The PG&E bankruptcy has come back into the news for us, in a small but interesting way. One of the key players in this is the United States Trustee for Northern California and Nevada, Linda Stanley. The US Trustee is a public watchdog over bankruptcy cases. Stanley has won praise from consumer groups for her efforts in the PG&E bankrupcy case to speak for ratepayers' interests, particularly on the point of having an oversight committee with ratepayer representatives to monitor the utility's future operations, and questioning the extravagant legal bills PG&E was racking up in the bankruptcy proceeding. And what is her reward for her efforts? She's just been fired by attorney general Ashcroft! In the middle of a term of office. The White House says it was a routine replacement, but others say that to boot someone in mid-term is extraordinary.
Halliburton is being sued by its stockholders for the accounting shenanigans they pulled under Dick Cheney.
Another company that has admitted to past misreporting of its profitability is Xerox. Their overstated profits exceed $6,000,000,000, a new record. Their chairman, Anne Mulcahey -- who goes into the record books as the first woman we know of to break into this white male world of extremely overpaid crooked corporate heads -- got a $10,100,000 bonus. Another is Rite Aid -- four executives including the chairman are now criminally charged, for things like destroying evidence, tampering with witnesses, and hiding company money in personal funds.
Another that is retracting its previous profit figures is Disney. Qwest may soon follow. Rumors are saying General Motors could join the list. A rumor said that Clear Channel Communications (the radio semi-monopoly) is under investigation, but they vigorously deny it. One that is under investigation, especially in the UK, is General Electric. MCI WorldCom, the guilty company currently most talked about in the media, turns out to have a favorite pet senator that they can count on for support: Trent Lott. They gave him around $1,000,000 in contributions. (Enron's pet senator was Phil Gramm, who is wisely not running for re-election.)
Enron, meanwhile, turns out to have under-reported their profits at the time while they were raking it in from California. They hid about $1,500,000,000 of windfall income because it would look bad during the crisis. And, to continue yesterday's observation that the various investigations are not yet recovering any of the hidden money, senators Baucus and Grassley, whose Senate Finance Committee is investigating Enron, say that the company, despite all the documentation it has turned over so far, is still withholding information about its offshore tax shelters. Clearly some of the skunks are hoping to still have their personal profits handy when all the dust settles.
Meanwhile, the investigation by federal prosecutors could soon be digging into the various banks that financed Enron's games, including Barclay's and J.P. Morgan Chase. Many individual bankers may have screwed their own employers by doing favorable deals for Enron and then getting a taste of the profits. Three former bankers at one British firm, National Westminster Bank, have been charged with wire fraud in an Enron deal.
Another Enron victim was the state of Connecticutt. They loaned Enron $220,000,000 as part of a deal to run a garbage-burning power plant, and of course now can't get the money back. They're doing an investigation of their own to add to all the others.
One of Andersen's competitors, Ernst & Young, is getting a taste of Andersonesque trouble in their Dutch division. It could spread. Today or yesterday, National Public Radio (I think) read a letter on the air from an accountant who said that he'd worked for three of the big five accounting companies, and all three had "document destruction policies" just like Andersen's when it came to covering up the truth for profit. The whole group of them -- Andersen, Ernst & Young, Deloitte & Touche, PricewaterhouseCoopers, and KPMG -- all do a considerable business in helping rich customers avoid taxes by means that stretch legal limits, and protect the techniques by making customers sign an agreement to keep them confidential. These techniques consist largely of obfuscations that make it unlikely for an audit to track down the money, not the use of genuine tax breaks or loopholes.
Another energy department official has come up on the list of those with "the appearance of a conflict of interest": Robert G. Card (not to be confused with white house chief of staff Andrew Card), the undersecretary who runs the department's Office of Environmental Management. The issue that is troubling some democrats is that he is in a position to hand out contracts for nuclear waste cleanup to his recent former employers, the Kaiser-Hill Company and CH2M Hill (which are apparently both part of Kaiser Group Holdings). The administration is saying that he's just being picked on by people trying to stonewall the Yucca Mountain nuclear waste repository.
How could I have forgotten this? It turns out that one of the companies that helped rape California during the price spiral was Ross Perot's. Perot Systems sold energy companies a set of maps that showed them where the good spots to extract a profit from shortages are. They outlined the techniques that companies could use to squeeze money out of the state. A spokesman for Perot Systems said they actively warned the California Power Exchange and the Independent System Operator about the legal flaws that would lead to them getting reamed. They say the report that turned up in papers from Reliant Energy was meant for the state, not for generating companies. State Senator Joseph Dunn, the leading legislative investigator of the power crisis and the one who revealed the Perot Systems documents to the public, was not convinced by this claim. He says the text definitely sounds more like it was meant for Reliant than that it was meant for the state. And sure enough -- an internal e-mail has come out showing that Perot Systems offered help on gaming the California energy market to Edison International. Perot has agreed to testify before Dunn's committee on July 11. Reliant, by the way, is under SEC investigation.
Dynegy, formerly one of Enron's main competitors, has been downgraded to junk status by Moody's. Their CFO recently resigned.
El Paso Natural Gas was a company that got some mention on last year's electricity crisis page, since they apparently responded to the surge in demand for power by holding back natural gas supplies and starting some shortages of their own. Well, investigators finally started digging into that business, and one target they homed in on was its treasurer (and senior vice president), Charles D. Rice. Well, on June 2, Rice was found dead in his home of a gunshot wound, an apparent suicide. He had been suffering from significant health problems, and his bosses were nudging him toward early retirement. El Paso's stock plummeted... and in response, they announced that they are reducing their involvement in Enron-style energy futures trading, and going back to just selling gas. They deny that the suicide means anything about the state of the company or what investigators might dig up.
Here's a nice tidbit: there are increasing rumors that somebody will soon resign from the Supreme Court, possibly justice O'Connor, maybe even Rehnquist. The white house is said to have the replacement selection process under way, and the front runner is said to be White House Counsel Alberto Gonzalez. But the democrats are rumored to have a thick "Enron file" on Gonzalez which could make his confirmation ugly.
From the graft & corruption scrapbook: the Republican party is backing a move to make it legally easier for churches to be politically active without risking their tax exempt status. And yet the same right-wing forces are trying to take away the tax exempt nonprofit status of People for the Ethical Treatment of Animals, for far less direct involvement in party politics than what many conservative christian groups are trying to bring into their churches.
The Clinton administration had moved to finally ban snowmobiling in Yellowstone Park -- something environmentalists had long been pushing for, and which the Park Service would have done on their own if higher-ups hadn't held them back. Well, there's a snowmobile industry lobby in Washington, and apparently they have access. The Bush administration is dumping the ban.
Another move: the white house is backing off a proposal to tax stock options for employees more like regular pay, with social security withholding. Corporate America was quick to praise the preservation of this tax avoidance technique.
Vladimir Putin of Russia recently said of George W. Bush,
after a summit with him, "I must say that the best lobbyist of the interests
of U.S. companies will be American President standing here."
There's been a significant amount of news about global warming. Most embarrassing for the Bush administration was a report by their own Environmental Protection Agency that undercut their policy of minimizing the problem and taking only token measures. Despite the atmosphere of energy industry ass-kissing that pervades this administration, the EPA found that the issue is significant and serious and that strong measures need to be taken. Bush had to go out there and try to brush off his own administration's work, because as Philip Clapp of the National Environmental Trust put it, the report "undercuts everything the president has said about global warming since he took office." His dismissal of this report comes across about as convincing as the recent administration argument that toxic sludge protects fish.
The country of Japan has ratified the Kyoto Protocol. The European Union did so earlier. Some countries have already made a surprising amount of progress toward the protocol's goals for reduced carbon dioxide production. The European Environment Agency says that six EU countries are already more than halfway to the Kyoto Protocol goals for the year 2012, and Germany has almost achieved the 2012 goal already. That goal is to release 8% less carbon dioxide than they did in 1990. This goal is most difficult in countries that have a history of less wealth and less industrialization, like Spain. But it is these countries where the goal is least crucial. Where it's most crucial, of course, is in the USA, where we belch out a huge percentage of the world's total carbon dioxide, and thanks to people like the Bushes, we have done almost nothing about it. The Senate Environment Committee recently passed (by one vote) a bill to cut back on power plant carbon dioxide production, and other smog, but senate republican leaders are saying the bill will die on the floor.
A new study by US climate scientist Stephen Schneider and Swedish energy economist Christian Azar has attempted to measure the effect on the economy of solving the global warming problem -- not just meeting the Kyoto Protocol goals, but actually fixing the problem for good. They found that if carbon dioxide production continues unchecked, the world economy will likely grow at such a rate that the average person's wealth will increase fivefold over the next hundred years. And what if we cut back and avoid global warming? According to their work, that would make this fivefold increase take a bit longer. Instead of taking 100 years, it would take... 102! That's right, it would take two percent longer. Says Schneider, "The wild rhetoric about enslaving the poor and bankrupting the economy to do climate policy is fallacious, even if one accepts the conventional economic models." The basis of their argument is the finding by the UN Intergovernmental Panel on Climate Change that the cost of stabilizing carbon dioxide output over the next century would be between $1,000,000,000,000 and $8,000,000,000,000. That seems like a lot, but the expected economic growth predicted over the same period by the same experts shrinks that to a trivial proportion. In the shorter run, they predict that the Kyoto Protocol would delay prosperity over the next decade by six months.
And they probably didn't even figure in the true economic costs of global warming into the other scenario. In real life, it will eventually leave us poorer, not richer, if we do nothing. Can an extra bit of economic stimulus in the early part of the century really compensate for things like losing New York and Hong Kong and other coastal cities to flooding? Half the human race might be forced to move, in the end... Not to mention the increases in various diseases that some foresee as a consequence of global warming.
In spite of this, the governments of Australia and Canada
recently joined the US in rejecting the Kyoto Protocol on the grounds that
it would cost them too much.
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