Memorial service set for Ken Lay…Merrill Lynch settles Enron lawsuit…Khodorkovsky attorney warns U.S. companies about Russian energy security…
A memorial service will be held in Houston for Enron founder and convicted felon Ken Lay. A family spokeswoman says the service will be held at First United Methodist Church. Further details are pending. Lay died yesterday while vacationing in Aspen, Colorado. A Colorado coroner says Lay died of severe atherosclerotic cardiovascular disease. He was 64. Mesa County coroner Robert Kurtzman says his preliminary examination showed clogged coronary arteries to be the cause of death. Kurtzman added the autopsy revealed Lay had a previous heart attack. Lay, who described himself as naturally optimistic, displayed no signs of ill health throughout his grueling four-month trial. Lay faced spending the rest of his life in prison after his May fraud and conspiracy convictions. Lay’s appeal was pending. His attorneys can now file court papers, with the death certificate, asking U.S. District Judge Sim Lake to vacate the conviction. Prosecutors have declined comment.
His death means Ken Lay will never serve a day in jail. But could it also erase his conviction? A legal expert thinks so. Roma Theus is vice chairman of the Corporate Integrity and White Collar Crime Committee of the Chicago-based Defense Research Institute. She’s also a former federal prosecutor. Theus says Lay’s attorneys have a great opportunity to vacate his conviction. Lay’s appeal was pending when he died of heart disease yesterday. According to Theus, the law views that as if Lay had never been indicted, tried and convicted. The defense can now take the death certificate to the judge and ask that the conviction be vacated. That would be bad news for prosecutors using the criminal courts to try to seize millions of dollars in Lay’s assets. But Theus says other federal agencies, as well as Enron shareholders, could still go after the estate in civil courts.
Merrill Lynch today agreed to pay Enron $29.5 million to settle its part of a lawsuit filed against ten banks. The lawsuits accused the banks of failing to prevent the Houston-based energy company’s 2001 collapse. The New York-based securities firm didn’t admit or deny wrongdoing. Rather, it said in a statement that it agreed to settle the so-called megaclaims suit “to avoid the costs and uncertainties of further proceedings.” The agreement must be approved by a New York bankruptcy judge. Enron filed for bankruptcy in December 2001 amid questions about its accounting and financial state. That triggered a flurry of litigation by both the company and its shareholders against a number of banks. Enron said remaining cases in the litigation involve Citigroup, Deutsche Bank, Barclays and Fleet National Bank.
Gazprom has appointed a Houston marketing representative and is opening a local office, and attorney Robert Amsterdam says Gazprom and Rosneft will be looking to participate in a wide variety of energy activities in Houston. Amsterdam is the international defense council for former Yukos CEO Mikhail Khodorkovsky, who is spending eight years in a Siberian prison camp for tax evasion and fraud–charges many consider to be politically motivated. The assets of Yukos were largely absorbed into state-owned Rosneft, which is due to go public on July 14th.
“This is state theft. And that the idea that these stolen goods could be put on to an international exchange with the assistance of international banks such as Dresdner Kleinwort is offensive to human rights, it’s offensive to international law and it’s a tragedy in respect to my client, who is in a Siberian concentration camp located beside a former uranium mine in the middle of Siberia beside the Chinese border. This is a prospectus–this Rosneft matter–with literally blood on it.”
There’s a Houston connection here–Yukos unsuccessfully filed for bankruptcy in a Houston court in late 2004 in a failed attempt to stop a Russian government-imposed dismantling of the company to pay for past-due taxes. Amsterdam wants to make Houston energy companies aware of hostility to foreign investors in Russia.
“I think Houston energy companies have to understand that the present situation in Russia is stacked against their interests, and that they would be best to have a very strong stand in Washington that demanded a level playing field for American and European energy interests. In the present non-transparent atmosphere, I find it amazing that companies can compete at all.”
Amsterdam continues to speak out about the treatment of his client.
“There’s a lawyer in this tiny town of Krasnokamensk that sees him. He was stabbed months ago in the face while he was asleep. He’s been in solitary confinement four times. He’s committed some grievous crimes–the last one was that he was drinking tea in an unauthorized area. The time before that he was sharing food with other inmates. And for this they put him in solitary confinement for five or ten days. And again, no leader, no western leader raised this issue for fear of somehow affronting Mr. Putin.
The Russian government contends that Khodorkovsky essentially stole state assets when he acquired Yukos cheaply through a controversial privatization in the mid 1990’s. Amsterdam continues pressing the European Union for new hearings about his case. He’s in Paris, preparing to visit Houston on the eve of the upcoming G-8 summit next week in Russia.
Galveston County lawmakers have requested a performance review of the University of Texas Medical Branch to assess the school’s budget constraints. The school announced last month that it will cut about 1,000 jobs from its work force of 13,000 to help stem operating losses. State Representative Craig Eiland says a review of the school’s financial data will help determine whether the layoffs are justified. And if so, the study would bolster the school’s requests for increased state funding, he says. University officials say rising medical costs, patients without insurance and shrinking government reimbursements are responsible for a growing gap in the operating budget. President John Stobo says he supports the performance review. Representative Larry Taylor, and Senators Mike Jackson and Kyle Janek also signed off on the request for a review by the Legislative Budget Board.
Officials in Nigeria report another oil rig raid. Gunmen today stormed an offshore oil rig and seized a security guard as they retreated. A Nigerian Navy spokesman says the armed men used several speed boats to get to the oil platform, where they forced their way aboard. The attackers told the rig’s owners that they were from a nearby community which has accused the oil firm of not living up to an agreement to provide jobs and other benefits. No comment from Nigeria’s Consolidated Oil Company, which owns the rig. Kidnappings in the Niger River Delta have become common in recent months, with militants using hostages to bargain for a greater share of the wealth from Africa’s largest crude oil producer.
The Labor Department reports the number of Americans filing first-time claims for unemployment benefits declined last week. It indicates the job market remains firm. The government says applications for jobless benefits totaled 313,000 last week, a decline of 2,000 from the previous week. Analysts had been looking for a slight increase, but the number is difficult to predict. The four-week moving average, which is less volatile, rose by 2,500 to more than 308,000. That’s at a level analysts believe portrays a healthy job market. The government reports on the June employment situation tomorrow.
A new report says the number of announced job cuts in the U.S. picked up speed last month. The outplacement firm Challenger, Gray and Christmas says planned job cuts topped 67,000 last month. It says that’s up 25 percent from May. Even so, Challenger cautions job cuts this year so far are running 19 percent below where they were a year ago at this time.
Another month of solid growth in online job recruitment activity. The Monster Employment Index was up four points in June–to 171–with broad growth across all nine Census Bureau regions. The second consecutive month of growth was driven for the most part by higher demand for white collar occupations such as management, finance and IT. Stepped-up efforts to recruit military related, healthcare, mining, and community and social services workers also contributed to the increase. Monster Worldwide says its index was up in nine of the 20 industries tracked. It was led by sharply increased demand for workers in mining, transportation, warehousing and wholesale trade. On the other hand, construction; accommodation and food services; and agriculture, forestry, fishing and hunting were among the eight industry sectors that declined.
A fresh snapshot of the nation’s services sector finds growth in June, but at a slightly slower pace than the month before. The Institute for Supply Management says its index came in at 57. A number above 50 indicates growth. The June showing is down from the previous month and slightly shy of expectations. In a statement, the group says comments coming from its members were mostly positive regarding current business conditions. They continue to be concerned about prices for raw materials and fuel.
A leading gauge for the housing sector rose slightly in May, an indication–according to the National Association of Realtors–that the market is stabilizing. The Pending Home Sales Index is based on contracts signed in May. While the index was up 1.3 percent from April, it was down more than ten percent from May of last year. The sale of a previously owned home is listed as pending when the contract has been signed and the transaction has not closed. Such sales are generally completed within a month or two of signing. NAR chief economist David Lereah says the slight change in the index suggests the market “is beginning to level out and consistent with the forecast for a “soft landing” for the housing sector.
Lockheed Martin Aeronautics is planning to cut about 130 of its Fort Worth employees as the plant continues to reduce its F-16 work force. The cutbacks, linked to fewer orders, will leave the facility with just under 4,000 employees working on the F-16 for Maryland-based Lockheed Martin. Spokesman Joe Stout says the company still employs about 15,000 in Fort Worth and should stay at that level as work on the F-35 Joint Strike Fighter reaches full production. Lockheed Martin tomorrow will roll out the first test F-35 aircraft. The job cuts, which could happen by the end of August, reflect the company’s previously stated intentions to cut the F-16 work force–reductions that began two years ago.
Tenet Healthcare today announced insurance companies paid it $340 million to cover claims from Hurricane Katrina. Katrina, which slammed the Gulf Coast last August, damaged five Tenet hospitals in the New Orleans area and one in Biloxi, Mississippi. Dallas-based Tenet says it settled with the insurers to avoid a dispute that could have lasted years. Tenet said it would record $240 million of the settlement in the quarter that ended June 30th. The other $100 million had already been recorded. Two of the hospitals in New Orleans–Memorial Medical Center and Lindy Boggs Medical Center–haven’t reopened. Tenet last week announced plans to sell the two hospitals and two others in Kenner, Louisiana and Gretna, Louisiana by next year.