Mary Flood of the Houston Chronicle is reporting that U.S. District Judge Sim Lake has scheduled the criminal trial of former Enron chairman Ken Lay, former CEO Jeff Skilling, and former head accountant Richard Causey to begin on January 17, 2006.
Here is Arthur Andersen’s opening brief in its appeal to the U.S. Supreme Court of the firm’s 2002 criminal conviction in connection with the Enron scandal. The following is an excerpt from the brief’s Statement of the Case:
This case arises out of the conviction of Arthur Andersen, LLP (“Andersen”) for witness tampering. . .
For more than a century, it had been settled law that destruction of documents prior to the initiation of judicial or agency proceedings is not obstruction of justice. The Government accordingly sought to circumvent the limits on the crime of obstruction by indicting Anderson for “witness tampering” under 18 U.S.C. 1512, which prohibits attempts to “kill,” “threaten,” or “corruptly persuade” potential witnesses. In the Government’s view, it was perfectly lawful for Anderson’s employees to comply with the document retention policy themselves, whatever their motive might be, prior to the start of a proceeding. But it was criminal “corrupt persua[sion]” to urge others to comply with the policy if the request was even partially motivated by an intent to “impede the fact-finding ability” of some possible future investigation. . .
That expansive and illogical interpretation of the statutory language criminalizes common conduct undertaken without any consciousness of wrongdoing. . .
This Jonathon V. Last-Daily Standard article reviews Edward Jay Epstein’s new book, The Big Picture (Random House 2005), which examines the fascinating and ever-changing economics of moviemaking. To give you an idea of what’s going on in Hollywood economics, consider this:
In 1947, Hollywood sold 4.7 billion movie tickets. The studios were hugely profitable movie factories.
Times have changed. . . Television came to compete with the movies, as did home video. And despite a population boom, movie-going fell out of favor. In 2003, only 1.57 billion tickets were sold, a third the number 56 years earlier, while the real cost of making movies increased some 1,600 percent.
It wasn’t just production costs that exploded. Today the average movie costs $4.2 million to distribute and nearly $35 million just to advertise. (The comparable 1947 figures, adjusted for inflation, were $550,000 and $300,000.) Such peripheral costs, Epstein explains, have grown so large that “even if the studios had somehow managed to obtain all their movies for free, they would still have lost money on their American releases.”
How did Hollywood respond? Epstein observes that Hollywood transformed itself from a factory for making movies into a clearinghouse for intellectual property, which is at least as profitable as making movies used to be. The result?
The truth is that, even with terrible movies, the studios have to try hard not to make money. In this way, today’s Hollywood is very much like the studio system of old. The two business models are so favorable that the quality of the product is beside the point. The difference, of course, is that the movies from the studio era were often quite good.
Read the entire review. Hat tip to EconoLog for the link to this review.
Several big oil companies released a report yesterday that they had commissioned that challeges the way in which U.S. regulators require oil companies to measure how much oil and natural gas the companies have in the ground. Reserve numbers are a critical measure for evaluating the long term health of an oil and gas company. Here is the executive summary of the report.
Cambridge Energy Research Associates prepared the report, and it sharply criticizes the method that the Securities and Exchange Commission requires that oil and gas companies use to assess oil and gas reserves. The report contends that the SEC’s method is obsolescent and that the results of using the method actually mislead investors because it underestimates the oil and gas industry’s success in discovering or tapping new reserves of oil and gas. The results from using the different methods is startling — it can amount to hundreds of millions of barrels of oil at one company alone. As a result, the report recommends that the SEC revise its reserves-accounting methodology to reflect changes in the oil and gas industry since the guideline was implemented 27 years ago.
This is a key issue for the oil and gas industry because because the long term prospects of companies in the industry is largely dependent on their ability each year to find enough new oil and gas reserves to replenish reserves that the company has generated. In short, reserves are akin to a sign of how much money an oil and gas company has in the bank.
Absent from the Big Oil sponsors of the report was Royal Dutch/Shell Group, which has been hammered over the past year by a scandal in which the company admitted that it had massively overstated its reserves. As a result, Shell has revised its reserves by about a third over the past year, and it still faces continued scrutiny from investigators in the U.S. and Europe.