Monthly Archives: April 2006

Charting Lay-Skilling

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LaySkilling6H.jpgIn connection with this NY Times/Alexei Barrionuevo and Kurt Eichenwald article on the upcoming testimony of former key Enron executives Ken Lay and Jeff Skilling, the Times provides this handy chart of the government’s core allegations in the trial.
The chart underscores the point made earlier here and here on why the Enron Task Force does not want the Lay-Skilling jury to see the indictment against Lay and Skilling, and does not want the Lay-Skilling defense team to be allowed to question witnesses about it — a substantial number of the allegations that the prosecution has elicited from its witnesses to date are simply not in either the indictment or statements in compliance that the prosecution filed against Lay and Skilling.
Moreover, the chart also underscores the Task Force’s slimmed down case (just half a dozen key witnesses) and — despite the conventional wisdom — that the limited areas of alleged wrongdoing make this an eminently defensible case for Lay and Skilling.

When even Tiger can’t help

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tigerbuick.jpgThe Enronesque experience of General Motors has been a common topic on this blog, but you know it’s gotten bad for the automaker when even Tiger Woods’s endorsement appeal cannot bolster one of the company’s brands. This John O’Dell/LA Times article reports about the slide into oblivion of GM’s Buick brand:

Buick was the seed from which General Motors Corp. sprouted. And for generations, the luxury car line was one of GM’s most bountiful divisions.
The Buick brand filled a crucial niche for the auto giant, attracting well-heeled consumers who wanted more than an Oldsmobile but weren’t comfortable with the flash of a Cadillac.
Now as GM faces the threat of bankruptcy, Buick has emerged as an emblem of the auto giant’s broader woes. GM sold nearly a million Buicks in the U.S. in 1984. By last year, sales had sputtered to 282,288, a 70% decline over two decades, the biggest of any major auto brand.
Buick has broken down in U.S. showrooms for the same reasons that Americans deserted GM brands such as Chevrolet, Pontiac and Olds in favor of Toyota, Honda and Nissan. [. . .] Even using golf superstar Tiger Woods as pitchman hasn’t helped Buick. [. . .]

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Former Westar executives sentenced

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westar4.jpgAlthough overshadowed by the Lay-Skilling trial, former Westar Energy, Inc. CEO David Wittig and his corporate right hand man Douglas Lake were sentenced yesterday to 18 and 15 years in prison after being convicted last year of looting the utility of millions of dollars in unapproved compensation. An earlier contentious trial of the two former executives had ended in a mistrial in late 2004 after another federal jury in 2003 convicted Mr. Wittig of bank fraud charges in a case that was not directly related to Westar. Federal prosecutors had sought life sentences against the 50 year-old Wittig and the 55 year-old Lake.
Wittig and Lake each faced charges relating to allegations they looted the largest electric utility in Kansas after the pair left Westar late in 2002 amidst allegations of misuse of corporate funds. Subsequently, Westar under Mr. Wittig was implicated in the scandal surrounding efforts to fund Houston Congressman Tom DeLay’s political action committee. Westar’s contribution of funds during 2002 to the DeLay’s PAC was among the allegations of wrongdoing that led to DeLay’s indictment in Travis County last year.

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DeLay is done

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DeLay10.jpgThis NY Times article and this WaPo article are reporting that Houston Congressman and former House Majority Leader Tom DeLay will announce today that he is leaving Congress and pulling out of his ongoing re-election bid. Earlier posts on DeLay’s mounting troubles over the past couple of years are here. Although DeLay won the Republican primary last month in his re-election bid, he still faced a tough re-election race against former Rep. Nick Lampson in November.
Once one of the most powerful politicians in Washington, DeLay was indicted in Travis County (Austin) last year for his role in allegedly routing illegal campaign contributions into Texas during the 2002 elections that followed a controversial redistricting effort in Texas that cemented Republican dominance of the Texas Congressional delegation. DeLay is also at the center of an increasingly broad Justice Department corruption probe of former Republican lobbyist and top DeLay fundraiser Jack Abramoff and former DeLay aides. Two of DeLay’s former aides have pleaded guilty in the investigation and Abramoff was sentenced last week to over five years in prison after copping a plea deal earlier. DeLay has not yet been accused of a crime in the probe, but he appears to be a target of the ongoing investigation.
However, even if DeLay is not charged, he clearly displayed poor judgment in his personnel decisions. As this Wall Street Journal ($) editorial observed today:

What caused this outbreak of greed is impossible to know for sure. Clearly a sense of entitlement set in among some Republicans, who forgot why they were elected and began to believe that power was its own reward. We can recall when Republicans, back in the early 1990s, proposed to reduce the size of their Capitol Hill staffs in order to reduce the scope of Congressional mischief. That idea went away pretty fast once they became a majority.

Could this be the reason?

Defending “Courting Failure”

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Courting failure2.jpgUCLA law professor Lynn LoPucki‘s book last year — Courting Failure : How Competition for Big Cases Is Corrupting the Bankruptcy Courts (UM Press 2005) — is still reverberating through corporate reorganization and bankruptcy legal circles. As noted in this earlier post, Professor LoPucki has been studying for many years the issue that he characterizes as the “race to the bottom” — i.e., bankruptcy courts in certain jurisdictions (primarily Delaware and New York City) bending federal bankruptcy law to market themselves to debtors’ lawyers who often are instrumental in choosing the venue of big business reorganization cases. Professor LoPucki argues that court competition caused high reorganization failure rates in Delaware and New York during the period from 1991-96 and then high reorganization failure rates nationally when the competition spread to the rest of the country in 1997.
In September 2005, the University of Wisconsin Law School convened a conference of leading bankruptcy scholars to provide a critique of Professor LoPucki’s book, and an upcoming symposium issue of the Buffalo Law Review will include the papers presented at that conference along with this response from Professor LoPucki, the abstract of which provides in part as follows:

By historical accident, the bankruptcy venue statute gives large public companies their choice of bankruptcy courts. Over three decades a competition for those cases has developed among some United States Bankruptcy Courts. The most successful courts – Delaware and New York – today attract more than two thirds of the billion-dollar-and-over cases. The courts compete principally because the cases represent a multi-billion dollar a year industry in professional fees alone, because local lawyers pressure judges to compete, and because judges who lose the competition are stigmatized and may not be reappointed. […]

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And in other baseball news . . .

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Baseball_Ball_ROMLB-resized200.jpgThis earlier post noted that the Tampa Bay Devil Rays have been the train-wreck of Major League Baseball for the club’s entire existence. Now, this Landon Thomas/NY Sunday Times article explains how former Houstonian Andrew Friedman — son of longtime Houston attorney J. Kent Friedman — is taking an innovative approach as Devil Rays general manager in attempting to make the ballclub competitive in the brutal American League East Division. Interestingly, the article notes that the Devil Rays best player is another native Houstonian — outfielder Carl Crawford — but does not even mention (even in a picture!) another former Houstonian who was recently hired by the Devil Rays to help Friedman: former Stros GM Gerry Hunsicker. Hunsicker’s star sure has dimmed since leaving Houston, hasn’t it?
Meanwhile, this San Antonio Express article provides the latest on San Antonio’s effort to lure the Florida Marlins (previous posts here and here):

[Bexar County Judge Nelson] Wolff said he has received 36 non-binding, oral commitments from area businesses to rent suites. That information, he said, will be passed on to [Marlins owner Jeffrey] Loria on Monday in Houston, where a San Antonio contingent led by Wolff . . . will watch the Marlins’ season opener against the Astros as Loria’s guest.

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Batter up! Stros 2006 Season Preview

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Clemens spraying Oswalt2.jpgIt’s Opening Day today in Houston as the Stros take on the Marlins this afternoon at Minute Maid Park, so it’s time for my annual preview of the Stros upcoming team and season (last season’s preview is here). Let’s first review what happened over the 2005 season and the off-season:

First, the improbable ride to the 2005 World Series.
An off-season snarky week in Strosland and Richard Justice’s continued petty criticism of Drayton McLane and Tim Purpura.
Why Milo Hamilton is wrong when he claims that Willy Taveras should have been National League Rookie-of-the-Year.

Berkman, oswalt, burke2.jpg

Comparing bad off-season deals and Roger Clemens, player agent.
Reviewing the top ten Stros minor league prospects.
Acquiring Preston Wilson may upgrade leftfield, but he’s no slugger.
Why Gene Elston should still be the Stros play-by-play announcer and the Stros connection to the latest Hall of Fame inductee.
The muddle over the disability insurance policy on Jeff Bagwell (here, here, here, here and here), the greatest player in Stros history prepares for the Hall of Fame, and something about steroids that Stros fans may soon be hearing about.

Chris Burke6.jpgSo, with that backdrop, the Stros begin their quest to make the National League playoffs for the seventh time in the past ten seasons as they close out the remarkably successful Biggio-Bagwell era. I was one of the few to predict that the light-hitting 2005 club could contend for yet another playoff berth, although even I wavered during the early part of the season and even later in the season. But after a horrible 15-30 record in their first 45 games, the 2005 Stros were a remarkable 74-43 for the remainder of the regular season to lock up the playoff berth with only three less wins than the 2004 club that came within a game of the World Series.
Most experts are again predicting that the Stros will decline during the 2006 season. Essentially, the contrarian view of the Stros is that inexperience in starting pitching, combined with the Stros’ overall lack of hitting and hitting prospects in the high minor leagues, will finally catch up with the Stros and cause them to finish closer to a .500 record than the 90-95 wins that are usually necessary to sew up a playoff berth (Baseball Prospectus’ Joe Sheehan has the Stros finishing 80-82). Ensberg6.jpgAlthough I understand the contrarian view, my rose-colored glasses view of the Stros is that the club has enough to make at least one more playoff run at the end of the Biggio–Bagwell era in which the Stros have posted a winning record in five consecutive seasons and 12 of 13 since 1993.
This season’s club will likely be better than last season’s club from a hitting standpoint, although that’s really not saying much. Last season’s club ended up at a -26 team runs created against average (“RCAA,” explained here) for the regular season (12th out of the 16 National League teams), which means that the 2005 Stros scored 26 fewer runs than an average National League team would have scored during the season.

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The remarkable Jack Burke

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burkejj.jpgOne of things that makes Houston such an endearing place to live is the city’s many characters, one of the most colorful of whom is Jack Burke, Jr., the former PGA Tour professional who retired at the age of 35 from the Tour in the late 1950’s to develop and operate Houston’s Champions Golf Club with his lifelong friend, the late Jimmy Demaret.
Burke — who is now 83 years old, but looks and acts like a much younger man — still runs Champions, which is one of Houston’s one of Houston’s finest golf clubs and the home club of such prominent golf swing gurus as Jim Hardy and Steve Elkington. I have had the pleasure of enjoying several lunches with Burke over the years, and they have always been highly entertaining as he holds forth with his sharp-edged and witty observations about the state of golf and its fascinating cast of characters.
Consequently, this Steve Campbell/Houston Chronicle article on the 50th anniversary of Burke’s 1956 Master’s Tournament victory is particularly interesting to me. Playing under the worst weather conditions in Master’s Tournament history (cold with 40-50 mph wind gusts), Burke charged from nine strokes back on the final day of the tournament with a one-under-par 71 to beat by a stroke the third round leader, a 24-year old car salesman from San Francisco named Ken Venturi. Twenty-nine players ó including Byron Nelson, Jimmy Demaret and Julius Boros ó shot 80 or above at Augusta National that day and the Sunday scoring average of 78.261 remains the highest for the last round in Master’s Tournament history. Burke’s one-over-par winning score of 289 matched the highest since the Masters began in 1934.

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The Osteen Empire

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osteen2.jpgThis Ralph Blumenthal/NY Times article profiles the ubiquitous Houston-based mega-pastor, Joel Osteen (prior posts here) in a quite positive light:

After a warm-up of rousing original rock and gospel hymns with lyrics and videos flashing on jumbo screens around the arena, Mr. Osteen began to speak. “We come with good news each week,” he told the packed crowd at his gigachurch in his native Texan twang.
The news for Mr. Osteen has lately been very good indeed: two weeks ago he signed a contract with Free Press, an imprint of Simon & Schuster, that could bring him as much as $13 million for a follow-up book to his debut spiritual guide, “Your Best Life Now: 7 Steps to Living at Your Full Potential,” which, since it was published by Warner Faith in 2004, has sold more than three million copies. “I believe God wants us to prosper” is the gospel according to Mr. Osteen, 43, who offers no apologies for his wealth.
“You know what, I’ve never done it for the money,” he said in an interview after Sunday’s service, which he led with his glamorous wife and co-pastor, Victoria. “I’ve never asked for money on television.” But opening oneself to God’s favors was a blessing, he said. “I believe it’s God rewarding you.
Mr. Osteen’s motto is: “God wants you to be a winner, not a whiner.” […]
He is not shy about calling on the Lord. He writes of praying for a winning basket in a basketball game, and then sinking it; and even of circling a parking lot, praying for a space, and then finding it. “Better yet,” he writes, “it was the premier spot in that parking lot.”

But R. Albert Mohler, Jr., the president of The Southern Baptist Theological Seminary, one of the largest seminaries in the world, is a tad skeptical of Reverend Osteen’s message:

The first question is this — Would anyone watching his television program, or sitting in his vast church facility, hear in Mr. Osteen’s message a clear and undiluted message of Gospel proclamation? Would this person have any reason, based on hearing Mr. Osteen’s message, to know himself as a sinner and to understand how the cross of Christ is the only ground of his salvation? Would he come to know that Jesus the Christ is fully human and fully divine, and that He came in order that we might have everlasting life — not just a good parking space?

Ben Witherington has more.