The Woodlands is a dynamic suburban community on Houston’s far northside, but it’s not the type of place that one normally associates with business scandals.
However, late last week, it appears that The Woodlands had its own real business scandal. The revelations began unfolding on Thursday when Chicago Bridge & Iron — the Netherlands-based engineering company that maintains its worldwide administrative office in The Woodlands — filed an 8-K (i.e., the regulatory filing that advices the investing public of significant corporate events) that contained this agreement, under which CBI controller Tommy C. Rhodes will be paid a $1.8 million ìstay bonusî so long as he remains with the company until the end of June. However, the more interesting part of the deal is that Rhodes must ìwithdraw and dismiss or close any and all complaints he previously has filed against the company.î This follows an earlier 8-K from the company on October 31, 2005 that disclosed that a senior member of CB&Iís accounting department had alleged accounting improprieties and that, as a result, third quarter 2005 numbers would be delayed.
All of that was followed on Friday with this announcement in which the company disclosed the termination of Gerald M. Glenn as Chairman, President and Chief Executive Officer, and Robert B. Jordan as Executive Vice President and Chief Operating Officer. Then, on Saturday, the Chronicle reported that Messrs. Glenn and Jordan’s attorney was already taking the approach that a good offense is the best defense, asserting that the executives “are being targeted by a results-oriented process where the reputations of honest men have been unfairly called into question. These men are not going to hand over their good names for the sake of a misguided, biased and incomplete review.”
Meanwhile, the company announced that “all previous earnings guidance issued by the company for 2005 is no longer operative. When given, the guidance will be subject to closing the books of the company for 2005 and completion of the audit committee’s previously announced ongoing investigation.”
Not exactly Enronesque, but pretty juicy nonetheless for The Woodlands.
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What I’d like to know is why a company named Chicago Bridge & Iron has it’s US corporate offices in The Woodlands, Texas and it’s worldwide headquarters in The Hague? Where exactly does “Chicago” enter into the picture in here? Never quite understood that…..
The company was founded in Chicago right around the time of the World’s Fair of 1894 and was initially involved primarily in bridge design and construction. But with the growth in the oil industry, CBI morphed into design engineering and field construction of water storage tanks, tanks for storage of petroleum and other refined products, and construction of refinery process vessels.
The company became a worldwide company in the 1920’s and 30’s, so the fact that its corporate headquarters is outside the U.S. is not really that surprising. I suspect the reason for the company’s office in The Woodlands is to be close to the oil and gas industry, which still generates a lot of CBI’s business.
Anything more on the CBI story ?? It looks like a texas size soap opera
No news since Monday, when the stock fell about 25% on the news from last Friday. My sense is that the securities fraud lawsuit probably has been commenced already, but I have not heard where it has been filed. I will update when that information becomes public.