U.S. District Judge Sim Lake >ruled unexpectedly on Tuesday that former Enron Chairman and CEO Ken Lay will face two separate criminal trials — one with former Enron CEO Jeff Skilling and former chief Enron accountant Richard Causey, and another one in which he will be the sole defendant.
To put it mildly, this is not the result that Lay’s lawyers expected.
Judge Lake refused to separate Lay, Skilling and Causey into three discrete trials as all three had requested. But Lake did separate the government’s four criminal charges against Lay relating to his personal banking into a second trial that would be tried separately from the Enron-related charges against the three former executives.
Causey and Skilling are each accused of 35 or more counts of conspiracy, fraud and insider trading in a scheme to manipulate the earnings of Enron to enrich themselves. Lay is accused of only 11 charges, seven of which relate to fraud and conspiracy at Enron and four of which relate to his personal banking.
In all likelihood, unless Lay presses the issue, the trial of the banking charges against Lay will be postponed until after the trial of the three former executives takes place, which means that they likely will never be tried. Regardless of the outcome of the first trial as to Lay, the government will likely cut some type of deal with Lay on the banking charges. My best guess at this point is that the trial against Lay, Skilling and Causey will crank up in mid-2005.
In another Enron-related development, the ongoing trial of the Nigerian Barge criminal case has been postponed for the rest of the week because U.S. District Judge Ewing Werlein became ill. Assuming the trial begins again next Monday, there is a good chance that the trial will conclude by the end of next week.
Daily Archives: October 19, 2004
Oscar Wyatt’s deal with the devil
This NY Times article follows up on last week’s news that longtime Houstonian Oscar Wyatt is one of three individuals and four companies that federal investigators are focusing on for who allegedly receiving vouchers for oil from Saddam Hussein as he sought to flout United Nations sanctions. The Times article notes the close relationship between Mr. Wyatt and Saddam:
Mr. Wyatt . . . traveled to Baghdad as recently as early 2003, as the United States was preparing for war, to meet with officials in Mr. Hussein’s government. Mr. Wyatt – once called in Texas Monthly magazine “the most hated oilman in Texas” – met Mr. Hussein in 1972, just after Iraq’s oil industry had been nationalized, and eventually became one of the biggest United States importers of Iraqi oil.
The two met again in 1990, after Iraq invaded Kuwait and Mr. Wyatt flew to Baghdad on a company jet to help negotiate the release of nearly two dozen American oil workers whom Mr. Hussein had turned into “human shields.”
The relationship was so close that when the United Nations authorized Iraq in 1996 to begin selling oil again, under the Oil for Food program, Mr. Wyatt and Coastal secured the first tanker shipment to leave the country.
And that close relationship is at the heart of the criminal investigation into Mr. Wyatt’s activities:
The years of effort on Mr. Wyatt’s part to court Iraqi officials and build a venture to export Iraqi oil to the United States produced ample rewards: he and companies that he has been linked to earned an estimated $23 million in profit in the seven years of the Oil for Food program, according to sales and profit estimates included in the C.I.A. report by Charles Duelfer; Mr. Wyatt disputes that figure.
And, lest we forget, Mr. Wyatt’s used his relationship with Saddam to attain a humanitarian achievement:
By the late 1980’s, Coastal was importing as much as 250,000 barrels of oil a day from Iraq. As these oil imports became more and more important to Coastal’s operations, Mr. Wyatt became more outspoken in his opposition to any threatened or standing trade sanctions by the United States in the Middle East, . . . including a move by Congress to impose restrictions on trade with Iraq after Mr. Hussein used poison gas against the Kurds.
It was Mr. Wyatt’s surprise trip to Baghdad in December 1990, however, that finally brought his relationship with Iraq into the spotlight. He met then with Mr. Hussein to negotiate the release of American hostages. The effort was opposed by the administration of George H. W. Bush, but Mr. Wyatt came home a hero and he wept at a meeting of the released hostages and their families.
“It was not a stunt,” said Bobby Parker, a drilling rig electrician who had been held for 128 days before being rescued. “Oscar Wyatt is just not that type of person.”
The hostages were safe, but ultimately, Mr. Wyatt’s goal had not been fully achieved. He had hoped to prevent a military move by the United States on Iraqi-occupied Kuwait, a war that, he said, the United States had no reason to start.
Five years later in 1996, Mr. Wyatt’s relations with Iraq were again in the news:
Mr. Wyatt’s ties to Iraq again raised eyebrows, when the first tanker laden with crude oil sailed out of Mina al-Bakr, Iraq’s main export oil terminal, in December 1996, in Iraq’s legal return to global oil markets.
The ship had been chartered by one of Mr. Wyatt’s companies.
This was the start of the Oil for Food program, which ultimately would result in the export of 3.4 billion barrels, earning $65 billion for the Iraqi government over the next seven years, money that was used to buy food and medicine, maintain oil fields and pay reparations from the first gulf war, among other spending.
My Wyatt, through spokespersons, declines to comment on any of this other than to deny that he engaged in any wrongdoing with regard to his business relations with Iraq. However, the Times article notes that one competitor characterized Mr. Wyatt’s propensity to enter into difficult business deals in the following manner:
“He is not afraid of the devil.”
Read the entire article.
On Brad Lidge
Please excuse me for having a hard time getting the Stros off of my mind. Amid the incredible performances over the past several days of Beltran, Berkman, Backe and Kent, Baseball Prospectus‘ ($) Joe Sheehan reminds us of the following:
Backe’s tremendous work enabled Phil Garner to skip over the questionable pitchers on his staff and go right to Brad Lidge in the ninth inning. Garner finally used Lidge in a tie game, and was rewarded with an insanely dominant outing. Lidge pitched in all three games in Houston, throwing five innings, allowing one hit and two walks, and striking out nine. He threw 56 strikes in 77 pitches, going after every hitter he faced.
There’s no better pitcher in baseball right now than Brad Lidge, and I say that with apologies to Johan Santana.
Bush’s trouble with Treasury Secretaries
The WSJ’s ($) Alan Murray is spot on with regard to his analysis in his weekly Political Capital column that the Bush Administration’s second Treasury Secretary — John Snow — has been just as ineffective as the Bush Administration’s first Treasury Secretary, Paul O’Neill:
Even some of the administration’s closest allies wonder: Why has Mr. Bush failed in his first four years to find an effective Treasury secretary? And can he be expected to do any better in a second term?
Messrs. O’Neill and Snow have proved the least effective in recent memory. And it is worth asking: Why? Part of the answer comes from the fact that national-security concerns have pushed economic matters to the back burner. The secretaries of state and defense have been in the spotlight in this administration, and economic policy has been secondary.
But much of the answer comes from the fact that, for this administration, economic policy has been a direct extension of political strategy. The tax cuts that characterized President Bush’s first term were forged during the campaign, and were as much a plan for election and re-election as for economic reinvigoration. The Treasury secretary’s job was taken over, in effect, by political adviser Karl Rove.
If Mr. Bush is re-elected, that could change. He won’t be running for a third term and he won’t be pushing tax cuts. Yawning budget deficits make that certain. And unless Brother Jeb Bush signs him on, Karl Rove will have lost his client.
That could be the chance for a new approach to economic policy. President Bush has suggested an ambitious agenda for his second term. He wants to rewrite the tax code, to encourage savings and eliminate loopholes. He wants to give Americans more control over their health-care plans. And he wants to remake the Social Security system, restoring its finances while creating private accounts for younger workers. If he is serious about all this, he will need a very strong Treasury secretary at his side.
Quare: Each of the policy initiatives mentioned in the foregoing paragraph make sense and would be supported by the vast majority of Americans. Given the Bush Administration’s track record, is it more likely that such initiatives would be seriously pursued in a second Bush Administration or in a Kerry Administration?
State AG’s and the Plaintiffs’ Bar
Longtime Wall Street Journal editorial writer John Fund has written this article for the Institute for Legal Reform in which he addresses the conflict of interest issues that arise in the context of state attorney generals hiring plaintiffs’ attorneys to represent states in tort litigation. Mr. Fund’s executive summary frames the issue in the following manner:
Increasingly, activist AGs are hiring outside plaintiffs? attorneys to represent their states on a contingency-fee basis. Very often, they hire attorneys who have given them major campaign contributions. . .
This pinstripe patronage is not merely unseemly, it represents a dangerous conflict of interest and distortion of incentives. Not only can AGs reward their contributors with no-bid contracts, but the plaintiffs? attorneys, once hired to pursue a lawsuit, have different incentives than the elected officials who hired them. While the AG is sworn to protect the interests of the people of his or her state, an attorney working on contingency has an incentive to pursue only monetary remedies, even if another outcome might best serve the people of the state. And because these attorneys are paid out of the amounts they cover rather than by taxpayers, taxpayers and legislators have no control over them.
At the very least, large state contracts with outside lawyers should be subject to the same sorts of public disclosure and bidding requirements applied to other state contracts. The Private Attorney Retention Sunshine Act ? model legislation drafted by the American Legislative Exchange Council ? has been adopted by five states to restore some measure of democratic control and void a replay of the scandalous back-room deals that plagued the tobacco settlement. That?s a good start.
The Birthplace of Bush Paranoia
Several months ago, Professor Ribstein commented on the phenomena in this election of Bush-bashing, which the Professor observed is premised on “an assumption that Bush and his supporters are not credible — that they are all idiots or worse.”
Along those lines, this Weekly Standard article by Andrew Ferguson examines how the political culture of Austin, Texas facilitated the Bush-bashing phenomenom. As Mr. Ferguson notes, Austin is . . . well, different from most other places in Texas:
With its university-town origins, its large population of musicians and artists, its long tradition of political liberalism, Austin is, as Jeff says, the “anti-Texas,” where “Texans who don’t really like Texas” choose to live. More important, it has also, in a larger sense, exported its own peculiar brand of Bush hatred to Democrats from one coast to the other.
And Mr. Ferguson points out that Austin’s brand of political opposition to President Bush may backfire big-time:
Austin has a lot to answer for, whether you’re a Democrat or a Republican. Ponder for a moment the strange course the presidential campaign has followed these last 18 months. Judged by the simplest, crudest criterion–comparing the state of the world as it was the day he took office with the world as it will be on the day he stands for reelection–George W. Bush should be the most easily beatable presidential incumbent since Jimmy Carter. A frontal assault on Bush’s record, repeated endlessly and packaged cleverly, might well have resulted in a walkaway win for whoever the Democrats had chosen to oppose him.
It hasn’t worked out that way, as we know. Bush’s opponents instead find themselves in a tight race they well might lose. There are lots of reasons why, but one surely is that instead of mounting a substantial critique of what the president has done and hasn’t done, his Democratic adversaries have obsessed over piecing together odd, paranoid caricatures of the man who’s driving them nuts–Bush as the agent of Halliburton, Bush as the idiot son of Robber Baron privilege, Bush the religious crank, the right-wing ideologue, the draft-dodger, the front man for Enron or Rove or the Saudi royals or J.R. Ewing.
Interestingly, Mr. Ferguson notes that the trouble with the Austin-style of opposition to Mr. Bush is the underlying insecurity of those who promote it:
[An essential characteristic of the Bush-haters is] hatred for themselves as Texans. “Keep Austin weird” is the cute, self-congratulatory, semi-official motto the city’s residents repeat insistently, and there is, sure enough, something weird here. But the city isn’t weird in the way Austinites think it is. No matter where in Austin you find yourself–the waiting room of an auto body shop, the men’s room of a beer joint–you’ll be confronted with a community bulletin board coated thickly with fliers announcing a poetry contest or some new development in Hatha Yoga technique. In that way Austin is no weirder than any other college town. It’s weirdness lies in the fact that, unlike every other college town–Madison, Wisconsin; Lawrence, Kansas; Eugene, Oregon–it has never made peace with its home state. Texas progressivism sets itself in opposition to its surroundings, defines itself by what it isn’t. It depends on a blend of boosterism (for Austin and for a few progressive neighborhoods in Houston) and contempt (for everything else north of the Rio Grande Valley and south of the Mason Dixon line). “The feeling you get in Austin sometimes,” Nathan Husted told me, “is like we’re all living in West Berlin during the Cold War.”
Even the flap over the now infamous 60 Minutes segment that relied on a untested forged document regarding Mr. Bush’s National Guard service has its genesis in the Austin culture of hatred toward Mr. Bush:
For our purposes, however, what was most interesting about the 60 Minutes imbroglio was the light it shed on the tiny, hermetic world of Texas Bush-hating. Rather himself–perhaps the world’s most prominent Texas Bush-hater–has a daughter, Robin, who is an activist in, and future contender for the chairmanship of, Austin’s Travis County Democratic party, which Rather once helped raise money for and whose chairman at that time, David Van Os, now serves as the attorney for Bill Burkett, who gave 60 Minutes the bogus documents and who has worked as a source for James C. Moore, who discovered the Austin4Kerry tape and whose book, Bush’s Brain, was co-written by Wayne Slater, Austin bureau chief of the Dallas Morning News, whose News colleague, Mark Wrolstad, is married to Mapes, who produced the 60 Minutes segment and who knew Moore when both were TV reporters in Houston, where Mapes still lives. It’s dizzying to think what Bush-haters would do with this web of intimacies if they were on the other side.
Read the entire piece. Quare: Is the Bush-bashing phenomena the natural result and counterbalance to the proliferation of demogogic right wing pundits that have arisen over the past decade (i.e., Rush Limbaugh, Sean Hannity, etc.)? Or did the latter naturally evolve in response to the former?