A former Enron executive is paying $31.5 million to settle federal charges of using inside information to illegally profit from stock sales in 2001. The Securities and Exchange Commission announced the settlement with Lou Pai, who was chairman and CEO of Enron Energy Services, the company's retail energy division. The SEC says the settlement is one of the largest ever with an individual for alleged illegal insider trading. The settlement includes a $1.5 million civil fine and $30 million in restitution plus interest. Pai neither admits nor denies wrongdoing. He left Enron before its troubles came to light, selling hundreds of millions of dollars of stock to meet a divorce settlement, according to interviews and legal records and proceedings. According to the Wall Street Journal, Pai has put some of his Enron-related earnings to work as a silent backer of a Houston-area firm called Element Markets that brokers pollution-emission credits.
Oil prices tumbled more than $3 a barrel Tuesday--another dose of welcome news to consumers. Prices are also continuing to fall at the gas station. Crude oil is at its lowest level in seven weeks. Light, sweet crude for September delivery closed at $122.19 a barrel on the New York Mercantile Exchange. Crude's trading high was $147.27, reached July 11th. Analysts say falling gasoline demand is helping to pull prices back down and may continue to do so. At the pump, the average for regular unleaded gas is put at $3.94, down more than 1.5 cents from Monday. That's according to AAA, the Oil Price Information Service and Wright Express.
Restaurant chains Bennigan's and Steak & Ale have filed for Chapter 7 bankruptcy protection and will shut their doors. The companies filed for bankruptcy protection in the eastern district of Texas. Their parent company--privately held Metromedia Restaurant Group--is based in Plano. In a Chapter 7 bankruptcy filing, a company seeks to liquidate its assets and shut down. In the filing, the company indicated that it has up to 49 creditors. It said it will have no funds left after administrative expenses are paid to repay its creditors.
Starbucks, planning to shut 600 stores, now also says it will cut almost 1,000 non-store jobs. It is part of a bid to re-energize the brand and boost profit by cutting costs. In a letter to all employees, CEO Howard Schultz says the gourmet coffee chain is reducing the number of positions and partners across the country. The jobs being cut are in addition to the layoffs from the store closures. Starbucks has said it will shut down 600 underperforming locations, the first 50 of which are being closed this month. Starbucks has been working to transfer employees in stores that are being closed to other locations. In the letter, Schultz said about 70 percent of those employees have been transferred.
XM Satellite Radio and Sirius Satellite Radio say they have completed their merger. The new company plans to change its name to Sirius XM Radio. The company says it now has more than 18.5 million subscribers. It plans to offer consumers new packages in the early fall, including the first-ever a la carte programming option in subscription media. One package offers "Best of Both," giving subscribers certain programming from the other network. Existing radios will continue to work and current service packages can be maintained. Cost savings from the deal are expected to be about $400 million in 2009.
An executive at Imperial Sugar found conditions so bad at a Georgia refinery prior to an explosion that killed 13 people--that he recommended firing the plant manager. Safety plates were missing on electrical gear and piles of discarded sugar and other materials littered the Port Wentworth, Georgia, plant. Details are in written testimony from Imperial Vice President of Operations Graham H. Graham, for a U.S. Senate hearing. Imperial is based in Sugar Land. The Senate Subcommittee on Workplace Safety is reviewing the February accident after a federal investigation found Imperial violated safety standards. The Occupational Safety and Health Administration has proposed nearly $9 million in fines, saying the blast was fueled by an excessive buildup of sugar dust.
An interim Defense Department report says there is no evidence KBR was involved in the death of at least one U.S. soldier electrocuted in Iraq. The Inspector General's report says while electrical systems in Iraq are known to "pose a hazard to personnel," there is no evidence Houston-based KBR was aware of any life-threatening hazards at the army barracks where Sgt. Ryan Maseth died. Maseth was electrocuted in January while showering. The interim report also says the Defense Contract Management Agency had no knowledge of potential threats at Maseth's barracks.
Continental Airlines has unveiled what it hopes will attract more customers to its business class, namely fully reclining seats. They'll go into some of its planes beginning next year. The airline says the seats will go into Boeing 777s, used mostly on trans-Atlantic and trans-Pacific routes beginning in fall 2009, and later on Boeing 757 and 787 jets. The new seats extend to 6.5 feet long and 25 inches wide, including the armrest. They also have storage space and laptop power, headset, USB and iPod-recharging ports and video monitors, for those who can't sleep during the entire flight.
Trade officials say a high-level summit to salvage a global trade pact has collapsed, after the United States, China and India failed to compromise on farm import rules. Trade officials from a rich and an emerging country told the Associated Press that a meeting of seven commercial powers collapsed at the World Trade Organization. The officials have asked for anonymity because the news was soon to be announced to a larger meeting of countries. They say the U.S. dispute with China and India over farm import safeguards had effectively ended any hope of a breakthrough. Negotiators were hoping for a deal this week on farm and industrial trade, so that crisis-ridden WTO talks could be saved.
The White House has downgraded its outlook for the U.S. economy for the remainder of this year and next. It has also revealed that the next occupant of the White House will have a bigger-than-expected budget shortfall. It looks for rising unemployment as the housing and financial crises take a toll, along with high energy prices. The Bush administration expects growth this year to come in at 1.6 percent. That's down from a 2.7 percent growth projection made in February. Growth next year is now seen at 2.2 percent, lower than the three percent growth rate previously estimated by the White House's budget office. The new forecasts were included with the updated look at the nation's balance sheets. A record $482 billion budget deficit is now being projected for next year, to be inherited by the next president.
Transportation Secretary Mary Peters says the federal approach to highway funding is "broken" and that she has a plan that would cut the time it takes for projects to get done. She said in a speech at Georgia Tech Research Institute that her plan would consolidate 102 federal transportation programs into eight projects. It also would give states more flexibility in deciding what projects are needed. She says it takes 13 years on average for a federal road or transit project to get done. Peters also urged Congress to find something besides the gas tax to fund road projects.
A Texas insurance organization says a large number of drivers on Texas highways and roads don't have auto insurance. A 60-day pilot project testing the new TexasSure program, which allows law enforcement personnel via computer to verify coverage status when they stop a motorist, focused on Travis County. During the test which is expected to end soon, Texas Department of Public Safety troopers stopped and ticketed uninsured drivers. So far, 25.5 percent of 5,012 drivers stopped in Travis County and small portions of nearby Williamson and Hays Counties since June 2nd didn't have auto insurance. A spokesman for the Insurance Council of Texas says the numbers show that Texas has an even larger number of uninsured drivers than had been realized. This spring, the minimum amount of liability insurance Texas drivers are required to have, increased for the first time in 22 years.