Monthly Archives: March 2005

The Texas City blast

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Texas City disaster.JPGA huge explosion tore through a British Petroleum oil refinery in Texas City Wednesday morning, killing at least 15 people and injuring over 100. Here is the exhaustive Chronicle coverage on the blast.
Texas City is a city of 40,000 located on Galveston Bay about 30 miles south of Houston just north of Galveston Island. My 15 year old daughter was on the beach on Galveston with friends when the blast occurred yesterday morning, and she and her friends said that the blast sounded like a thunderclap directly overhead when it occurred. They spent the rest of the morning watching the billowing smoke from the blast cover the sky north of Galveston.
The British Petroleum refinery that blew is one of many in Texas City, which is one of several cities south and east of Houston that contain some of the largest refineries and petrochemical plants in the nation. This particular plant is the third largest in the U.S., sprawling across 1,200 acres. It processes almost 450,000 barrels of crude oil daily and employs almost 2,000 people.
Within minutes of the explosion, Texas City officials issued the “shelter-in-place” warning to Texas City residents, which requires residents to stay inside until authorities could be certain the air was safe. These procedures are commonplace in Texas City, which has endured some of the most remarkable explosions in American history.
Although the 1900 Galveston Hurricane is the worst disaster that the Houston-Galveston area has endured in modern history, the disaster resulting from the Texas City industrial explosions over a two day period in April 1947 is not far behind. During those perilous two days, a fire aboard a ship at the Texas City docks triggered a series of massive explosions in several Texas City plants that killed 576 people and left fires burning in the city for days. In fact, huge explosions are really just a part of life in Texas City. As one former Texas City resident observed to me several years ago after a relatively small blast killed a couple of workers at another plant:

“That one won’t even make the Top Ten list of Texas City explosions.”

Unfortunately, the BP plant explosion of yesterday will.

The real reason why Barry might not play?

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barrybonds.jpgBaseball fans are opening their newspapars this morning to this article reporting that star San Francisco Giants slugger Barry Bonds, the best baseball player of his generation, might not play this upcoming season because of a minor knee injury and the effect that media scrutiny of Bonds’ steroid use has had on his family. However, as Paul Harvey would say, “here’s the rest of the story.”
Turns out that Bonds’ former mistress — Kimberly Bell — is apparently singing like a canary to the same federal grand jury in San Francisco that has been investigating the alleged illegal distribution of steroids that resulted in the indictment of certain individuals affiliated with BALCO (previous posts here and here). This San Francisco Chronicle article reports that Ms. Bell has not only testified that Bonds admitted to her that he used steroids, but that he gave her $80,000 from autographing baseballs in increments of just under $10,000 to avoid currency transaction reporting requirements. Federal prosecutors do not look kindly upon such activities.
As noted in this earlier post, Bonds allegedly claimed in his grand jury testimony several months ago that that he did not understand that some of the supplements that his BALCO trainer was giving him were steroids. Inasmuch as Ms. Bell’s alleged testimony reflects that prosecutors may be preparing to charge Bonds with perjury, currency reporting violations, and possible tax evasion, Bonds’ lack of desire to play this season may have more to do with preparing a criminal defense than anything else.

Professor Ribstein on the Law and Economics of Blogging

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ribstein.jpgProfessor Ribstein over at Ideoblog is presenting a workshop on blogging at the University of Illinois (perhaps to take their minds off of Bruce Pearl, see this previous post). In organizing the event, the Professor has developed this insightful “blog article” that outlines the various legal, economic, and political issues that have arisen in the field of blogging. The Professor is encouraging readers to comment on the issues raised in his blog article, which he will then include in the final draft of his paper. Check out this innovative approach to developing ideas, which is the key goal of Professor’s Ribstein’s first-rate blog.

The real story behind the game

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pearl.jpgOne of the alluring characteristics of the NCAA Basketball Tournament each season are the undercurrents that bubble to the surface when certain teams end up playing each other. One of the more delicious background stories of this year’s tournament pertains to this Thursday’s game between the number one seeded University of Illinois Illini and the University of Wisconsin at Milwaukee, which is making its first appearance in the Sweet Sixteen of the NCAA Tournament.
What makes this game so interesting is that Bruce Pearl, the UWM coach, was the central figure over 15 years ago in a recruiting scandal that haunts the Illinois program and its fans to this day. Pearl, then an assistant coach at Illinois recruiting rival Iowa, taped a conversation with Deon Thomas — a hot high school basketball prospect — and then turned the tape over to the NCAA Enforcement Division. The resulting investigation landed the Illini program on probation and the NCAA banned the program from the NCAA Tournament for a year. A couple of Illini assistant coaches lost their jobs over the affair, and Illinois and Iowa basketball fans re-confirmed their mutual and everlasting distaste for each other.
Although Illini fans allege that Pearl turned on the Illinois program simply because Illinois had won the battle for Thomas and that Pearl himself was guilty of recruiting violations, the NCAA did not cite either Pearl or Iowa for any violations in connection with its investigation of the affair. Nevertheless, many in the cozy basketball coaching “fraternity” deemed Pearl a “snitch” and blacklisted him. Moreover, inasmuch as the state of Illinois was Pearl’s main recruiting territory while he was on the Iowa coaching staff, his tarnished reputation in Illinois at the time prompted him to leave the Iowa staff and start over at a Division II school. Even though he had been a rising star in the coaching profession at Iowa, Pearl toiled for 12 more years in the backwaters of college basketball before finally getting a chance to coach at a Division I school, and then only at the obscure Milwaukee campus of the University of Wisconsin. Four years later, his team is the Cinderella story of the tournament.
So, you might want to take a few minutes tomorrow night and watch a bit of the Illinois-UWM tournament game. Even though the players on both squads were just pups at the time of the Pearl-Thomas affair, you can rest assured that the Illini fans — as well as Coach Pearl — will bring a special intensity to this particular game.
And if Coach Pearl’s Cinderella team were to prevail over the mighty Illini? Moments such as those are the reason why the NCAA Basketball Tournament remains a colorful thread in the fabric of America life each March. Don’t miss the opportunity to see it.

Updating the Yukos case — Yukos throws in the bankruptcy towel

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fed cthouse.jpgRussian oil giant and former U.S. debtor-in-possession under chapter 11 OAO Yukos waved “good-bye” to the Houston federal courthouse yesterday by announcing that it would no longer pursue an appeal of U.S. Bankruptcy Judge Letitia Clark’s decision last month that dismissed the company’s chapter 11 case for lack of jurisdiction. Here are the earlier posts on the Yukos saga.
Yukos had requested both Judge Clark and U.S. District Judge Nancy Atlas to stay the order dismissing Yukos’ chapter 11 case pending the company’s appeal of that order, but both judges denied the stay request on the grounds that Yukos had failed to show a reasonable probability of success on the merits of its appeal. Yukos apparently concluded that its chances for a stay pending appeal at the Fifth Circuit Court of Appeals — not to mention its slim chance for success on the merits of the appeal generally — did not justify further machinations in the U.S. federal courts.
Yukos’ decision closes the chapter on an interesting “go for broke” chapter 11 strategy in its running battle with the Russian government. Although establishing bankruptcy jurisdiction in the United States federal courts for a Russian company was always a longshot, Yukos management does not have many alternatives left for attempting to salvage any value for shareholders. Despite the attraction of potentially lucrative business opportunities in Russia, the lesson of the Yukos case is that the Russian government remains a very powerful opponent of maintaining strong and valuable business interests there.

New Provost named at UH

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shasta75.jpgAnne Linehan over at blogHouston.net alerts us to this University of Houston announcement that Donald J. Foss has been named the University’s new Provost.
Dr. Foss has been the Dean of the College of Arts and Sciences at Florida State University for the past 10 years and, for 12 years before that, he was Dhairman of the Department of Psychology at The University of Texas at Austin. He replaces former UH Optometry Dean Jerald Strickland, who has filled the Provost position on an interim basis since September 2003.
By all accounts, Dean Strickland has done a marvelous job of patching up the relationship between the UH Faculty and Administration that had deteriorated badly during the tenure of former UH Provost Edward Sheridan. That bitter relationship is the subject of this April 2002 Tim Fleck Houston Press article.
Dr. Foss’ appointment is subject to approval by the UH Board of Regents at its April 6 meeting, and he is expected to assume the Provost position in July.

Well, at least it’s playing close by

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River Oaks Theatre.jpgThe Chron’s Mary Flood reports today that the documentary Enron, The Smartests Guys in the Room (earlier post here) will open in Houston on April 20 at the River Oaks Theatre, just down the street from where Ken Lay, Jeff Skilling and Andy Fastow all live.
No word on whether the three are on the invitation-only list for the Houston premiere.
By the way, I am patiently waiting for a movie reviewer to read this paper before penning a review on the Enron documentary. Don’t worry, though. I am not holding my breath while waiting.

Rocket Boy disses the Space Shuttle program

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NASA.jpgHomer Hickam, the former NASA engineer and author whose brilliant October Sky was made into one of the best family films of the past decade, urges President Bush to discontinue the obsolescent Space Shuttle program in this devastating Wall Street Journal op-ed ($), in which he observes:

I left NASA in 1998 to pursue a writing career. I’m glad I did, because I could no longer stand to work on the Space Shuttle: 24 years after it first flew, what was once a magnificent example of engineering has become an old and dangerous contraption. It has killed 14 people and will probably kill more if it continues to be launched. It has also wasted a generation of engineers trying to keep it flying on schedule and safe. Frankly, that’s just not possible and most NASA engineers in the trenches know it. Einstein reputedly defined insanity as repeating the same behavior and expecting different results. The Shuttle program is a prime example of this.

Mr. Hickam describes a phenomena of big governmental agencies that Robert Coram examined in regard to the Defense Department in Boyd: The Fighter Pilot Who Changed the Art of War — i.e., the tendency of power elites in governmental agencies to perpetuate their pet projects at the expense of progress and innovation. Secretary Rumsfeld is confronting much the same inertia in the Defense Department as he attempts to transform America’s military, a topic that is addressed in these earlier posts. This is not a story that the MSM covers to any meaningful degree, but it remains one of the most important to America’s survival as a superpower.

Former WorldCom chairman finally settles

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Bert roberts.gifFormer WorldCom chairman Bert C. Roberts, Jr. — the final settlement holdout among WorldCom Inc.’s former outside directors — agreed to settle the WorldCom investors’ class-action lawsuit claims against him for $5.5 million, including $4.5 million out of his own pocket. Earlier posts on the WorldCom directors’ settlement may be reviewed through this post.
Roberts’ settlement leaves WorldCom’s former auditor Arthur Andersen as the only remaining defendant in the trial of the class action, which is scheduled to begin on Wednesday. With huge litigation exposure remaining in connection with both the WorldCom and Enron class actions cases, Arthur Andersen has apparently decided to use its remaining cash reserves (estimated to be several hundred million dollars) to defend the cases rather than dilute the reserves through settlement. Andersen really does not have much to lose in pursuing such a high risk litigation strategy. It’s not like the firm can be put out of business. The Justice Department has already taken care of that.

AIG sacrifices more to the Lord of Regulation

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AIG.gifFollowing on these earlier posts regarding the increasing threat of criminal indictment that is being place on American International Group executives, AIG canned two of its top executives — CFO Howard I. Smith and VP Christian M. Milton — after the two invoked their Fifth Amendment right against possible self-incrimination in the ongoing investigation into whether whether AIG manipulated its books in connection with a transaction involving General Re Corp., a unit of Warren Buffett’s Berkshire Hathaway Inc.
Both men were terminated pursuant to an AIG company policy that requires employees to cooperate with government authorities investigating matters pertaining to the company. However, the two employees were clearly placed in an untenable position given recent developments in similar criminal investigations. In connection with this investigation involving Computer Associates, three former executives of that company pleaded guilty to obstruction of justice charges that were not tied to alleged misstatements told to federal investigators, but to alleged misstatements made to the company’s own law firm during the company’s internal investigation. Similarly, in this case involving accounting giant KPMG, the government required threatened criminal action against KPMG in connection with a tax avoidance scheme unless the firm forced one of its partners to cooperate with the government, which of course can use the partner’s statements against him in prosecuting a crime.
Accordingly, rather than attempt to facedown the government over its increasingly common use of its odious power to criminalize merely questionable business transactions, the AIG Board has decided to offer several sacificial lambs to the Lord of Regulation in an effort to avoid a meltdown of the company. One can only ponder how many such lambs this Lord will require?