Posted on 07/07/2004 1:07:00 PM PDT by OneTimeLurker
Ken Lay indicted.
No one above the law, indict klinton and his croonies.
Figured this was coming this week. I truly enjoyed watching Lay's perp walk this morning.
I can't fathom a CEO who requires four (4) mansions, fully staffed, in the same city (Denver)....especially when he lives full time in Houston.
I take my responsibilities as a CEO very seriously. Lay apparently didn't view it the way I do.
Have a nice time over the course of the next year, Mr Lay. You are going to look absolutely marvelous in an orange jumpsuit, you scum bag.
I hadn't thought of it in those terms, but that's exactly what happens if the Fed is doing its job. The M1, M2 and M3 measures of the supply of money have all increased by about 33% since 1999 which certainly provided the liquidity needed. Greenspan feared deflation, but now he has to worry about inflation.
Exactly. They can talk it up while they drop their holdings, and bring it down after the chumps buy in. The cash comes from the hands of the bag-holders and new cash ends up in the hands of the bankers to lend. Pretty nifty.
It appears that the 11 indictments accused Lay, Skilling and Causey of enriching themselves through salaries, bonuses, grants of stock and stock options.
It specifically names Lay in 11 counts: one count of conspiracy, two of wire fraud, four of securities fraud, one bank fraud and three of making false statements to banks.
After learning of the indictment on Wednesday, Lay said in a statement, "I have done nothing wrong, and the indictment is not justified."
I would like to know more about what evidence the Government has against Lay and the specifics of the charges.
As to following the money, yes Enron stock value was "paper." However the "billions taken by evil energy traders from California electric power rate payers and funded with long term bonds" was real money. I don't see that "real money" sitting around in a pile anywhere. I think that the "real" money was spread around in the economy. That is why I feel that much of what is going on is just for show as there is no hope of "collecting billion" even if it could be proved that Enron was a crook.
While spending money on attorneys to take the drug addict who broke into your home and stole real money to civil court and suing for damages, may make you feel good. The judgement isn't going to pay any bills. In that case one needs to follow the money and then arrest those involved in the drug sales, confiscate their cars/homes/bank accounts.
In the Enron case, the money isn't in Lay's trust fund. It appears to be in the hands of investment bankers, politicians, shaddy attorneys, government agencies (fines & fees), equipment vendors, worker, etc. Their cash enrichment as you point out was by in large "wiped out on paper" by the Clinton market crash as you point out.
Well, the city of Los Angeles paid off a whole bunch of bonds with their windfall profits.
I don't know what Enron did with theirs. If Enron was raping California so badly, then where did the money go? Maybe we will find out when the bankruptcy court rules.
I really have to laugh at that indictment. Enron stock options? Is losing your shirt a crime now?
There's the "wealth effect", too. When peoples' retirement accounts were growing at 30% per year like they were in the late 90's, they felt more free to spend and take on debt.
Probably!
You are right LADWP sucked up and used a lot of the "real" money. I had forgotten that, but it still wasn't in the billions. My feeling is that the real money (not the stock values) went for the most part either into paying for real things at outrageous costs (natural gas, polution control equipment expedited to meet California Air Pollution laws, labor working 24/7 to install pollution control equipment and do power plant maintenance, consulting fees to do 24/7 power plant siting and design for new facilities, contributions/bribes to politicians, fees collected by shaddy investment bankers and accountants to help drive up stock values, outrageous salaries to hustlers working for Enron)
From what I understand the major Enron asset is the Portland General Electric utility in Oregon, which is being sold for net book value ($2.35 billion) and is less than all the claims against Enron.
What the above means to me is that there is no way that Enron could have "raped the California market/ratepayers of billions of dollars." If multiple billions in real money were stolen by Enron, those billions should be somewhere in a few large pots of money. There isn't a big pile of money for the Bankruptcy Court to go after (compared to the claims).
This means that FERC has to be right in that the amounts of "overcharging" during the energy crisis are relatively modest, i.e. a few hundred millions and not many billions as claimed by some politicians.
bump
Well, lookie here: Enron Bankruptcy & Litigation Report
Enron Bankruptcy & Litigation Report ® (EBLR) is the nation’s sole source of independent news, data and analysis of the most complex corporate bankruptcy in history. EBLR was created for attorneys, auditors, consultants, creditors, shareholders, suppliers, vendors and others who have an interest in the bankruptcy or shareholder litigation involving Enron, its subsidiaries and fiduciary officers, and how those cases will be impacted by ongoing Congressional, U.S. Justice Department and regulatory agency investigations.
With more than $13 billion in direct liabilities, Enron's list of creditors reads like a Who's Who of Wall Street and Louisiana Street, the road through downtown Houston that became synonymous with energy-trading firms. The bankruptcy filing does not list off-balance sheet and contingent liabilities.That list begins with major commercial banks. According to Bankruptcy Creditors Service, Enron owes Citigroup at least $3 billion, J.P. Morgan Chase nearly $2 billion and Bank of New York at least $2 billion. Also on the list of Enron creditors are scores of regional banks that are unlikely to be made whole. Some of the debt listed for the major commercial banks may be securitized, which would reduce the lenders' direct liability.
"It seems reasonable to expect the Enron credit is substantially written off by most bank creditors," says Christopher Marinac, managing director of financial services research at SunTrust Robinson Humphrey. "We hope this occurs in the fourth quarter, and it will very likely have an earnings impact. The legal actions and bankruptcy proceedings will extend for months, if not years."
In addition, investors will be closely eyeing other energy companies that are Enron creditors. Companies like Duke Energy, Williams, Mirant, AEP and even Dynegy have said they have millions in credit exposure to Enron.
Even companies like Calpine, which says it has little "net exposure" to Enron, could end up with losses as a result of Enron's bankruptcy if a bankruptcy judge doesn't allow universal offsets. Such transaction allow trading parties to offset all debits and credits between them even though they may be governed by different contracts. Barring universal offsets could increase losses at other energy trading companies.
How exactly did he rip them off?
Seems to me, he had faith in his own company, and even put his OWN money into it. Since when is it a crime to be an optimist?
Or should Ken have seen the negative factors, and run out and told all shareholders to sell? How inteligent would that have been?
I saw the justice department spokesperson giving a press conference in Houston at lunch. I think I heard him say the investigation was ongoing, even after the indictment of Lay. I don't know if that meant more charges for those already indicted or if they had finished with Enron and were moving to other companies ala Arthur Anderson. Made me wonder if maybe they were going to look at Citibank and Robert Rubin.
Nice going, now we have a potential un-main-stream-media filtered source of information.
Enron filed some 1,000 avoidance action last September and hopes to recover a staggering $17 billion to help pay its creditors (see item above). In the avoidance actions at issue here, Enron is trying to reclaim $418 million from UBS AG (formerly Union Bank of Switzerland), Europe's biggest bank; some $235 million from Lehman Bros., the fourth-largest securities firm by capital; another $231 million from New York-based Credit Suisse First Boston, the securities unit of Zurich-based Credit Suisse Group, Switzerland's No. 2 bank; and $26 million from Bear Stearns, the seventh-largest securities firm, in connection with the "hedging" or derivatives transactions. The banks are represented by Cleary, Gottlieb, Steen & Hamilton, Cravath, Swaine & Moore, Sullivan & Cromwell and Kramer Levin.
Now we are beginning to see where the money is located. Yes, it appears that the shady investment bankers are the "drug dealers" that have been taking anything and everything that Enron may have "stolen" from various power markets, if indeed anything were stolen as opposed to given by contract from the various utilities.
This now explains why Snohomish County PUD in Everett Washington is trying to avoid the $112 million it may owe under the power contract cancelation provision. The amount of $112 million is large enough that it would Snohomish PUD in probably the top 20 list of potential sources of money for creditors! It is now all beginning to come together.
I did find that Dynegy settled with Enron for $25 million on the breach of contract suit. Dynegy then fell on hard times themselves and had to sell off the mid-america pipline that was collateral for the Enron deal.
They sold it to Warren Buffet.
You find out what assets are really worth at a bankruptcy sale, don't you.
Two months after Enron Corp.'s online gas and trading business closed its virtual doors, the one-time world-beating exchange has been reincarnated under new ownership as UBS Warburg Energy, or UBSWenergy.com.A wholly owned subsidiary of London-based UBS Warburg, which is itself the investment banking subsidiary of Swiss bank UBS AG, the re-formed energy exchange has acquired Enron's gas and power trading IT infrastructure, its intellectual property and 625 of its former employees (see story).
"When the sale was finalized [Feb. 8], those people became UBSWenergy employees," said company spokeswoman Jennifer Walker.
Most notable in the group is former Enron President and Chief Operating Officer Greg Whalley, who rose to that position in August after former Enron President Jeff Skillings left unexpectedly.
Subsequently, Enron's stock plunged amid revelations of shady accounting practices (see story), and the company filed for Chapter 11 bankruptcy protection.
Whalley was instrumental in forming the gas and power trading platform -- which had been the crown jewel in Enron's former corporate empire -- and will now manage the UBS Warburg Energy operation.
I'm pretty sure, at the time, you were one of the ones who claimed there was no over charging...are you now realizing there actually was?
Since when is "a few hundred millions" of ill gotten gains modest?
In negotiating 101, if you want to recoup "a few hundred millions" the first thing you do is add at least "a few hundred millions" to your "a few hundred millions" claim.
At the time, I was saying that many of the high power costs were justified and the "caps" (up until the point of curtailment & blackouts) were improper. I had utility clients in Washington state and Oregon, generating electricity with small 1 to 2 MW diesel generators, just to serve load at prices of $150/kWh to $200/kWh or more when some were saying anyone charging $100/kWh or more was guilty of price gouging. If those utilities sold that electricity for what it cost them, I didn't think that was price gouging.
I also objected to myself and others in the PNW having our local utilities raise rates and threaten us with curtailment while many California rates were frozen at artificially low values by the California Pubic Utility Commission. I also felt that alot of the complaints by California politicians about how they were being ripped off by Enron were really being overstated by several orders of magnitude
Finally, I also felt that many of the "smoking guns" of price gouging and market manipulation being stated in the press were pure "spin." There were many times when California would not allow diesel generators to pollute their air, but utiltiies up in Washington ran diesel generators to make power that was needed by the West Coast and yet couldn't collect a proper price for the power. In a case like that, should we breath poluted air when folks in California aren't willing to either pay the full cost of the power or allow for temporary pollution regulation waivers in California?
Since when is "a few hundred millions" of ill gotten gains modest?
When Grey Davis screams that energy companies have stollen $6 billion or so, and the real value turns out to be a couple of hundred million, I consider that modest. Remember a FERC judge studied the matter and concluded once that California owed other utilities maybe $300 million and California leaders claimed that they were owed by these power companies somewhere around $4 to $6 billion, but based on the analysis by the FERC judge, he figured maybe California was owed about $300 million so it was close to a wash. Based on new information not known to the public, FERC is now saying maybe California is owed more. (Of course what is not discussed is that maybe some of the questionable things that were done by the Cal PX, the California Dept of Water Resources and the California ISO could be considered market manipulation and increase what "California" owes to others outside the state.) I don't think that "crying wolf" helps settle things.
In negotiating 101, if you want to recoup "a few hundred millions" the first thing you do is add at least "a few hundred millions" to your "a few hundred millions" claim.
If I tried to do what you suggest with an insurance company claim on a car accident, I could end up in jail. I don't think that it is right to fluff up claims. You may have a much more sophisticated approach to the world than I do that allows such things. I just hope you don't do that on your IRS charitable claims deductions.
As to Negotiations 101, we obviously attended different schools of learning. I doubt I would file a sworn affidavit with a Bankrupcy judge saying I was owed $6 billion when in fact I knew it was only "a few hundred million." If nothing else, my credibility as a witness in the subsequent court proceeding before that judge would be worth zip.
From what I know California has no credibility as to monitary damage amounts and has no integrity on that subject.
When you add to that the fact that the government of California has its "finger prints" all over many dirty deals (like submitting false transmission schedules to change power prices, like calling up certain power marketing companies and asking them to submit false power purchases and sales data so that the market price will be changed, like putting political pressure on federal officals to force the Bonneville Power Administration to curtrail spilling water from behind dams to move juvinille fish out to sea faster and increase the fishes chance of survival and causing Washington State electric utilities to use high priced diesel generated power because very low reservoirs were being drawn down by BPA to produce power for California at bargin basement prices........etc.), I get tired of hearing them whine and cry wolf in California.
Boxer and Feinstein are full of it.
Each one of those entities charged California two or three times as much for electricity as Enron did. [link]
OK, it was a stupid question. It's because you're a Volvo-driving, business-hating, Gray Davis loving democrat. That's why.
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