee, had to cancel his skin cancer o=
peration after discovering Enron failed to finish paperwork necessary for l=
aid off workers to have continued insurance coverage under COBRA (color)=20
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09

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

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

COMPANIES & FINANCE INTERNATIONAL - Bidders line up in battle for Enron sta=
ke - COLLAPSE AT LEAST THREE COMPANIES LIKELY TO BID FOR CORE ENERGY TRADIN=
G BUSINESS.=20
At least three companies are likely to bid for control of Enron's core ener=
gy trading business by today's deadline, according to the bankrupt US compa=
ny's advisers.
Citigroup, the US bank that is also one of Enron's main creditors, is likel=
y to be one of the bidders, according to other people close to the process.=
=20
It will not be clear until later in the week if all the potential bidders h=
ave submitted offers, but if the auction is successful, it will boost the c=
onfidence of Enron creditors.=20
Any delay in striking a deal could damage the chances of Enron reviving its=
 trading operations and restructuring the rest of the company. Enron's trad=
ers are locked in by incentives for a limited time, and trading counterpart=
ies, bruised by the sudden collapse of the company, are already sceptical a=
bout dealing with a revitalised trading operation=20
Enron advisers said yesterday that all the potential buyers of a majority s=
take were sufficiently creditworthy to restore customers' confidence in the=
 trading business. "That (creditworthiness) is not a problem," said Martin =
Bienenstock of Weil Gotshal & Manges, Enron's lawyer.=20
"We're expecting a number of bids," said a spokesman for Blackstone Group, =
financial adviser to Enron, yesterday.=20
The auction will be held on Thursday and a bankruptcy court hearing has bee=
n scheduled for Friday to approve a partner for the trading operation.=20
Enron hopes to auction off the assets, technology and key staff of its core=
 trading operation, forming a joint venture in which the energy group would=
 maintain a minority stake.=20
Banks, led by Citigroup, are the most likely buyers of a majority stake. UB=
S of Switzerland had expressed interest before Christmas, but the Swiss ban=
k's enthusiasm for making an offer has cooled since, according to people in=
volved. Neither bank would comment last week.=20
People close to the procedure said last week that Enron's cash flow was bet=
ter than originally expected and it had not yet drawn on the $250m of emerg=
ency funds available as part of its $1.5bn debtor-in-possession financing p=
ackage. They said Enron might even reduce the size of the loan to avoid pay=
ing unnecessary charges.=20
In a separate hearing today, a number of Texas creditors will argue for the=
 whole procedure to be switched from New York to Houston, where Enron has i=
ts headquarters.=20
(c) Copyright Financial Times Ltd. All rights reserved.=20
http://www.ft.com.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09

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

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

The latest moves in the Enron saga take place, with this week being crucial=
 to the future of operations. The deadline passes for bids, while the forma=
l auction takes place and the buyer may be approved for the energy trading =
unit. A series of post-Christmas trading updates from UK retailers will be =
examined for indications of the strength of consumer spending.=20
MONDAY
Monday is the deadline for companies to bid to form a joint venture with En=
ron's energy trading business, the core of the bankrupt company. Citigroup =
and UBS had both expressed interest in the business, which Enron believes c=
an be revived with the help of a credit-worthy partner. A formal auction wi=
ll be held by the bankruptcy court on Thursday, assuming more than one comp=
any comes forward, and a hearing has been set for Friday to approve a buyer=
. Administrators to Enron Corporation are close to the sale of the London-b=
ased metals trading business of the collapsed US energy group. The deal, wh=
ich would be the third significant disposal to be negotiated in the UK sinc=
e Enron's European operations were put into administration at the end of No=
vember, could be announced within days. Potential buyers for all or parts o=
f the business are Glencore, the Swiss commodities trader, Sempra Energy of=
 San Diego, HSBC and Goldman Sachs. PricewaterhouseCoopers, which is acting=
 as administrator, is understood to have singled out one of the interested =
parties and is expected to finalise the sale over the weekend or early next=
 week. A sale had been expected before Christmas, but was delayed because o=
f difficulties in unravelling the complex corporate structure. TUESDAY=20
Alcoa, the world's largest producer of aluminium, is expected to report fou=
rth-quarter earnings per share of 10 cents, far short of the 45 cents earne=
d a year ago, as anaemic demand for aluminium in the auto and aerospace sec=
tors is expected to strongly hit impact the company's bottom line, analysts=
 said. Two weeks ago Alcoa pre-announced its fourth-quarter earnings per sh=
are expectations of 10 cents, excluding a $225m after-tax restructuring cha=
rge. Lower volumes, depressed metal prices and an overall weak downstream m=
arket will all weigh on fourth-quarter results, trimming full-year earnings=
 to $1.43 compared with $1.81 last year. The company's current estimate of =
10 cents is well below the previous forecast of Wall Street analysts' conse=
nsus of 30 cents. AFX, New York=20
Interim figures from Pace Micro Technology, the UK television set-top box m=
aker, may contain news on progress in the US. It said at the final results =
announcement in July that sales in the US were likely to grow faster than i=
n the more mature UK market. In that context, investors may be keen to hear=
 how contracts with AOL Time Warner and Comcast of the US are progressing. =
Analysts expect Malcolm Miller, chief executive of Pace, to announce a rise=
 from GBP18.4m ($26.7m) in profits before exceptionals to GBP19.3m, on sale=
s up from GBP205.8m to GBP215.7m in the six months to the end of November.=
=20
One of the most eagerly-awaited of the post-Christmas trading statements is=
 expected from Next, the UK clothing retailer. It said on the morning of Se=
ptember 11 that like-for-like sales were up 8 per cent, while Next Director=
y sales were 20 per cent ahead of the previous year.=20
WEDNESDAY=20
Oc, the Dutch repro-graphics group, will report for the fiscal year to Nove=
mber 30 net profit before extraordinary items of 106.7m-109m, down from 152=
m ($133.8m) a year earlier, analysts said. Earnings per share after preferr=
ed dividends are forecast to fall to 1.14-1.21 from 1.76 a year earlier. In=
 a pre-announcement in December, the company forecast a 30 per cent fall in=
 net profit before extraordinary items with sales unchanged. Oce also plans=
 to take a restructuring charge of 125m. AFX, Amsterdam=20
Interim figures from Dixons, the UK consumer electronics retailer, are expe=
cted to be between GBP80m-GBP87m for the six months to October, against GBP=
90.8m before exceptionals and losses at Freeserve, the sale of which makes =
comparisons difficult. However, a trading update is likely to overshadow th=
e figures.=20
Additional reporting by Andrew Hill in New York and Alex Skorecki in London=
.=20
(c) Copyright Financial Times Group.=20
http://www.ft.com.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09

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

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

Enron will find out whether there is sufficient interest in its core energy=
 trading operations to justify an auction of a majority stake this week.=20
According to people close to the bankruptcy procedure, potential bidders we=
re still conducting due diligence examinations of the business late last we=
ek.
The deadline for formal offers is Monday. If there are enough bids, the ban=
kruptcy court will hold an auction on Thursday. A court hearing has been sc=
heduled for Friday to approve a partner for the trading operation.=20
Enron hopes to auction off the assets, technology and key staff of its core=
 trading operation, forming a joint venture with a creditworthy buyer, poss=
ibly a bank, in which the energy group would maintain a minority stake. The=
 trading book is unlikely to be sold because of the size of Enron's liabili=
ties to customers.=20
A long delay would be fatal to the prospects of reviving the business. Trad=
ers are locked in by incentives for a limited time and trading counterparti=
es, bruised by the collapse of Enron, are already sceptical about dealing w=
ith a revitalised trading operation.=20
Martin Bienenstock of Weil Gotshal & Manges, Enron's lawyer, warned before =
Christmas that if the deal was not closed in early January, traders would "=
simply be compelled to find other jobs with other financial entities".=20
Citigroup is more likely to take a stake in the business, but it has not ye=
t come forward with a stalking-horse offer, which would set a base for the =
auction. Interest from UBS has cooled, according to people involved. Neithe=
r bank would comment. Rival energy companies said they were unlikely to bec=
ome partners of the trading business.=20
The creditors' committee might still select a stalking-horse, but one credi=
tor said that even without an opening bid the committee was confident that =
a partner would be found.=20
People close to the procedure said last week that Enron's cash flow was bet=
ter than had been expected and it had not yet drawn on the $250m of emergen=
cy funds available as part of the $1.5bn debtor-in-possession financing pac=
kage arranged last month.=20
Court approval of the package has been postponed to January 30, but bankers=
 have played down concerns that it would be difficult to syndicate the fina=
l $1bn tranche of the loan.=20
In a separate hearing on Monday, the New York bankruptcy court will hear ar=
guments for the procedure to be switched to Houston where Enron has its hea=
dquarters.=20
(c) Copyright Financial Times Group.=20
http://www.ft.com.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09

OTC regulation flaws exposed by Enron.
By NIKKI TAIT.

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

The furore over Enron - and cries from some quarters for greater regulation=
 - come exactly one year after the US believed that it had put to rest the =
issue of derivatives trading supervision.=20
On a Friday night, December 15 2000, Congress passed complex and highly tec=
hnical legislation which essentially ensured that much of the $94,000bn ove=
r-the-counter derivatives industry would operate outside the nation's commo=
dities laws.
Senator Phil Gramm helped to resurrect the legislation after the House agri=
culture committee added a special exemption from regulation for EnronOnline=
, according to Michael Greenberger, a former official of the Commodity Futu=
res Trading Commission. The package, attached to 200 pages of legislation o=
f an 11,000-page general public funding bill, was barely noticed in the rus=
h to adjourn Congress.=20
Much of America's regulatory regime was devised at a time when derivatives =
trading consisted mainly of standardised futures contracts transacted throu=
gh third-party exchanges like the Chicago Board of Trade, and involving tra=
ditional commodity products such as corn or soyabeans.=20
But during the 1980s and 1990s, a good deal of risk-management action had s=
hifted to the over-the-counter market, where banks and trading firms negoti=
ated bilateral contracts (often called "swaps") on an individual basis. The=
re had also been phenomenal growth in financial contracts - hedging interes=
t rate or currency exposures, for example. Finally, the proliferation of el=
ectronic trading systems made it easier to transact business outside the US=
, if regulatory regimes were kinder elsewhere.=20
For participants in the swaps markets one of the biggest concerns is that t=
he Commodity Futures Trading Commission, set up to regulate the futures mar=
kets, might seek to extend some authority to OTC markets. Brooksley Born, h=
ead of the agency in the late-1990s, felt strongly about the issue and the =
problems at Long-Term Capital Management offered her some vindication.=20
But swaps dealers argued that if swaps were deemed futures (giving the CFTC=
 jurisdiction), counterparties with losing positions could argue the deals =
had been transacted illegally. Accordingly, the big Wall Street banks deman=
ded "legal certainty", to ensure that OTC transactions were not caught in t=
he regulatory net. Satisfying that demand was one important element of last=
 December's legislation.=20
Separately, the legislation also set out a new regulatory structure for exc=
hanges - with the degree of supervision highly dependent on the type of pro=
duct traded and the nature of market participants. Certain commodity produc=
ts, in finite supply, are susceptible to manipulation. Moreover, if retail =
customers were to be involved with a market, there would be a need for a de=
cent degree of oversight. Conversely, sophisticated players, trading hard-t=
o-manipulate financial contracts, could look after themselves.=20
Little of this applied to EnronOnline, however. Although outsiders may have=
 viewed its trading activities as equivalent to an exchange, EnronOnline wa=
s structured so that the company itself was the counterparty to transaction=
s handled by its trading unit. That made its business model very different =
from a traditional exchange, which serves as a neutral forum.=20
Few of the participants in last year's debate seem to have changed their vi=
ews significantly. But regulators who believed that largely-unsupervised OT=
C trades could be a Pandora's box in future, still think last year's legisl=
ation a regressive step. "The Commodity Futures Modernisation Act [of 2000]=
 sanctioned opaque markets," says Michael Greenberger, former director of t=
he trading and markets division of the CFTC.=20
Conversely, observers in the swaps industry argue Enron's difficulties did =
not originate in its trading activities - the trading operations suffered w=
hen other problems caused the group's credit standings to collapse. "EnronO=
nline was a highly innovative means of servicing clients for nine months of=
 the year," says Robert Pickel, executive director of the International Swa=
ps and Derivatives Association, stressing that the trading arm had provided=
 "convenient and cost-effective management of risk".=20
However, even advocates of the lighter, less proscriptive regulatory regime=
 had cautioned that the relatively new area of energy derivatives trading c=
ould pose issues that trading of financial swaps did not.=20
"Most dealers in the swaps market are either financial institutions subject=
 to supervision by bank regulatory agencies, or affiliates of broker-dealer=
s regulated by the SEC, or affiliates of FCMs [futures trading firms] subje=
ct to CFTC oversight," Bill Rainer, the CFTC's former chairman told a congr=
essional committee in June. "The same cannot be said of trading in energy d=
erivatives ... Thus a principal argument warranting the exclusion of financ=
ial derivatives from the Commodity Exchange Act - the fact that derivatives=
 trading in these products is subject to direct or indirect federal oversig=
ht - does not apply to OTC energy transactions."=20
(c) Copyright Financial Times Group.=20
http://www.ft.com.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09

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

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

Here's a paradox: Despite predictions of doom from many financial writers, =
it doesn't matter very much that Enron -- at one time touted as the seventh=
-largest company in the nation -- failed. What matters is why it failed.=20
Enron's demise will be little more than a blip on the U.S. economy, with th=
e big losers confined to the same financial speculators who rode the bubble=
 on the way up. But the underlying cause of Enron's fall -- a corporate cul=
ture of secrecy and obfuscation -- is not unique to that company. Far from =
it. Enron's problems are emblematic of myriad public companies in the 1990s=
, from dot-com start-ups to some of America's biggest corporations, who yie=
lded to the pressure to inflate their stock by whatever means possible.
If that culture isn't replaced by more transparency and accountability, reg=
ulated and enforced by the Securities and Exchange Commission (SEC) and U.S=
. prosecutors, the credibility and integrity of the various stock markets i=
n which millions of Americans are now invested could be seriously undermine=
d. That's why I hope that Sen. Joseph I. Lieberman (D-Conn.) meant it when =
he said Wednesday -- after his Senate Governmental Affairs Committee announ=
ced it would subpoena Enron's top executives and directors -- that the comm=
ittee's focus will be "to make sure that something like this never happens =
again."=20
I know something about the culture of obfuscation. I have spent much of the=
 past three years representing public companies and executives accused of a=
ccounting and financial fraud. Sometimes I have been lucky enough to be cal=
led in before the bad news hit the fan. But more frequently, I arrived afte=
r information had begun to leak out.=20
In one instance, the new CEO of a Nasdaq-listed company, Lernout & Hauspie =
Speech Products, retained me and my law firm. He told me he suspected that =
the books of the language translation software company had been cooked by t=
he company's former CEO. The company, he said, had created the appearance o=
f dramatic growth by establishing outside entities -- investment companies =
in which money from investors was being used to purchase what turned out to=
 be mostly nonexistent products and services. Liabilities and losses were b=
eing hidden in these entities and not included in the company's financial s=
tatements.=20
The new CEO suspected that some members of the board of directors might be =
complicit. The Wall Street Journal had been writing bits and pieces of the =
story, but the company, based in Belgium, had either stonewalled or had giv=
en out misinformation.=20
We quickly initiated a two-part strategy based on complete transparency: Fi=
rst, we decided to support an investigation by outside auditors and a new l=
aw firm, with a commitment to publish the results and cooperate fully with =
the SEC; second, we proposed a program of internal reform to clean up the l=
ast vestiges of misleading financial reporting. While we knew the company's=
 high-flying stock would take a major beating once we made these disclosure=
s, we believed this strategy offered the only hope for the survival of the =
company.=20
However, we ran into a glitch. The company's board of directors opposed ful=
l disclosure. The new CEO defied the board and directed me to give the repo=
rt to the Wall Street Journal and to other newspapers and to post it on the=
 company's Web site. We both agreed he had no alternative if he were to avo=
id becoming part of the coverup. One immediate result of our strategy: The =
new CEO was summarily fired by the board -- as were my law firm and I. Anot=
her result: A short time later, the company filed for bankruptcy and was li=
quidated. The former CEO and some board members were charged with fraud and=
 stock manipulation. All have denied these allegations. The investigation i=
s continuing.=20
So you can see why I took such an interest in the rise and fall of Enron. A=
s Yogi Berra would say, "It's de{acute}ja{grv} vu all over again." Enron, t=
oo, developed outside entities that supposedly generated revenues for the c=
ompany, while keeping the expenses and contingent liabilities associated wi=
th those transactions off the books. And Enron's business, like Lernout & H=
auspie's, didn't focus on selling real products to consumers with real prof=
it margins. Rather, Enron was essentially a broker: It bought, resold and i=
nvested in commodities futures contracts, gambling on future prices and mar=
ket conditions. One example of this business model is a brokerage company s=
uch as Goldman Sachs. But perhaps a more apt analogy is Las Vegas.=20
It really didn't matter what commodities Enron was betting on. Although it =
was known as an energy company, trading in natural gas and electricity cont=
racts, it also speculated in water contracts, advertising and time contract=
s, complex derivatives, broadband capacity futures and weather derivatives =
(whatever that means). Its former chief executive, Jeffrey K. Skilling, act=
ually once boasted about the company's absence of hard assets. He proudly d=
escribed its approach as "asset lite," adding: "In the old days, people wor=
ked for assets. We've turned it around -- what we've said is, the assets wo=
rk for people."=20
This characterization is the key to understanding both the breathtaking spe=
ed of Enron's collapse and the reason its failure will not have much impact=
 on the nation's economy. Enron's geometric growth from a sleepy natural ga=
s pipeline company in the '80s to a global giant -- with 21,000 employees, =
3,500 subdivisions around the world and, by the summer of 2000, a total "ma=
rket capitalization" value of more than $80 billion -- was based on percept=
ion rather than reality. As long as everyone saw the stock price going high=
er and higher, people were willing to bet their money (through loans, equit=
y investments and credit on trades) on Enron. J.P. Morgan Chase & Co., for =
example, lent Enron $500 million without security and another $400 million =
purportedly secured by something.=20
But if you live by the perception and the illusion of growth, then you die =
by it once reality sets in. Being "asset lite" meant that once Enron's numb=
ers and disclosures became suspect, there was no foundation of hard assets =
-- real products with real value -- to fall back on. Not surprisingly, once=
 the first card of credibility was lost, the rest of the house collapsed qu=
ickly. On Oct. 17, Enron was forced to announce that it had hidden $1 billi=
on of losses resulting from the outside entities; the next day it reduced i=
ts assets by $1.2 billion. Just six weeks later, on Dec. 2, after weeks of =
putting out deceptive information, Enron filed for bankruptcy. Its stock pr=
ice had fallen from $90 a share in the previous year to just 87 cents.=20
The fallout? Thousands of Enron employees who lost their jobs and much of t=
he value of their 401(k) pension plans, which included now-worthless Enron =
stock, will feel a deep impact. Because of decisions made by senior managem=
ent, these employees were not allowed to sell the stock as it was dropping =
in value, though those same managers had sold nearly $1 billion worth of sh=
ares throughout the year. Others likely to suffer from the company's failur=
e are the banks, investors and trading partners who willingly advanced Enro=
n their money as the stock soared.=20
But it's hard to feel much sympathy there. Consumers won't really notice th=
e difference. The electricity, natural gas and water supplies that were the=
 subject of Enron futures contracts will still be delivered to their homes =
one way or the other. Speculators in Enron's "weather derivatives" may have=
 lost some money, but that's not likely to have much effect on whether it r=
ains or shines each day.=20
So if Enron's fall doesn't really matter in macroeconomic terms, why should=
 we care? Because the corporate culture that bred that failure has undermin=
ed trust in the integrity of the public markets. The goal of "meeting the n=
umbers" projected by analysts for each quarter has too often become the ove=
rriding goal -- to be achieved in the accounting department if it cannot be=
 achieved in the marketplace. As Michael R. Young has written in "Accountin=
g Irregularities and Financial Fraud," his seminal book, "What moves financ=
ial markets is the published expectations of Wall Street analysts." They "a=
re perceived to establish, within a very narrow margin, the parameters for =
the upcoming actual financial results. Analyst expectations have become, in=
 effect, a company's reported earnings."=20
With millions of Americans now invested in the stock market, this is no lon=
ger a concern limited to financial elites. We cannot afford to preserve a s=
ystem in which perception is more important than reality.=20
The solutions are as obvious as they are unlikely to be met. The rule of th=
umb must be transparency, in word as well as deed. On a technical level, ac=
counting rules and disclosure requirements have to be tightened up. Off-bal=
ance-sheet entities that create even the slightest contingent liabilities s=
hould be incorporated into the company's publicly filed financial informati=
on. We must also move to a system of real-time financial disclosures, with =
online access to the latest financial information. This is what SEC policym=
akers and congressional investigators should concentrate on.=20
In addition, white-collar criminals who cook the books should be prosecuted=
, sent to jail and required to disgorge profits from all stock sales made d=
uring the period of fraud, rather than receiving what is too often a slap o=
n the wrist and a reminder to the corporate world that crime can pay.=20
Finally, corporate managers must practice the basic rules of crisis managem=
ent -- which may mean defying the advice of many of their lawyers -- when t=
hey learn about bad news that could hurt the company's stock price. The tru=
th will come out anyway, and dribs and drabs will only make its impact wors=
e. So you might as well put it out yourself -- and then do something to fix=
 the problem.=20
Of course, this advice to tell all the truth has been rejected, time and ag=
ain, and not only by business executives. It has been ignored by politician=
s as well. The effect on the public's trust -- whether shareholders' or vot=
ers' -- has been the same.=20
Lanny Davis, special counsel to President Clinton from 1996 until 1998, is =
partner at the law firm of Patton Boggs and serves on its legal crisis mana=
gement team. He is the author of "Truth to Tell: Tell It Early, Tell It All=
, Tell It Yourself" (Free Press).


http://www.washingtonpost.com=20
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09

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

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

As Enron's bankruptcy has rippled through the markets, inflicting losses on=
 holders of its shares and bonds, the credit derivatives market is among th=
e sectors counting the costs of the energy trader's failure.=20
EnronOnline, which rapidly became the world's largest e-commerce site, was =
best known for its role in natural gas, power and crude oil trading. But at=
 its height it offered more than 1,200 products, including bandwidth deriva=
tives, weather derivatives, emissions credits, pipeline capacity and credit=
 derivatives.
The credit derivatives market has exploded in recent years, with the global=
 market for credit derivative contracts growing from about $50bn in 1996 to=
 more than $1,200bn today.=20
The market has become ever more sophisticated, evolving into an alternative=
 to the cash market.=20
Enron was one of the market's most active players, being both a dealer and =
a traded company. Through a credit derivatives exchange known as Enron Cred=
it it encouraged other companies to use Enron to manage their credit exposu=
re.=20
But following the collapse, and the negative impact on some of the credit d=
erivative structures to which Enron was exposed, industry players predict i=
nvestors will approach the market with greater caution.=20
"You're going to see people kind of stepping back and looking at collateral=
 and thinking about the structures before they buy," says John Tierney, hea=
d of credit derivatives research at Deutsche Bank.=20
Investors are also likely to look more closely at the way rating agencies a=
ssess credit derivative structures, he adds. Ratings agencies have put nume=
rous US and European credit derivative transactions containing Enron exposu=
re on review for downgrade, reflecting possible losses for investors.=20
Previously an investment grade company with large amounts of debt and good =
liquidity, Enron was at one time an attractive asset to trade in the credit=
 default swap market.=20
Credit default swaps are the most commonly traded credit derivative, provid=
ing insurance-like protection from the risk of default. There are two parti=
es in a credit default swap: one party (the protection seller) receives a p=
remium from another party (the protection buyer) for assuming the credit ri=
sk of a specified entity. In return for the premium, the protection buyer r=
eceives a payment from the seller in the case of the specified entity under=
going a "credit event", such as a default.=20
Total exposure to Enron via the credit derivative market has been estimated=
 at as much as $6.3bn by Standard & Poor's. Much of this exposure occurred =
through complicated structured finance vehicles known as synthetic collater=
alised debt obligations (CDOs). These sell credit protection through a port=
folio of credit default swaps, pooling a large number of credits, typically=
 credits which are investment-grade.=20
CDOs give investors the opportunity to participate in a range of "tranches"=
 of varying credit quality. The most junior tranche, often referred to as t=
he "equity" portion of the deal because it offers a high, equity-like retur=
n, is the most risky.=20
Insurance companies and banks are among the biggest investors in CDOs. The =
structures provide insurance companies with a means of diversifying credit =
risk and offer relatively high rates of return.=20
Analysts and ratings agencies say exposure to Enron via CDOs should be "man=
ageable". But the downgrading of many CDO transactions following Enron's co=
llapse shows the difficulty of gauging many of the risks.=20
Although exposure to individual credits within synthetic CDO transactions a=
re limited to very small amounts - exposure to any one credit is usually le=
ss than 2 per cent of the pool - the amount of leverage can be quite high, =
because the first-loss or junior portion of the tranche is typically quite =
small. Consequently, even investors in senior tranches of the transaction a=
re vulnerable to sudden defaults.=20
Money managers are more wary than insurers of CDOs, citing the transactions=
' opaque nature. Many are private, and transaction managers often do not re=
veal immediately the names of companies involved, making it difficult to as=
sess credit risk, fund managers say.=20
With CDO transactions so difficult to assess, the ratings agencies have ack=
nowledged that quantification of exposure to Enron in the derivatives marke=
t remains "incomplete".=20
(c) Copyright Financial Times Group.=20
http://www.ft.com.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09

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

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

Last week, the Senate's government affairs committee became the fourth cong=
ressional panel to pile on Enron, announcing a two-pronged inquiry into the=
 bankrupt energy giant that will look into both malfeasance within the comp=
any as well as possible lapses by federal regulators.=20
But according to staffers from other committees that are already investigat=
ing the collapse, the folks at government affairs, which quickly issued sub=
poenas for documents from Enron and its auditor Arthur Andersen, may have b=
it off more than they can chew.
The reason: it seems getting documents from Enron is proving more costly th=
an originally expected. Because the company is currently in bankruptcy prot=
ection, company lawyers have insisted it cannot pay copying fees for the pa=
pers the committees want, leaving congressional staffers to fork out the ca=
sh for duplication.=20
And the fees are beginning to rack up. While there are no estimates as to c=
osts incurred thus far, the House energy and commerce committee - expected =
to take the lead in the probes because of its wide-ranging jurisdiction ove=
r both energy policy and accounting standards - expects to have 2m document=
s by the end of the month.=20
Senator Carl Levin, who chairs the government affairs subcommittee on inves=
tigations, said he had not requested any additional funding for his probe, =
adding that he believed some reallocation of resources, including using con=
gressional fellows already detailed to the committee, would cover any addit=
ional expenses.=20
But other Capitol Hill denizens are not so sanguine. Said one staffer from =
a rival committee: "The fact that there are tens of thousands of these docu=
ments - that may take some of the steam out of them."=20
(c) Copyright Financial Times Ltd. All rights reserved.=20
http://www.ft.com.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09

Wiser Oil Seeks Separate Enron Power Creditor Panel

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

DJ CFA SOURCE:Bankruptcy=20

ISSUER: ENRON CORP.=20
SYMBOL: ENE=20


(This story was originally published Friday evening.)=20

By Carol McCleary=20
Of DOW JONES NEWSWIRES=20

WASHINGTON (Dow Jones) - A movement is underway to have a separate=20
committee formed in Enron Corp.'s (ENE) bankruptcy case to represent power=
=20
generators and traders, who contend that the current creditors' committee=
=20
can't adequately protect their interests.=20

Wiser Oil Co. (WZR) is among a group of Enron creditors who are concerned=
=20
with the way the U.S. Trustee comprised the creditors' committee - appointi=
ng=20
debtor-in-possession lenders to the panel.=20

The committee should be acting as the watchdog in the case, Wiser's=20
counsel Van Oliver said. He questioned how the lenders can exercise their=
=20
fiduciary duties as committee members.=20

A number of parties holding claims arising out of hedging contracts have=20
concerns with the way the committee has been set up to represent the=20
interests of Enron and not its subsidiaries, particularly Enron North=20
America, Oliver told Dow Jones Newswires.=20



There is also concern with the way the debtor's counsel has been=20
"mashing" all of the assets of Enron and its subsidiary debtors into one=20
basket, Oliver said.=20

The company hasn't yet filed its financial schedules - the U.S.=20
Bankruptcy Code gives it four months from the Chapter 11 petition date to d=
o=20
so.=20

Noting that Enron and its subsidiaries prepare consolidated balance=20
sheets and income statements, Oliver said creditors don't know what the=20
subsidiaries themselves have in terms of assets and liabilities.=20

The cash management system in place isn't protective of the subsidiaries'=
=20
claims, according to Oliver.=20

Mirant Corp. (MIR) and Williams Cos. (WMB) are also involved in the=20
effort to have a separate committee appointed, people familiar with the=20
matter said. Oliver declined to identify those involved with Wiser, but sai=
d=20
that the parties together hold claims of at least $100 million and possibly=
=20
more than $500 million.=20

A motion is expected to be filed within the next couple of weeks asking=20
the U.S. Bankruptcy Court in Manhattan to order the trustee to appoint the=
=20
separate committee or, alternatively, appoint a subcommittee to represent t=
he=20
power generators/traders.=20

As reported by Dow Jones Newswires, a hearing on the company's DIP=20
financing agreement with J.P. Morgan Chase & Co. (JPM) and Citigroup (C) ha=
s=20
been postponed to Jan. 30. A $1.5 billion DIP loan was initially planned,=
=20
but, sources said the lenders are reworking the facility based on Enron's=
=20
better-than-anticipated cash position, as well as lingering apathy among=20
bankers recruited to take part in the loan.=20

A change of venue request by several creditors who are seeking to move=20
the bankruptcy case to Houston from New York remains set for hearing before=
=20
Judge Arthur J. Gonzalez on Monday. The creditors are seeking to move the=
=20
bankruptcy case to Houston from New York.=20

-Carol McCleary; Dow Jones Corporate Filings Alert; 202-628-8916;=20

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09

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

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

A group of Enron Corp. creditors will try to persuade a New York bankruptcy=
 judge today to move the case to a court in Houston, where the energy compa=
ny is based.=20
Large creditors, such as energy traders Dynegy Inc. and El Paso Corp., and =
smaller ones, such as the Southern Ute Indian Tribe of Colorado, believe it=
 would be more convenient and economical to hear the case near the location=
 of many of Enron creditors and assets. Dynegy and El Paso are based in Hou=
ston.
In a motion filed by Dynegy and other creditors, lawyers also say there is =
"an emotional interest to be served" by moving the case to Houston, where t=
housands of Enron employees were laid off and many more witnessed the rapid=
 evaporation of their retirement plans when the company's stock plummeted.=
=20
Analysts say these creditors might also be hoping for a potentially more fa=
vorable hearing in Houston, where the economy has suffered as a result of E=
nron's demise.=20
Lawyers for Enron, and a handful of creditors opposed to relocating the pro=
ceedings, are expected to argue that it would be less expensive and more ac=
commodating if the case were administered in New York, home to the armies o=
f lawyers and bankers working on both sides.=20
Howard B. Comet, an attorney for Weil, Gotshal & Manges in New York, said i=
t also would be easier for business partners and potential witnesses involv=
ed in Enron's worldwide operations to participate if the proceedings took p=
lace in New York.=20
"The focus of the financial restructuring is here," Comet said.=20
Citigroup Inc. of New York, Barclays Bank of London and Dresdner Bank of Fr=
ankfurt are among the creditors opposed to changing venues.=20
Under the federal rules of bankruptcy procedure, a case may be transferred =
from one district court to another "in the interest of justice or for the c=
onvenience of the parties."=20
The basic criteria considered by judges ruling on previous change-of-venue =
motions have been the proximity of creditors, debtors and witnesses; the lo=
cation of assets; and the cost.=20
Experts say few cases of this size have been moved but Judge Arthur J. Gonz=
alez could be swayed by the fact that so many of Enron's energy-trading par=
tners are in and around Houston.=20
Enron collapsed late last year when revelations of questionable accounting =
practices and mounting debt caused investors and traders to lose confidence=
 in the company. The company lost $60 billion in market value over the last=
 year.=20
Enron filed for protection from creditors under Chapter 11 of federal bankr=
uptcy law Dec. 2 in the U.S. Bankruptcy Court for the Southern District of =
New York.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09

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

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

Of DOW JONES NEWSWIRES=20

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

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09

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

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

It may not yet quite be the "cancer on the presidency" of which John Dean w=
arned Richard Nixon in the early days of Watergate. But the collapse of the=
 energy conglomerate Enron is suddenly shaping up as big, big trouble for G=
eorge Bush.=20
All the ingredients of a classic Washington scandal are there: the biggest =
corporate failure in history, a chief executive on such good terms with Geo=
rge Bush that the President refers to him as "Kenny Boy" and a history of m=
assive contributions by the Houston-based Enron to the White House campaign=
s of Bush the father and Bush the son.
The final element fell into place last week with the announcement of a full=
-scale Senate investigation, complete with subpoenas for top Enron executiv=
es including Kenneth Lay (aka "Kenny Boy"), representatives of the Arthur A=
ndersen accounting firm which singularly failed to spot the impending disas=
ter, and perhaps senior figures in the Bush administration as well.=20
Even the cast of characters is comfortingly familiar. Enron's lead attorney=
, for instance, is Robert Bennett, the $500-an-hour DC superlawyer who feat=
ured in Washington's most recent presidential scandal when he represented B=
ill Clinton in the Paula Jones sexual harassment suit. That led directly to=
 the Monica Lewinsky saga.=20
By any yardstick, Enron is a massive financial scandal, a tale of concealed=
 debt and shell companies, incompetent auditing and scanty regulatory overs=
ight - not to mention the sudden impoverishment of thousands of employees o=
bliged to hold their pension savings in now worthless Enron shares, even as=
 senior executives cashed in stock and stock options for up to $1bn (pounds=
 700m) during 2000 and 2001.=20
Until now, however, Enron has been the dog which failed to bark - or, more =
exactly, was ignored as the media concentrated on Afghanistan and barely da=
red mention such goings-on as the presidential approval ratings hovered aro=
und the 90 per cent mark. Enron unravelled in November, but not until 28 De=
cember was Mr Bush first asked about the debacle. All that is about to chan=
ge as the news focus starts to shift from the anti-terror campaign to domes=
tic politics. Not only is this a mid-term election year in which the Democr=
ats need just half-a-dozen seats to recapture the House of Representatives,=
 but thoughts are already turning to the 2004 White House race. In all thes=
e calculations, Enron could prove a factor.=20
Already, at least three Congressional committees have been sniffing around =
the affair. But the main investigation will be conducted by the Senate's go=
vernmental affairs committee, headed by the Democrat Joe Lieberman of Conne=
cticut. Mr Lieberman, it will not be forgotten, was Al Gore's vice- preside=
ntial running mate last time and is is widely believed to have ambitions fo=
r the top job in 2004.=20
Thus far, Mr Lieberman has followed the Washington scandal script to a T. E=
choing investigators of Watergate, Iran-Contra and Whitewater before him, h=
e promises solemnly that his probe will be even-handed, "a search for the t=
ruth, not a witchhunt". But, he warns, "we're going to go wherever the sear=
ch takes us". If so, it could be a most interesting journey.=20
Enron has been a fountain of money for politicians of every hue. Since 1990=
, according to the Center for Responsive Politics, which monitors such dona=
tions, it has made campaign contributions of $5.8m (pounds 4m), three- quar=
ters of it to Republicans. The biggest single beneficiaries, unsurprisingly=
, have been the two Texas senators, Kay Bailey Hutchinson and Phil Gramm, w=
hose wife Wendy sits on the Enron board.=20
Like most big corporate donors, it has hedged its bets. On Capitol Hill, 71=
 of the 100 current senators and nearly half the 435 congressmen have recei=
ved contributions. The investment paid off with a vengeance, when Enron sec=
ured exemption for its energy derivatives business under a 2000 Act regulat=
ing commodity futures trading. But the Bush family has been a special objec=
t of its attentions. Mr Lay was listed by the Bush-Cheney campaign as one o=
f the "Pioneers" who raised at least $100,000 (pounds 70,000) for the elect=
ion, while Enron gave $100,000 to the inauguration gala, a contribution mat=
ched by "Kenny Boy" and his wife.=20
Potentially most damaging is its possible backstage role in the formulation=
 of Mr Bush's energy policy. At least four Enron consultants and executives=
 have done work for the administration. A champion of the deregulation favo=
ured by the White House, Mr Lay was a frequent informal adviser to the pane=
l under the Vice-President, Dick Cheney, which drew up a national energy st=
rategy.=20
"We've got to ask whether the advice tendered was self-serving," Mr Lieberm=
an says. Or, to put it more bluntly, were the Texan oilman in the White Hou=
se and the Texan energy baron in Houston running a mutual benefit society? =
These questions can no longer escape an answer.

Caption: Enron unravels: ex-employee Janice Farmer - who has lost most of h=
er savings - with her daughter Julie at a Senate subcommittee hearing; `Ken=
ny Boy' Lay, chief executive (top); and Senator Joe Lieberman DENNIS COOK/A=
P=20
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09

First
Watch Out For...
Lee Clifford

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

A deadly disease besieged executives across the country this year: Call it =
Sudden Reputation Death Syndrome. Early symptoms seemed innocuous enough--g=
rumbling board members, mild cases of foot-in- mouth disease, stock falloff=
s. But once the disease took hold, no decision the afflicted executive made=
 was the right one, and soon onetime People to Watch had become People to W=
atch Out For.=20
Houston became a regular hot zone after Jeff Skilling, Ken Lay, and the res=
t of the Enron gang managed to turn a thriving New Age energy business into=
 a pile of rubble between Labor Day and Thanksgiving.
Blustery Linda Wachner and Jacques Nasser fought long battles but fell vict=
im to the illness when Wachner plunged Warnaco into bankruptcy and Nasser's=
 missteps alienated the Ford family and caused his company's stock to lose =
another 30% on the year. Shailesh Mehta, who pursued an aggressive growth s=
trategy at credit card provider Providian, took sick while watching the sto=
ck drop 94% during 2001 amid a wave of card defaults. All three lost their =
jobs.=20
There's another possible case germinating at Hewlett-Packard-- that of Carl=
y Fiorina. Whether the Compaq merger will push her into full arrest remains=
 to be seen, but one thing's for sure: This drama is more action-packed tha=
n an episode of ER.=20
--Lee Clifford

COLOR PHOTO: WIN MCNAMEE--REUTERS/TIMEPIX Jacques Nasser=20
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09

Enron Canada Corp To Assume New Form: CEO

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

(This article was originally published Friday)=20

CALGARY -(Dow Jones)- The head of former marketing giant Enron Corp.'s (ENE=
) Canadian unit is a strong believer in reincarnation, at least if it's cor=
porate.
Enron Canada Corp.'s profitability and pool of talent will keep it from sin=
king under the ashes of its parent company's fiery demise, President and Ch=
ief Executive Robson Milnthorp said Friday to Dow Jones Newswires.=20
"There are a number of shapes that this can be resurrected under," Milnthor=
p said. "That might entail being auctioned off through the parent in Housto=
n, or replacing the Enron balance sheet with someone else's.=20
"There's no reason to panic or jump at the first alternative," he said.=20
The shaved-bald executive believes a new entity will appear on the Canada p=
ower market by midyear, under a different name but with many of Enron Canad=
a's strengths.=20
Enron Canada, which cornered approximately 40% of power trades in the count=
ry last year, tried unsuccessfully to distance itself from Enron Corp. when=
 the global power trader lost investor status in November because of a numb=
er of dubious business deals.=20
The Canadian unit argued it was financially stable, compared to its parent =
and credit guarantor, but was unable to stop the flood of contract terminat=
ions that followed Enron's filing for bankruptcy protection in early Decemb=
er.=20
Milnthorp lost a court battle last month to keep counterparties from jumpin=
g ship, and has been liquidating company accounts since then to keep from b=
ecoming insolvent.=20
The biggest move was the C$215 million sale of its power contract for the o=
utput of a 706-megawatt generation station in northcentral Alberta.=20
Enron Canada lost $80 million on its original purchase price in the deal wi=
th TransCanada PipeLines Ltd. (T.TRP) and AltaGas Services Inc. that was co=
mpleted last Friday when a U.S. bankruptcy judge approved the sale.=20
The sale enabled Enron Canada to meet December settlements from November co=
ntracts, albeit three days late, on Dec. 28.=20
Financial settlements due Jan. 5 will be met Friday, Jan. 4, Milnthorp said=
.=20
Enron's fall from credit favor across the world has changed how natural gas=
 producers look on contracts, said a Calgary analyst.=20
"Credit is now No. 1 with producers," Ron Vogal, with Streamline Energy Gro=
up Ltd. said. "We're telling all the little guys to align themselves with a=
 number of marketers instead of just one, and some are looking at going bac=
k to dealing directly with the end-user, rather than through a marketer."=
=20
Most Canadian producers have liquidated their contracts with Enron Canada a=
nd are in the process of replacing the natural gas. Offset agreements, wher=
e amounts due are balanced against amounts owing for a net result, are taki=
ng place between producers and Enron Canada, Vogal said.=20
A number of companies still owe the marketing firm. One company, IMC Canada=
 Ltd., recently lost a court request to be released from its C$2.3 million =
debt to Enron Canada.=20
Milnthorp anticipates more litigation to come through Canadian courtrooms a=
s counterparties and Enron Canada sort out contract terminations and calcul=
ate damages.=20
-By Dina O'Meara, Dow Jones Newswires; 403-531-2912; dina.omeara@dowjones.c=
om

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09

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

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

HOUSTON - As the lunch-hour crowd shuffles by, Dave Glessner, a chemical en=
gineer at Enron Corp., stands alone across the street from the company's gl=
itzy headquarters. A box of his personal work belongings rests at his feet.=
=20
He has bittersweet feelings about the energy trader that recently filed the=
 largest bankruptcy petition in U.S. history. "It was a great job, great co=
mpany, great people," said Mr. Glessner, dressed casually in a short-sleeve=
 shirt and olive-colored pants. He has worked at Enron for almost 11 years =
and will be dismissed in about a month.
"I just hope, if there was some criminal intent, that the people who caused=
 this feel some real pain," referring to the legal punishment top managemen=
t may receive for questionable accounting methods.=20
The collapse of Enron's stock price - it's now selling for 65 cents a share=
, after it lost 99 percent of its value in the past year - has wiped out th=
e savings of many retirees and investors.=20
For example, Mr. Glessner's 401(k) company retirement plan has declined in =
value from $1 million to $5,000, but the pain for him and his colleagues ru=
ns deeper.=20
"People's lives were disrupted," the unassuming 52-year-old said. "It's eve=
rything from relationships to anxiety. People are feeling depressed."=20
Enron's release of 4,500 Houston employees, or 60 percent of its local work=
 force, is just one event that has contributed to the insecure mood.=20
A couple of other Houston-based public companies have had similar woes. Com=
paq Computer, hurt by sluggish PC sales, already has laid off at least 1,50=
0 workers here and may fire more if Hewlett-Packard acquires the firm. Cont=
inental Airlines announced thousands of local job cuts after the September =
11 terrorist attacks because of reduced air travel and increased security c=
osts.=20
Natural disaster struck, too, as flooding from Tropical Storm Allison cause=
d $5 billion in damage and killed 22 persons in early June.=20
Yet Houston remains cocky, even with a nationwide recession. The city has b=
een adding about 50,000 jobs annually in recent years, though leaders expec=
t 2002 employment growth will be about half of that number.=20
"There is a quality in Houston of bravado, of risk taking, of dreaming big =
dreams and being prepared to fall on your face if they don't come true," sa=
id Stephen Klineberg, a sociology professor at Rice University. "In some pa=
radoxical sense, Enron falling on its face is a confirmation of that entrep=
reneurial spirit."=20
Mr. Glessner, the Enron engineer, said the company already had taught him t=
o be prepared always to reinvent yourself. Not married, he intends to stay =
in Houston and is pursuing job leads in the natural gas business.=20
"Change is a constant, and you have to keep current," he acknowledged. "Tha=
t's what I'm doing."=20
Oil once dominated Houston, with four out of five jobs tied directly or ind=
irectly to the industry. When oil prices fell in the mid-1980s, the city un=
raveled. Work evaporated, downtown office space went vacant, and banks lock=
ed their doors for good.=20
Houston diversified some in the 1990s and added jobs in such areas as techn=
ology, manufacturing and trade. Houston now also is home to a renowned medi=
cal center, the second-busiest port in the country, NASA's Johnson Space Ce=
nter and a 17-block cultural district, replete with modern art centers, a t=
heater hall and a Holocaust museum.=20
But regardless, the nation's fourth-largest city still runs on energy, said=
 John Young, a wildcatter who drills for oil and natural gas in central Tex=
as and the onshore Gulf Coast region. "It really is the world energy capita=
l," he said.=20
In this city known for its traffic jams and air pollution, energy firms eve=
n now compose 50 percent of the economy. Enron, formed by Chairman Ken Lay =
in 1985 as a gas pipeline business, sought to be a pioneer. The company exp=
anded into energy trading in the 1990s, as it bought and sold natural gas a=
nd electric power in wholesale markets.=20
Enron then branched out further and attempted to sell all sorts of goods on=
 the Internet, from paper products to fiber-optic bandwidth. The company sa=
id it had sales of more than $100 billion in 2000, making it the seventh-la=
rgest U.S. company.=20
At the tony Galleria Mall, shoppers are buying more cautiously after Enron'=
s demise. "It's all anyone's talking about at the Christmas parties," said =
Gayl Carlberg, who co-owns an advertising agency with her husband.=20
Holding a small, red Neiman Marcus bag, she said her firm has had a record =
year in winning new business, though existing clients have cut back. As a r=
esult, the mother of two said she plans to spend less on holiday gifts this=
 year than last year.=20
Nevertheless, she's confident the city will bounce back. "That's the thing =
about Houston and Texas. You can't knock us down," Mrs. Carlberg said.=20
Mr. Young agreed, calling the Enron collapse just a "speed bump" for the ho=
me of 2 million residents and 21 Fortune 500 companies.=20
Houston's swagger may have been "downsized" a bit, but the city remains upb=
eat, local Salomon Smith Barney stockbroker David Harris said. He didn't re=
commend Enron stock to his clients because it was overvalued, though he had=
 no inkling about Enron's ruin.=20
A Michigan native, Mr. Harris predicts Houston may face a fall in some resi=
dential real estate prices, and entertainment spending may decrease. The fi=
scal effects haven't filtered down yet, he said, though it might be like a =
"Chinese water torture" over the next several months.=20
"We've learned a lot from the boom and subsequent bust of the '80s," said M=
r. Harris, 45, who moved to Houston 16 years ago. "The boom this time was f=
ar more subdued, and therefore, any downside will be much more modest."=20
The collapse of Enron has left other ripples in its wake. Enron had been a =
major benefactor to local charities, and city officials say the money will =
not be easily replaced.=20
"It was profoundly philanthropic," said Peter Marzio, the director of the M=
useum of Fine Arts in Houston. Enron's collapse "will certainly have a shor=
t-term effect."=20
Of the $35.5 million corporations contributed to the museum from 1995 to 20=
00, about $1.7 million, or 5 percent, came from Enron, he said.=20
Another Enron effect is the name of the 2-year-old downtown stadium where t=
he Houston Astros baseball team plays. Enron agreed to pay the team $100 mi=
llion over 30 years for the naming rights, though the future of the stadium=
's name is uncertain.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09

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

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

WASHINGTON -(Dow Jones)- Lawrence Lindsey, President George W. Bush's econo=
mic adviser, Sunday described as a "tribute to American capitalism" the U.S=
. government's decision not to intervene during the collapse of energy gian=
t Enron Corp.=20
Appearing on the Fox News Sunday program, Lindsey also confirmed that he wo=
rked briefly for Enron as a consultant providing macroeconomic analysis.
Enron filed for Chapter 11 bankruptcy protection in early December 2001 ami=
d allegations of accounting irregularities that have prompted several inves=
tigations.=20
"What I think is the story here that's going untold (is that) in no other c=
ountry in the world would you have the seventh-largest company fail - Enron=
, with these alleged political connections - and the government would simpl=
y let it happen," Lindsey said.=20
"This is a tribute to American capitalism, I believe, that we have a profit=
 and loss economy; that If you make mistakes - and clearly mistakes were ma=
de by Enron - that the government is not going to step and save it. No one =
is proposing to do that," he said.=20
Enron, Lindsey said, pursued a strategy common among major corporations by =
making financial contributions to both major political parties. Fox News re=
ported the President's economic counselor received $50,000 from Enron in 20=
00, and Lindsey was asked at one point whether he might become the victim o=
f a Republican version of "Whitewater," referring to the investigations int=
o the business dealings of former President Bill Clinton and his wife, Sena=
tor Hillary Rodham Clinton.=20
"I gave them (Enron) macroeconomic advice and if that's the case, so be it,=
" he replied.=20

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

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09

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

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

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

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09

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

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

With meltdowns in California and Enron Corp. at either end, electricity der=
egulation may have had its worst year ever. But a number of states are neve=
rtheless pushing ahead plans to open their markets to competition.=20
Those moves are being led by Texas, which has planned to allow the vast maj=
ority of its consumers to choose their power provider as of yesterday -- a =
year after an electricity crisis threatened to plunge California into darkn=
ess and a month after Enron, once the country's largest trader of power and=
 natural gas, filed for bankruptcy-law protection.
Texas' effort ranks as the country's second-largest experiment with deregul=
ation -- right behind California's -- and will affect eight million consume=
rs. How well competition takes hold there could influence deregulation plan=
s in other states, energy experts agreed. "I think everyone is watching Tex=
as," said Sharon Reishus, associate director at Cambridge Energy Research A=
ssociates, a Massachusetts research firm. "It certainly is the key to resto=
ring people's confidence that retail energy has a future."=20
Michigan and Virginia also planned to launch full retail competition on New=
 Year's Day. In May, all residential consumers in Illinois will have the op=
portunity to choose an alternate power supplier.=20
But success in Texas won't necessarily translate into momentum in all regio=
ns. Lingering concerns over California's energy crisis may continue to stal=
l deregulation plans in some states, some regulators and consumers advocate=
s said.=20
Deregulation will affect most consumers in Texas, those under the Electric =
Reliability Council of Texas, or Ercot, which runs the power grid in all ar=
eas of the state except the Texas Panhandle and parts of the southeast and =
far west.=20
Conditions in Texas bode well for competition to take root, Ercot and some =
analysts said. Power supplies are plentiful, wholesale electricity prices a=
re low and the retail rates Texas utilities must initially charge their cus=
tomers are high enough to give other service providers room to compete, Ms.=
 Reishus said.=20
Ercot ran a pilot program during the second half of 2001 under which 5% of =
customers in the region could switch providers and now says it is ready to =
open competition to all.=20
Computer glitches that surfaced during the trial phase have been worked out=
, and Ercot successfully tested the centralized computer-registration syste=
m in late November, said Tom Noel, the grid operator's chief operating offi=
cer. "We are very confident that everything is in excellent working order,"=
 he said. "I expect the transition from Dec. 31 to Jan. 1 to be very much l=
ike Y2K. It will just come and go."=20
It is difficult to estimate how many customers will seek alternate provider=
s, but the migration will likely be gradual, rather than a frantic rush to =
switch in the first few days of deregulation, Mr. Noel said.=20
That has certainly been the case in other states, where even relatively suc=
cessful efforts like Pennsylvania's have seen few residential customers wil=
ling to switch providers. Alternate suppliers in such states have complaine=
d they can't compete with the low rates state energy regulators have allowe=
d incumbent utilities to offer.=20
A successful transition in Texas could help move deregulation forward elsew=
here, Ms. Reishus said. "If it works there, we'll see some renewed optimism=
 about the retail markets in general," she said.=20
About half of the states in the union have deregulated their retail electri=
city markets or are in some stage of laying the groundwork.=20
Though Texas is moving forward, some of its neighbors are having second tho=
ughts. Arkansas and Oklahoma, along with a handful of other states, have so=
ught to delay the start of competition, citing uncertainty about wholesale =
market development and the consequences for consumers.=20
That uncertainty was generated by California, where a poorly designed marke=
t structure and tight supplies produced soaring power costs and rolling bla=
ckouts, and left the state's two largest utilities unable to pay their bill=
s. The state of California, which contends energy companies took advantage =
of a lack of oversight to manipulate the market and boost prices, has becom=
e the primary procurer of power for millions of consumers. As such, it has =
signed $43 billion in power-supply contracts that consumers will be paying =
off for the next decade.=20
Some of the 26 states that haven't passed deregulation laws, such as Wiscon=
sin and Minnesota, have cited concerns about California-style problems as t=
he reason for holding back.=20
---=20
Jon Kamp in Chicago contributed to this article.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09

Editorial
Investigating Enron

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

NO SERIOUS scandal in Washington is investigated just once, and Enron's spe=
ctacular collapse is generating multiple inquiries. So far three House comm=
ittees and two Senate committees are looking into the energy trading firm's=
 demise; the Justice Department, the Labor Department and the Securities an=
d Exchange Commission are conducting three more postmortems. This hydra-hea=
ded inquisition is basically welcome, because Enron's bankruptcy raises man=
y troubling issues. But its focus must remain on the regulatory failures th=
at allowed the company to defraud shareholders and workers. Enron's links t=
o the Bush administration, a tempting target for Democrat-controlled commit=
tees in the Senate, appear less salient for the moment.=20
The regulatory failures begin with the auditing profession. Over the past f=
our years, Enron's accounts overstated its real earnings by half a billion =
dollars. At the end of 2000 Enron reported debts of $10.2 billion; in its b=
ankruptcy filing last month, it listed debts of almost $40 billion. This so=
rt of deception is supposed to be prevented by a firm's outside auditor, wh=
ose job is to certify the accuracy of accounts. But Arthur Andersen, the au=
ditor in this case, knowingly certified misleading financial statements. In=
 1997 Andersen identified $51 million of problems in Enron's books. It sugg=
ested that these should be put right. But when its advice was ignored, it w=
ent ahead and certified Enron's accounts anyway.
This may not be the first time that Andersen turned a blind eye to dishones=
ty. The Securities and Exchange Commission has alleged that the firm's part=
ners saw problems at two other big clients, Sunbeam Corp. and Waste Managem=
ent Inc. According to the SEC, Andersen decided that the problems could be =
overlooked because they were not "material." In the Waste Management case, =
the SEC accused Andersen of fraud and the firm agreed to a settlement invol=
ving a fine of $7 million. In light of this track record, it is not very co=
mforting that another big auditor, Deloitte Touche Tohmatsu, completed a pe=
er review of Andersen on Wednesday and offered only minor criticisms of its=
 operations. The whole edifice of self-regulation appears insufficiently ro=
bust. An important focus for Enron's inquisitors is to consider tougher ove=
rsight.=20
The second focus ought to concern pensions. Enron's employees were encourag=
ed to invest their 401(k) plans in Enron stock, which came to make up more =
than half the assets in the company's retirement system. Enron's collapse t=
herefore left many of the 4,500 U.S. employees who were laid off pensionles=
s as well as jobless. This ill-advised concentration of risk exists at many=
 firms. One study of retirement plans at 219 firms found that a fifth bet m=
ore than half their wealth on the company's own stock. Last month Sens. Bar=
bara Boxer (D-Calif.) and Jon Corzine (D-N.J.) proposed legislation that wo=
uld cap company stock at 20 percent of a retirement fund. Reform along thes=
e lines ought to be supported.=20
Fixing audit and pension rules is a meaty challenge. But some Democrats see=
m tempted to play down these issues in favor of focusing on links between E=
nron and the Bush administration. Kenneth Lay, Enron's chairman, has been P=
resident Bush's leading financial backer; he was consulted when the adminis=
tration was drawing up its energy plan. But, barring further disclosures, t=
his looks more like an instance of the generalized corruption of campaign f=
inance than a shadow over the Bush team. The truth is that Enron showered m=
oney on many politicians of both parties, and especially on Texans. If Demo=
crats are outraged by this, they should push for campaign finance reform ra=
ther than attacking the administration.


http://www.washingtonpost.com=20
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09

Crossroads
Investigating Enron Corp.
RUBY

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

Investigating Enron Corp.=20
By RUBY
Sunday, January 6, 2002=20
About the same time the Winter Olympics are gearing up in Salt Lake City, o=
ther games will be under way at a venue nearly a continent away. The collap=
se of Enron Corp., the giant energy and trading company, has sparked an inv=
estigative groundswell in Washington. This is as it should be: Enron's spec=
tacular sinking spell has raised questions about the probity of financial r=
eporting and auditing, the integrity of the company's top brass, whether or=
dinary employees were prevented from selling shares while officers were dum=
ping theirs and the quality and quantity of government regulation. The war =
on terrorism is mandatory Job One for the U.S. government, but cleaning out=
 the Enron sewer may be Job Two.=20
The Securities and Exchange Commission is the lead government agency invest=
igating Enron right now. The company was a Wall Street darling less than a =
year ago when its stock price was nearly $90 a share. But investor confiden=
ce imploded following stories of alleged insider partnerships and downgrade=
d earnings forecasts. By the time Enron sought protection under bankruptcy =
laws, its stock had declined to less than $1 a share. It closed on Friday a=
t 66 cents a share. In the process, thousands of employees invested in the =
company's stock through their 401(k) plans lost almost everything.=20
Congress is investigating, too, with several committees or subcommittees pl=
anning hearings. To prevent a real circus, these congressional inquiries ou=
ght to be consolidated -- ideally, into a special joint committee of the Ho=
use and Senate that would be co- chaired by members named by House Speaker =
Dennis Hastert (R-Ill.) and Senate Majority Leader Tom Daschle (D-S.D.). Th=
is joint committee would have the same subpoena powers as a standing commit=
tee, and its members obviously could seek guidance from outside experts.=20
But the objective is to get to the bottom of the Enron debacle, find out wh=
at went wrong and whether individuals are culpable, and take prosecutorial =
action if appropriate. That objective will be better achieved if the effort=
 is not scattered throughout the government.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09

INSIGHT
JOAN RYAN
The 401(k) terrorists
Joan Ryan

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

They were the secretaries and bookkeepers and engineers who brought their f=
amilies to the company picnic every year and drank their morning coffee fro=
m company mugs. All the magazines said Enron was one of the best companies =
in America, so they squeezed 30,000 extra miles from the family car to put =
aside a bit of every paycheck to buy company stock.=20
When the 401(k) statement arrived each month, they slept easier that night.=
 Even when rumors surfaced that Enron was faltering, employees were assured=
 it was media gossip.
Marie Thibaut, a 61-year-old executive assistant, had planned to retire fro=
m Enron at the end of 2002. She finally could help her exhausted father in =
Michigan care for her mother, who suffered from Alzheimer's. And she wanted=
 to spend time with her four grandchildren.=20
By August 2001, her 401(k) had grown to almost $500,000 -- enough with Soci=
al Security to provide a comfortable retirement and maybe leave a little so=
mething to her kids.=20
Then, just like that, the money was gone, lost in the biggest bankruptcy in=
 American history.=20
"You can't believe it's happening," she said by phone from Houston the othe=
r day. "It's like an out-of-body experience."=20
Of all the ideas and institutions we took for granted as recently as six mo=
nths ago -- our electoral system, our national security, our civil libertie=
s -- none has shaken the confidence of more Americans than the sudden and c=
olossal collapse of that sure-thing, Wall- Street-darling Enron.=20
Perhaps this sounds politically insensitive, but I fear the upper managemen=
t of the companies that comprise my pension fund more than I fear the upper=
 management of al Qaeda. The truth is, the cold indifference inside an Amer=
ican boardroom is more likely to cripple any one of us than the cold indiff=
erence inside an Afghan cave.=20
The executives at Enron knew the company was in trouble as early as last sp=
ring. But chairman Ken Lay repeatedly assured employees their 401(k)s were =
safe, even as lawyers and accountants shuttled money among partnerships to =
keep the company afloat.=20
In December, after reports had become public about inflated earnings, hidde=
n losses and secret deals, Enron filed for bankruptcy, vaporizing what was =
once more than $50 billion of shareholders' wealth. But Lay, former chief e=
xecutive Jeffrey Skilling and other insiders had already saved themselves. =
They had been cashing in millions of dollars' worth of shares at premium pr=
ices.=20
The employees, however, were locked inside the sinking ship. Enron froze th=
eir 401(k) plans just when stock prices began to plummet to less than 60 ce=
nts a share. People like Marie Thibaut watched helplessly, prohibited from =
withdrawing their money until it was too late. They also watched, in horror=
 and disbelief, as Enron distributed more than $100 million in bonuses to a=
 select group of executives and other employees.=20
Thibaut's savings has now dwindled to about $22,000. And she has been laid =
off, leaving Enron with just $4,500 in severance pay for 15 years of servic=
e.=20
"We believed in our company. We believed in Ken Lay. He kept telling us not=
 to worry, that everything was OK," Thibaut said. "I hope these people go t=
o jail."=20
On Monday, she will start a new job with Shell Oil at a lower salary, and s=
he feels lucky to have it. She will begin to build a new pension account. S=
he has to keep working for at least another five years to become vested.=20
Ken Lay and his colleagues will move on, too. One imagines they'll play 18 =
at Kapalua during Easter week and dig a pond at the ranch for summer fishin=
g and land at another corporation with cappuccino in the executive kitchen.=
=20
American law doesn't define what these men have done as terrorism. So they =
do not qualify for trial in front of a tribunal to account for the pain and=
 fear they've spread.=20
I propose we make an exception.

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09

Interview: Senators John McCain and Joseph Lieberman discuss the war in Afg=
hanistan and the US economy

01/06/2002
NBC News: Meet the Press
(c) Copyright 2002, National Broadcasting Company, Inc. All Rights Reserved=
.
Excerpt Only
MR. RUSSERT: And we are back and joined by Senators Joe Lieberman and John =
McCain. They're heading for Afghanistan and Pakistan this morning, are in T=
ashkent, Uzbekistan. Senator McCain, you just heard Mr. Karzai talk about t=
he frustration of trying to find Mohammad Omar. Are you confident that we w=
ill take him into custody eventually?=20
**********************************************
MR. RUSSERT: Senator McCain, and, Senator Lieberman--let me start with Sena=
tor McCain first--how serious do you think the investigation into the colla=
pse of Enron is for the Bush administration?=20
SEN. McCAIN: I don't know, because we've just begun the investigation, but =
there sure was a lot of money washing around. And I'll be very interested t=
o see what we find out. And, clearly, I don't understand some of the machin=
ations that took place that allowed executives to make millions of dollars =
while the shareholders are left holding the bag.=20
MR. RUSSERT: Senator Lieberman, how serious is the Enron investigation?=20
SEN. LIEBERMAN: Well, the Enron investigation is very serious. The focus of=
 it is not in the first instance on a connection between anybody in the Bus=
h administration and the folks at Enron, but, you know, to do a thorough in=
vestigation, you've got to ask that question, certainly, down the road. And=
 the question that we're going to ask on our committee is: Where were the o=
versight agencies of the federal government? Could they have done more? And=
 what about the auditors and outside directors of Enron? And what about the=
se strange offshore entities, partnerships that were created by executives =
of Enron, which traded with the company, in some cases seeming to create a =
market, that then drew average Americans to put their money into the compan=
y and lose an awful lot of it?=20
So this is an unprecedented event. The largest bankruptcy in American histo=
ry. And unless we look at it thoroughly and ask all the questions, the dang=
er is it's going to happen again and a lot more average folks are going to =
lose a lot of hard-earned money.=20
MR. RUSSERT: Democratic Senator Joe Lieberman, Republican Senator John McCa=
in. And we'll be right back.=20
(Announcements)

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09

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

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

Louisiana Democratic Senator John Breaux discusses the possible composition=
 of economic stimulus legislation.=20
ROBERT NOVAK, CO-HOST: I'm Robert Novak. Al Hunt and I will question a lead=
er of the bipartisan Centrist Coalition in Congress.
AL HUNT, CO-HOST: He is Democratic Senator John Breaux of Louisiana.=20
(BEGIN VIDEOTAPE)
Excerpt Only
************************************
HUNT: Senator Breaux, Enron, as you know, only months ago, one of the highe=
st values companies in America, has gone bankrupt, top executives that walk=
ed away with millions from the sweetheart deals, while thousands of workers=
 have lost their pensions. A lot of talk about the identification with Geor=
ge Bush and the Republican Party. They also have contributed to a number of=
 Democrats. I think you were the 11th-largest Senate recipient of Enron fun=
ds over the last 12 years. They had street fair for you at a previous Democ=
ratic convention.=20
As you look at that company now, do you think Enron was merely a victim of =
an economic downturn or do you think it was an ethical and perhaps even cri=
minal scam?=20
BREAUX: It wasn't a street fair; that was a Mardi Gras party, in the finest=
 New Orleans tradition.=20
HUNT: I stand corrected.=20
BREAUX: The Enron thing is a mess and I think that it's going to be properl=
y looked at at the very highest level. It's already been investigated by a =
number of congressional committees, and they should look into it. I think t=
hat some of the activities of some of the leaders of that corporation right=
 before it tanked is absolutely unacceptable.=20
I mean, it was obvious to me that somebody knew what they were doing by bai=
ling out of the company, while they were in leadership positions. The peopl=
e who were hurt the most were the individuals or the every-day working guy =
and lady who had their lifetime savings invested in their stock. And there =
were some terrible things -- wrong things that were done. And I think it's =
going to come out.=20
HUNT: One thing that is alleged is that Ken Lay, the former CEO, and the co=
mpany had an enormous amount of influence in helping Dick Cheney put togeth=
er the Bush energy package, reportedly even some veto power over some measu=
res.=20
Do you think that all ought to be revealed? Should Vice President Cheney ha=
ve to tell the American public and the Congress what role Ken Lay and Enron=
 played in formulating the Bush-Cheney energy policy?=20
BREAUX: Whether he should or shouldn't, I think he's probably going to have=
 to. I think the political situation, I think, is going to require that the=
y pretty much divulge everybody that, perhaps, they talked to and got recom=
mendations.=20
I want to say, however, I have no problems talking to energy companies abou=
t getting recommendations on energy. I mean, what do you do? Talk to people=
 who know nothing about the problem, and then listen to what they have to s=
ay?=20
I think you have to go to people that know something about the process and =
know something about developing energy to develop an energy policy. So I ha=
ve no problems with the fact that they consulted with people in the busines=
s. I think they should have.=20
But I think also, they're going to have to say that and have to disclose it=
 now.=20
********
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SE=
CURE ONLINE ORDER FORM LOCATED AT www.fdch.com=20
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY B=
E UPDATED.=20

Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09

Editorial
Culpable Executives

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

Kenneth Lay should be in the spotlight on the Enron scandal ["Enron Executi=
ves Face Subpoenas," Business, Jan. 3]. As head of Enron, he is ultimately =
answerable and culpable. No one should take a fall for him. He exploited sh=
areholders. He deceived analysts, suppliers and customers. He gamed the sys=
tem and took, unfairly, all the personal wealth he could. He cost many empl=
oyees their jobs through predatory and poor fiscal judgment. Maybe we shoul=
d start a category labeled business terrorists.=20
FRANK SLAVICK=20
Superior, Colo.
http://www.washingtonpost.com=20
Copyright ? 2000 Dow Jones & Company, Inc. All Rights Reserved. =09



Sarah Palmer
Internal Communications Manager
Enron Public Relations
(713) 853-9843
sarah.palmer@enron.com