Ken Lay’s attorneys formally request erasure of fraud and conspiracy convictions…Gazprom opens Houston office…Government opens bids for petroleum leases off Gulf coasts of Texas and western Louisiana…
Attorneys have formally requested that Enron founder Ken Lay’s criminal record be erased. The attorney who was to handle Lay’s appeal of his fraud and conspiracy conviction has asked U.S. District Judge Sim Lake to vacate the indictment, which would make it as if Lay had never been charged with a crime. Lay was found guilty on May 25th of all ten charges he faced, but he died from heart disease on July 5th. He was scheduled to be sentenced October 23rd, but had planned to appeal. There is legal precedent that states a defendant has not received final judgment if he dies before being sentenced or has the opportunity to appeal. The government has 20 days to file any opposition to the motion. Prosecutors don’t intend to allow lay’s criminal record to be wiped clean without a fight. A one-sentence addition to today’s filing revealed prosecutors won’t rubber-stamp the request. The government is trying to recover $43 million that prosecutors say was pocketed by Lay during Enron fraud. Prosecutors could still pursue those gains in civil court, but the Feds would have to compete with other litigants. Co-defendant Jeff Skilling was convicted of 19 of 28 counts against him and is still slated to be sentenced on October 23rd. Enron went bankrupt in 2001.
An international arbitration panel has awarded a $185 million judgment in favor of former Enron water services subsidiary Azurix. The assets of Azurix were bought by New Jersey-based American Water Works in August 2001, just months before Enron filed for bankruptcy. Azurix had a 30-year deal to provide water and wastewater services in Buenos Aires, Argentina, but the venture was problem-plagued. Azurix took its case to the International Centre for the Settlement of Investment Disputes, arguing that the various acts of provincial authorities violated a bilateral investment treaty between the U.S. and Argentina.
Russian gas monopoly Gazprom has set up an office in Houston to supply liquid natural gas to U.S. markets. The U.S. subsidiary will be headed by the long-time LNG director for London-based Gazprom Marketing & Trading Ltd. In August 2005, Gazprom inkeed a supply agreement with UK-based natural gas company Shell Western BV and BG Group to supply LNG to the U.S. market.
The federal government today has opened bids for petroleum leases off the Gulf coasts of Texas and western Louisiana. That comes after two days of court action. Louisiana Governor Kathleen Blanco is campaigning to get Louisiana a bigger share of federal offshore royalty money. She filed suit against the U.S. Minerals Management Service, alleging the agency hasn’t done enough to protect Louisiana’s wetlands from damage from drilling. As part of the suit, she sought a court order to block today’s sale in New Orleans. On Monday, U.S. District Judge Kurt Engelhardt refused to block the sale, but he said Louisiana would have a strong case when the dispute goes to trial in November. That led Republican U.S. Senator David Vitter of Louisiana to say yesterday that the Bush administration should delay the sale until the legal uncertainties are resolved. But the MMS continued to allow petroleum explorers to submit or withdraw bids before opening them this afternoon.
Irving-based Exxon Mobil and Houston-based ConocoPhillips are telling customers they can’t meet contract obligations to supply crude oil from Alaska’s Prudhoe Bay oil field. They cite unavoidable events beyond their control. This leads some to question whether the underlying reason–pipeline corrosion that went undetected after years of lax maintenance–really fits the standard for invoking that legal escape clause. The clause is called force majeure. That’s a sort-of contractual get-out-of-jail-free card excusing a company from fulfilling an obligation because of an unavoidable performance failure. Exercising this option usually happens during war or after a natural disaster such as a hurricane, and is often lumped under the category of “acts of God.” Neither was the case when both invoked the clause last week after field operator BP announced it was partially shutting down the nation’s largest oil field.
Mayor Bill White and other officials used a job fair to urge unemployed Hurricane Katrina evacuees to get to work. Authorities say there are more than 5,000 jobs available in Houston and neighboring Louisiana. August 29th is the first anniversary since Katrina slammed the Gulf Coast, sending several hundred thousand Louisiana evacuees to Texas. Officials have estimated about 250,000 remain in Texas, with nearly two-thirds still in the Houston area. A state-funded survey released this month shows that most Katrina evacuees still living in Texas don’t have jobs. Almost half live in households with incomes of less than $500 per month. Yesterday’s job fair featured more than 150 employers, including 13 that offered about 600 jobs in Louisiana.
Hart Galleries has filed for Chapter 11 bankruptcy, with court documents indicating assets at $500,000 to $1 million, with debts of $1 million to $10 million. There may be as many as 400 unsecured creditors. The gallery has handled auctions for the estates of Roy Hofheinz and John Connally, as well as diamonds seized by the Harris county Tax Office in a tax delinquency case and memorabilia from the Titanic.
Higher energy costs were behind a pickup in inflation pressure at the retail level in July. The Labor Department’s Consumer Price Index posted a four-tenths-of-one-percent increase. Helping to dampen concern, however, is word that the core rate, excluding food and energy, was up just two-tenths. The core rate came in below expectations, and below the rate seen in previous months. Wachovia economist Mark Vitner says the economy appears to be cooling off, and as the economy moderates, inflationary pressures should subside later this year. Rising prices for gasoline and other energy tipped the scales in the face of the biggest decline in clothing costs in nearly two decades. Yesterday, the government reported that wholesale inflation pressures were more muted than expected in July. Combined, the news should help to allay some concerns for federal reserve officials, who opted last week to leave interest rates unchanged.
Output by the nation’s factories, mines and utilities rose again in July–but at a slower clip than the month before. The Federal Reserve reports industrial production increased by four-tenths percent, slowing from June’s growth rate of eight-tenths percent. Much of the increase came from utilities, where higher electricity output amid above-average temperatures helped offset a drop in auto production. In addition, U.S. industry operated at 82.4 percent of capacity–up a tick from June–and the highest rate in more than six years.
Fewer shovels were going into the ground for the first time, as the government reports that housing starts fell in July. Marking further proof of the housing market slowdown, it is the fifth decline in six months for starts. The Commerce Department says homes were being built at a seasonally adjusted annual rate of nearly one-point-eight million units. That’s a two-and-a-half-percent decline from June’s pace. It is the slowest level since November 2004, leading to a rising supply of new homes on the market. In addition, building permits, a gauge of future activity, dropped six and a-half percent. Just yesterday, the National Association of Home Builders said its index of builder sentiment dropped to the lowest level in 15 years.