Are you ready to rumble Enron-style?

skilling and lay10.jpgAs the scheduled Monday commencement of the criminal trial of former key Enron executives Ken Lay and Jeff Skilling draws nearer, the Chronicle’s Mary Flood — who has spent more time on the frontlines of Enron-related cases than any other reporter — provides this overview of what to expect from the upcoming trial and John Roper follows this earlier Chronicle profile of Mr. Skilling with this article on Mr. Lay’s preprarations for the trial.
Meanwhile, over at the sparring ring where the respective legal teams prepare for battle, it looks as if the Enron Task Force is continuing to have a bit of trouble deciding on what to present to the jury. In a pleading (download here) filed earlier in the week, the Lay-Skilling defense teams reveal that the Task Force is attempting to add about a dozen, previously undisclosed allegations of wrongdoing against Messrs. Lay and Skilling in the week before trial. Such last-minute modifications reflect a prosecution team that is not particularly confident in its case. U.S. District Judge Sim Lake is expected to rule on that matter and other remaining pre-trial issues in a final pre-trial conference tomorrow afternoon.

Houston Pavilions taking shape

Houston Pavilions.jpgFollowing on this earlier post, the Chronicle’s Nancy Sarnoff reports on the expected announcement today by Houston Pavilions LP that House of Blues Entertainment Inc. will be its first anchor tenant in the $200 million, 700,000 square foot downtown project that hopes to transform three city blocks into an open-air shopping-and-entertainment mall with offices and condominiums. The House of Blues facility is expected to feature a performance hall, restaurant and retail shop covering about 43,000 square feet of the project, which also includes plans for a 134,000-square-foot condominium tower and 200,000 square feet of loft-office space.
The Houston Pavilions is located between the newly revitalized Main Street on one side and the George R. Brown Convention Center on the other near the downtown Foley’s and The Shops at Houston Center shopping mall, so it would appear that developers Geoffrey Jones and William Denton are banking on creating something of a retail district in the area (Mr. Denton developed a similar project in Denver that opened in 1998). To induce the private investment in the project, the City of Houston and Harris County have provided over $13 million in development grants and local officials redrew the boundaries of a tax increment reinvestment zone to include the project.
As is typical of such deals, the project is not without risks. For over a generation now, Houston’s retail and entertainment areas have gravitated away from the downtown area, perhaps best reflected by the Galleria area about seven miles west of downtown. The developers are also counting on notoriously air-conditioning-conditioned Houstonians to choose an outdoor urban experience rather than the indoor suburban outing that has become the norm over the past several decades. Nevertheless, the recent success of similar (albeit smaller) projects in the Houston area is probably making the developers and prospective tenants more bullish on the project.

Could you pass this along to O’Reilly?

Bill O'Reilly2.jpgAlways a source of common sense, the W$J’s George Melloan passes along this timely column today in which he patiently explains that demagogic calls for more control of energy markets is precisely the opposite approach that legislators need to be taking in response to rising energy prices. In so doing, he passes along this pearl of simple wisdom, which the confused Bill O’Reilly could really use:

But it’s also deplorably true that when constituents complain about soaring prices of natural gas and gasoline, [politicians seeking more regulation] have a ready scapegoat, “the giant oil companies.” Anyone still buying that line should ask himself why the “giant oil companies,” with all their market power, somehow couldn’t prevent crude oil from collapsing to $10 a barrel a few years ago.

What? You mean there is discovery in a civil lawsuit?

Spitzer52.jpgThis Wall Street Journal ($) article reports that New York AG (“attorney general” or “aspiring governor,” take your pick) Eliot Spitzer is shocked, yes, shocked that he and his office may be subjected to discovery in the civil lawsuits that Spitzer is pursuing against former AIG chairman and CEO Maurice “Hank” Greenberg and former NYSE chairman and CEO, Richard Grasso:
The Journal reports that a subject of the defense’s quite reasonable discovery requests in both the Grasso and Greenberg lawsuits involve internal reviews that the NYSE and AIG conducted after both companies had been pressured by Spitzer to oust the executives. Grasso and Greenberg contend that the internal reviews — which mirror Spitzer’s cases against the two men — were shams because the companies had incentives to blame past managers to curry favor with the Lord of Regulation:

“Mr. Spitzer was personally involved in pressuring a firm to help the AG’s office try to make a case against Grasso, and he ought to be willing to explain that,” says [Gerson] Zweifach, [a] Grasso lawyer.
“We have many reasons to believe the AG colluded with AIG to concoct an investigation that would justify the forced retirement of Mr. Greenberg and baseless ‘fraud’ accusation made by the AG on national TV,” said Nicholas A. Gravante, Jr., an attorney for Mr. Greenberg with Boies, Schiller & Flexner LLP. “We intend to use every available legal option to force the AG to turn over all evidence to which Mr. Greenberg is entitled.”

H’mm. I wonder whether Spitzer’s dockside bully tactics will work on a civil court judge?

The focused Mr. Skilling

Jeff SkillingT2.jpgFollowing on this earlier profile, the Chronicle’s Mike Tolson provides this extensive profile today of former Enron CEO Jeff Skilling as he gears up for the commencement of the Super Bowl of Enron criminal trials next Monday.
Echoing thoughts that have long been presented on this blog, Skilling in the article talks about the difficulty of defending himself in an intensely anti-Enron environment:

Skilling, as ever, insists Enron was a great, innovative company that did not deserve the fate that befell it.
“It was a complicated business, and the fact that it was complicated led to misrepresentations and a lot of what I call the urban myth of Enron,” [Skilling] said.
Rather than gather enough information to understand it, he said, people accept popular notions that it was a house of cards, perpetuated by fraud, and that Skilling was a master manipulator of impressionable young MBAs and a supersmart bamboozler who persuaded investors to buy overpriced stock so he could keep raking in fortunes in stock options.
“The way I have been portrayed is a caricature,” he said. “I don’t care what book or movie or article you are talking about, the caricature has been created and the real person kind of loses out in the process.”

Then, Skilling asks a very common sense question:

“If I were who I have been made out to be, could I have built a company? Who would have followed such a guy that has been portrayed like that?”

Bashing this year’s Super Bowl city

super bowl xl.jpgYesterday’s league championship games decided that the Steelers and the Seahawks will tangle in Super Bowl XL, but it remains decidedly unclear whether this year’s big game in Detroit will be the hot ticket of Super Bowls past.
As noted in previous posts here and here, last year’s Super Bowl host city Jacksonville was ill-equipped to handle the logistical demands of handling the Super Bowl. Now, as Phil Miller notes in this post, Detroit is getting even a worse reaction from from prospective Super Bowl attendees than Jacksonville:

With the NFL’s first cold-weather Super Bowl in 14 years, and only the third one in the event’s 40-year run, just three weeks away, many of the firms that arrange Super Bowl hospitality trips report that clients are not as eager to go this year.
The tepid response is largely due to the expected cold weather, with the average high termperature in February in Detroit at 36 degrees. That combined with the city’s lackluster reputation, have led some clients to depart for other locales such as Vegas and the Caribbean for viewing parties, or simply taking a pass and booking early for the 2007 game in south Florida.

Well, so much for building a stadium to get a Super Bowl to promote the city!
That’s from the latest issue of the Sports Business Journal. The article starts out by mentioning that Dan Marino and John Elway will be raising money for their charities during Super Bowl week – in Las Vegas. Ouch!

Speaking of football, here is a nice story about a couple of football fans who have a special interest in the upcoming Super Bowl.

Flying the friendly chapter 11 skies of United

UAL-logo12.gifAfter wallowing over three years in chapter 11, United Airlines parent UAL Corp. finally emerged from bankruptcy this past Friday (previous posts here) amidst the usual wave of optimism that greets such achievements. Recent trading in bankruptcy claims and UAL’s unsecured bonds indicates that the reorganized UAL’s stock might perform better than anticipated, which would generate more for unsecured creditors than the estimated four to eight cents on the dollar dividend that UAL estimated during the disclosure and confirmation hearings in regard to its chapter 11 plan.
Count me as not so bullish on the reorganized UAL’s prospects.

Continue reading

Reflection of a Mickey Mouse league

referee_bop_bag200.jpgOne of the perceptions that the University of Houston athletic teams have fought since the demise of the Southwest Conference a decade ago is that they compete in a “Mickey Mouse” conference — that is, Conference USA.
A conference in D-I athletics these days is defined as a “major” conference by whether the conference has a tie-in to the Bowl Championship Football Series that sponsors the richest bowl games and the annual National Championship game, which Texas won this past season. Thus, institutions in conferences such as the Big 10, the Big 12, the Pac-10, the Atlantic Coast and the Big East all reap more money and prestige because of their conference’s automatic berth in the BCS bowl games. On the other hand, conferences such as CUSA that have no tie-in to the BCS struggle financially and with membership, as institutions in such conferences continually seek to migrate into a more lucrative membership in a BCS conference.
So, with that backdrop, it’s not as if CUSA needs any further reinforcement that it’s not among the “major leagues” of major college athletics. Therefore, CUSA officials were in full-blown, public relations-crisis mode earlier this month when a CUSA football officiating crew was ridiculed by the announcers on national television during the Outback Bowl game in Orlando between the Florida Gators and the Iowa Hawkeyes. The officiating crew made at least half-a-dozen clearly wrong calls in the game, mostly against Iowa, including a game-deciding offsides call that nullified a Hawkeye recovery of an onside kick during a furious comeback in the closing minutes of the game.
After that call allowed Florida to hang on to a 31-24 victory, CUSA’s official in charge of officiating attempted to stem the public relations debacle by publicly apologizing and announcing that he was launching an investigation into the officiating crew’s performance. Nonetheless, the CUSA crew’s performance in the Outback Bowl will probably prompt BCS conference schools to decide not to use non-BCS conference referees in future bowl games between teams from BCS conferences. In short, yet another slap in the face for CUSA.
But it turns out that the CUSA referees’ performance in the Outback Bowl was hardly an aberration. As this Michael Murphy/Houston Chronicle article reports (SportsPageMagazine.com report here), a CUSA officiating crew was generally horrible during the UH-University of Alabama-Birmingham basketball game last night in Birmingham. However, one bad call topped all others — the officiating crew called a technical foul against University of Houston basketball coach Tom Penders just before halftime for collapsing on the sideline!:

With 52.6 seconds to play in the first half, Penders rose to his feet, staggered and then crumpled to his hands and knees on the sideline. After a few moments, Penders went flat as medical personnel rushed to attend to him.
[CUSA referee John] Hampton strolled by, paused and called a technical foul on Penders, apparently thinking the coach was reacting to a questionable intentional foul call on Smith.
Even when Penders was taken off the court on a stretcher, Hampton refused to rescind the technical. UAB’s Carldell Johnson made both free throws for a 48-44 lead.

UAB won by three points. Kevin Whited has more here.
Inasmuch as the only real justification for UH to subsidize the not insubstantial operating deficit each year for its athletic program is the public relations benefit that the university reaps from its athletic teams, are those millions being wisely-spent when the UH teams are effectively forced to compete in a Mickey-Mouse conference such as CUSA?

Profiting from criminalizing business

weissman12.jpgAndrew Weissmann, the former head of the Enron Task Force who stepped down last year at the conclusion of the Task Force’s disastrous Enron Broadband trial, is joining the New York office of law firm Jenner & Block where he will specialize on internal corporate compliance and investigations, including representation before the Justice Department, the Securities and Exchange Commission, and state and local authorities. Peter Lattman — whose WSJ Law Blog has quickly become one of my daily reads –comments on Weissmann’s hiring in the context of the New York legal scene here.
Meanwhile, as a result of Weissmann’s dubious prosecutions while leading the Task Force, four Merrill Lynch executives have unjustly had their careers destroyed and their personal freedom lost, and thousands of employees around the country lost their jobs as an American accounting icon was improperly prosecuted out of business.
That’s not the typical resumÈ that one would think would land a partnership at a prestigious law firm.

Checking in on oil prices

oil and gas well at sunset8.jpgWhile the price for natural gas has receded quickly from the post-hurricane highs of last summer, oil prices have been a different story.
Crude-oil future contracts on the New York Mercantile Exchange climbed about a dollar yesterday, settling at a four-month high of almost $67 a barrel. Benchmark light, sweet crude-oil futures for February rose $1.10 to settle at $66.83 a barrel, which was the highest closing price since mid-September. Although inventory data indicates that U.S. crude and product stocks are at above-average levels, market jitters remain over the possibility that international oil supplies could be disrupted further as a result of political problems in both Iran and Nigeria.
Clear Thinkers favorite James Hamilton is thinking about what the rise in oil prices indicates, and he continues to believe that the current oil price rise is demand-driven, unlike the speculative bubbles of past spikes.