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Non-Tech : The ENRON Scandal -- Ignore unavailable to you. Want to Upgrade?

To: Patricia Trinchero who wrote (1942)	1/31/2002 6:21:32 AM
From: Baldur Fjvlnisson	Read Replies (1) \| Respond to of 5185

.P. Morgan Says Argentine Unit May Have Committed Fraud By Andrew J. Barden Buenos Aires, Jan. 30 (Bloomberg) -- J.P. Morgan Chase & Co. told Argentine authorities a bank it controls with Credit Suisse First Boston and Dresdner Bank AG may have broken the law by moving $260 million overseas after the government banned such transfers, a federal judge said. A J.P. Morgan spokeswoman in New York said the U.S. bank's lawyers contacted Argentina's central bank about the alleged fraud. Carlos Rohm, vice president of the Argentine bank Banco General de Negocios SA, has been held since Jan. 23 on charges that allege he violated restrictions started in December that prohibit the transfer of money out of the country. ``We're shocked and we are saddened to learn about these allegations and the bank is aiding and cooperating in the investigation in every possible way,'' said Brooke Harlow, a J.P. Morgan spokeswoman in New York. CSFB and Dresdner officials weren't immediately available to comment. Rohm's lawyer Alfredo Iribarren has asked a federal court to throw out the charges against his client, saying they are unfounded. Maria Servini de Cubria, the federal judge in Buenos Aires who ordered Rohm's arrest, detailed on Argentina's Todo Noticias television station conversations she had with lawyers from J.P. Morgan. CSFB CSFB officials in Switzerland told J.P. Morgan about the alleged fraud after receiving information from Carlos Rohm's brother, Jose Rohm, the chief executive of the Argentine bank, Servini de Cubria said. ``There's been a presentation by the Argentine central bank, where in a document the legal representative of J.P. Morgan made an allegation saying that Jose Rohm accused his brother of a fraud'' totaling $260 million, Servini de Cubria said. Jose Rohm denies he accused his brother, La Nacion newspaper reported. Carlos Rohm was detained by police Jan. 23 at the international airport in Buenos Aires as he tried to board a plane to Switzerland to attend a bank board meeting. His brother flew to Switzerland on an earlier flight for the meeting. Credit Suisse owns 26.37 percent of Banco General de Negocios, J.P. Morgan owns 26.03 percent and Dresdner owns 26.08 percent, according to CSFB spokeswoman Cristina von Bargen.

To: Patricia Trinchero who wrote (1942)	2/1/2002 1:34:09 AM
From: Mephisto	Respond to of 5185

THE ENRON COLLAPSE / Memo details Cheney--Enron links / Company's suggestions resembled elements of the administration's energy policy. sfgate.com. Pat, thanks for the copy! Mephisto Cheers, Mephisto

To: Patricia Trinchero who wrote (1942)	2/1/2002 1:35:55 AM
From: Mephisto	Respond to of 5185

The Enron apologists have it wrong By Winston H. Hickox January 30, 2002 Some Washington insiders claim to see no connection between the collapse of Enron and the failure of energy deregulation in California, but to anyone living in the state in the past year the linkage is obvious. One year ago, Californians became familiar with the name Enron. National headlines focused on the few actual rolling blackouts (and the threat of potential ones), but the market manipulators actually represented twin threats: power interruptions and extortionate prices. At that time Gov. Gray Davis marshalled the tools available: California's heroic conservation effort; a massive generator building program and, most importantly, long-term energy contracts and enforcement of federal laws requiring that electricity prices be "fair and just." Some Monday-morning quarterbacks are now carping about the terms of the contracts, but the fact remains that they guaranteed prices well below those then current, and they broke the back of rampant price speculation. Last winter federal regulators refused to regulate. California did what it had to do. The governor followed up by convincing the Federal Energy Regulatory Commission to do its job and enforce the law. When Enron's post mortem is completed, it may be that FERC's anemic price cap was enough to begin the collapse of Enron's Ponzi-like structure. Enron, now a synonym for history's biggest train wreck, designed its own demise. It will take an army of investigators to determine whether the actions behind America's largest bankruptcy were criminal or simply cavalier. In the meantime, common sense tells us this massive failure did not just "happen." It was the direct result of a series of business and political decisions. The only people who refuse to admit the simple truth are a handful inside the Beltway who are so tied to Enron that they feel they must defend a failed system. Enron billed itself as an electricity expert, but it produced mostly short-circuits. Like Oz, its accomplishments (profits and growth) were mostly illusions and its business model relied on convincing people to ignore the man behind the curtain. Just as Enron helped engineer its own disaster, it designed the hands-off system of non-oversight, called "deregulation" that allowed its playing fast and loose with profit reports and debt "management" in the form of sham "partnerships." Company executives didn't take advantage of existing loopholes; they had them custom-built by public officials with whom they maintained a too-cozy relationship. That system, now being defended by a few people in the Washington establishment, not only made it possible that people would be hurt, it made it inevitable. California consumers were only the first to feel the pain as Enron (and other electricity traders) "gamed" the system to create phony shortages and drive prices sky-high. A careful examination reveals some of the built-in weaknesses in Enron's business plan and some of the actions that ended the company's grip on Californians' wallets. Washington's Enron apologists won't like it, but the facts show that more protection, not less, is necessary. Enron expanded exponentially in the last decade. It built its house of cards on rosy profit predictions that led to higher stock prices. It leveraged massive loans guaranteed by its inflated "value" as determined by Wall Street. Just like a Ponzi scheme, it could continue as long as more money poured in. When the markets responded to news that the books had been cooked, stock prices sank below loan-guarantee levels, and the "implosion" began. It may be that some essential commodities and services (water, electricity, sewers) are too important to be traded like pork bellies. When bacon is too expensive, we can switch to hamburger or peanut butter. However, no household or company can plan for an uncertain power or water supply or overnight price fluctuations of 400 percent or more. You can chase the prospect of an ephemeral lowest-possible price, but only by bargaining away reliability of service and price continuity. Deregulation in California has taught us that lesson the hard way. If we believe that "fair and just" pricing (year-in, year-out) is the wisest choice, a well-regulated system will provide us reliable supply and price continuity. We can't have it all. We must decide what is most important. Enron's friends in Washington continue to be true believers in the system it pioneered. The rest of us have been harshly reminded of what leaders such as Teddy Roosevelt knew: the public must be protected from monopoly and market power. Lack of oversight invites abuses. Enron's customers know it, Enron's stockholders know it, Enron's laid-off employees now know it. Why don't some Cabinet members get it? Hickox is secretary of the California Environmental Protection Agency. Copyright 2002 Union-Tribune Publishing Co.