Monday PM October 16th, 2006

CSB says BP failed to have procedures in place that could have prevented July 2005 blaze...SEC charges former three former Enron executives in fraudulent deal to manipulate Enron's publicly reported earnings...Jeff Skilling asks to remain free as he appeals his conviction...

Federal investigators say BP did not have procedures that could have prevented a fire at its Texas City refinery. The July 2005 blaze happened after workers installed the wrong type of pipe in a unit at the plant. It caused more than $30 million in damage. One worker suffered minor injuries after the unit was shut down. Carolyn Merritt, chairman and CEO of the U.S. Chemical Safety and Hazard Investigation Board, recently addressed the Critical Issues and Best Practices Conference in League City, noting that companies take economic hits when incidents occur. Merritt said it might take BP years to recover from this and other catastrophes, like the March 2005 Texas City refinery fire.

"And with its other events, you know, they're reporting (a) $7 billion impact. You know, that's an impact. And look at the damage to their reputation. I mean, the impact is significant, and the problem is, is that it takes such a long time. The first time you step away from good safety practice or good safety culture, nothing usually happens. Harvard and Georgetown University and other places have done studies on human nature, and when you take a risk and nothing bad happens, it actually encourages this behavior. Management is encouraged to cut programs and nothing bad happens so they cut them more. Nothing bad happens, so they cut them more, until they reach a critical mass in which things start going wrong everywhere. And then all of a sudden they start throwing money at the program, throwing bodies at the program, trying to bring this curve back up again. But, you know, the latent problem that exists in corporations is pervasive. It is not superficial and it's not momentary. And it will take years, it will take BP years to recover from this catastrophe in building a safety culture."

CSB photoDuring maintenance in February 2005, workers removed three elbow-shaped pipe segments in a section of the unit. Two of the pieces of pipe were made of allow steel and resistant to higher temperatures. The other piece was made of carbon steel, which is not resistant to higher temperatures. According to the report issued Sunday by the CSB, when the elbow-shaped pipe segments were reinstalled, workers mixed up one made of carbon steel with one made of allow steel. The newly-installed pipe segment failed. The fire occurred at the same BP plant where 15 people were killed and more than 170 others were injured in a March 2005 explosion.

Agreements have been reached in 52 federal and 63 state cases handled by attorney Tony Buzbee from the March 2005 BP Texas City refinery explosion. The agreements in the 115 cases were reached just days after a federal judge ruled that plaintiffs' counsel could obtain deposition testimony from BP CEO John Browne. The settlements bring to 159 the number of BP Texas City-related cases resolved the law firm has handled.


The Securities and Exchange Commission has charged a former Enron account executive and two other former executives with fraud and aiding and abetting Enron's violations of the reporting, record keeping and internal controls provisions of securities laws. Former accountant Jerry Kent Castleman and former executives Cheryl Lipshutz and Kathleen Lynn were allegedly involved in a fraudulent deal to manipulate Enron's publicly reported earnings. The SEC says Castelman and Lipshutz negotiated the sale of interest in a Brazilian power project to LJM Cayman, controlled by former Enron CFO Andy Fastow. The SEC says Enron needed earnings from related gas supply contracts to meeting earnings statements. The SEC says Castleman and Lynn negotiated the buyback. Enron paid LJM a profit despite the poor economics of the project.

Former Enron chief executive Jeff Skilling is asking a judge to let him remain free while he appeals his conviction on 19 fraud, conspiracy and other charges. U.S. District Judge Sim Lake could order Skilling into custody immediately after the court proceeding on October 23rd. Skilling faces more than two decades in prison. He must serve at least 85 percent of his sentence.


The specter of Goodyear Tire and Rubber shutting down its Tyler unit has stirred anxiety since union members went on strike last week. The closure could mean stripping the region of about 1,000 scarce high-paying manufacturing jobs. City officials, fearful of losing one of Tyler's largest employers, hurried to present Goodyear a $12 million incentive plan to keep the 44-year-old plant running. Younger workers without enough savings to endure a lengthy strike are scrambling for a dwindling number of blue-collar jobs available. Meanwhile, their families are scheduling dentist visits and doctor appointments before health benefits expire in January. More than 12,000 workers at 16 U.S. and Canadian plants struck Goodyear on October 5th after the steelworkers union failed to reach an agreement on a new contract. Bargaining has stalled. No new talks are scheduled.


A federal judge in Tennessee last week granted class action status to a wage-related lawsuit against Tyson Foods. The suit alleges the company depressed wages by hiring illegal immigrants at eight plants in Texas, Tennessee, Alabama, Indiana, Missouri and Virginia. Tyson workers attorney Howard Foster says he's seeking damages for thousands of workers. An attorney for Arkansas-based Tyson, Roger Dickson of Chattanooga, declined comment--saying he has not had a chance to read the judge's order. The ruling set a January 29th conference with attorneys. A federal jury in 2003 acquitted Tyson Foods and three former managers of conspiring to hire illegal immigrants from Mexico and Central America for low-wage production jobs. Two former Tyson managers made plea deals and received probation.


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