Thursday PM February 8th, 2007

Army nixes KBR billing for private security by subcontractors in Iraq...EL Paso Corporation settles with SEC over surcharges paid to Iraq in UN Oil for Food Program...Houston judge denies request by three former Enron lenders to consolidate investor lawsuits...

The U.S. Army has taken back $19.6 million from Halliburton subsidiary KBR for billing for private security by its subcontractors in Iraq. KBR's multi-million dollar contract with the Pentagon to provide logistical support for U.S. troops does not authorize reimbursement for private security. Some 50,000 KBR employees and subcontractors provide support services for U.S. troops, ranging from building basesξto serving foods. KBR subcontracted with ESS Support Services Worldwide to provide food service. ESS hired a Kuwaiti firm, which subcontracted with private security firm Blackwater USA. KBR's civilian employees are not permitted to carry weapons without special permission. The military is obligated to provide security for KBR personnel.

El Paso Corporation is paying $7.7 million to settle charges filed by the Securities and Exchange Commission over surcharges paid to Iraq in the United Nations Oil for Food Program. The SEC has filed charges under the Foreign Corrupt Practices Act. The SEC said the Houston-based company bought about 21.4 million barrels of Iraqi crude oil from third parties participating in the Oil for Food program, but money was illegally kicked back to Iraq through oil surcharges. El Paso will pay $5.48 million and a $2.25 million civil penalty. The Oil for Food program was intended to provide humanitarian relief during international trade sanctions.

A Houston judge has denied a request by three former lenders to Enron to consolidate three investor lawsuits into one trial. U.S. District Judge Melinda Harmon denied the request by Merrill Lynch, Credit Suisse Group, Barclay's and the Regents of the University of California. The class action, known as Newby vs. Enron, and is set to begin April 9th in Houston.

New York plans to sue Exxon Mobil and some other companies over a years-old underground pond of petroleum. New York Attorney General Andrew Cuomo said the suit will involve the companies taking decades to clean up after refineries that once lined Brooklyn's waterfront. Irving-based Exxon Mobil accepted responsibility for much of the spill in 1990. The company built a pumping system that's gradually extracted more than nine million gallons. Exxon Mobil says the site is being remediated and the delicate nature of the oil recovery operation makes it difficult to extract the material any faster. Cuomo's office has begun serving formal notice that New York will sue under the Federal Resource Conservation and Recovery Act.

The U.S. Department of Defense has awarded a grant of about $1.6 million to a University of Houston research team to build a powerful magnetic field sensor. Two assistant professors of electrical and computer engineering with the UH Cullen College of Engineering will use the grant to create a new type of magnetic field sensor. The sensors can help soldiers navigate a minefield or aid doctors in examining a tumor using magnetic resonance imaging.

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