This NY Times article has the skinny on the slobberknocking litigation that is taking place between harried but feisty KPMG and R. Cary and D. Calhoun McNair, sons of Houston Texans’ owner Bob McNair, over tax shelters that KPMG allegedly promoted to the McNairs back in 1999.
KPMG is walking a fine line in this lawsuit and numerous other civil lawsuits that have arisen over the firm’s former clients having problems with the IRS over claiming deductions for shelters that the IRS ultimately determined were abusive. Inasmuch as KPMG has already conceded that certain of its tax partners engaged in “unlawful conduct” in creating and selling the tax shelters, KPMG now has to juggle the dueling positions of being contrite while attempting to avoid a criminal indictment through negotiation of a deferred-prosecution agreement while fighting similar allegations in civil lawsuits with former clients to avoid potentially huge damage awards that could also sink the firm.
Daily Archives: August 18, 2005
The latest Dome redevelopment plan
Following on these earlier posts (here and here), this Chronicle story reports that an outfit named Astrodome Redevelopment Corp. has obtained a preliminary $450 million financing commitment to redevelop the Astrodome into a Gaylord Texan-type hotel and entertainment complex. Astrodome Redevelopment Corp. is an investment company comprised of Oceaneering International Inc., a publicly traded firm working in engineering, science and technology; URS, a large architectural and design firm; NBGS International, a theme park developer; and Falcon’s Treehouse, a Florida-based design firm.
Emphasis here should be on the word “preliminary.” A project of this magnitude would entail working out huge problems, such as how an additional 1,200 rooms can be justified to lenders and equity investors in light of Houston’s current glut of hotel rooms, parking woes during football games and the Houston Livestock Show and Rodeo, and the dubious nature of the pitiful Astroworld Six Flags Amusement Park across the freeway from the Dome as a draw for the hotel. As a result, my sense is that this deal will never come together, but crazier financial decision have been made — just look at the Metro Light Rail line! ;^)
Anne Linehan over at blogHouston.net summarizes local reaction to this latest Dome boondoggle.
More on when justice destroys good reputations
This post from awhile back noted one of the by-products of the current trend toward criminalizing merely questionable business transactions — i.e., the government’s destruction of good reputations in its quest to obtain convictions against unpopular defendants.
Along those lines, this U.S.A. Today article from yesterday catches up with Mark Belnick, the former Paul Weiss partner and Tyco general counsel who was indicted and acquitted in connection with the prosecutions of former Tyco executives after he had coordinated the company’s cooperation with the criminal investigation of former Tyco executives Dennis Kozlowski and Mark Swartz. Here is a longer New York Magazine article on Mr. Belnick’s ordeal.
In the article, Mr. Belnick discusses with the reporter the misery that he endured during a prosecution that was based upon grand larceny charges for compensation that was Tyco’s CEO and CFO indisputably approved:
“When I was threatened with grand larceny, I thought, ‘What did I steal — my stock bonus?’ ” says Belnick. “I didn’t even understand what the theory of grand larceny could be here.”
During the trial, the prosecution described Belnick as a “man who lost his moral compass” and accepted excessive compensation that he knew was a payoff for his silence about wrongdoing committed by Messrs. Kozlowski and Swartz. This, of course, after the same prosecutor had received Mr. Belnick’s assistance in uncovering the alleged wrongdoing by Messrs. Kozlowski and Swartz.
So it goes in the continuing criminalization of agency costs.
Review of the Golf Club of Houston
As noted in this previous post, the Rees Jones-designed Golf Club of Houston Course opened for play earlier this month to generally positive reviews. The Tournament Course — the new specially-designed home of the Shell Houston Open PGA Tour Golf Tournament — is the latest step in the Houston Golf Association‘s efforts to revive the lagging event, which relocated to Redstone three years ago after a spectacularly successful 28 year run in The Woodlands, primarily at the Tournament (formerly the TPC) Course.
Several days ago, three pals and I teed it up at the Tournament Course for the first time. Although we should have had our heads examined, we decided — in order to get the full flavor of the course — that we would walk the course with caddies (in 95 degree temperature with 90% humidity!) and play the course from the tournament (i.e., the longest) tees. Inasmuch as the ground was still quite wet from a heavy rain storm the previous afternoon, we received no roll on our drives and felt like we trudged every one of the 7,500 yards of the course. Despite the challenging conditions, we had a jolly good time, and the following is my report (with photographs) on the newest addition to the generally underrated family of Houston championship golf courses.