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

To: Baldur Fjvlnisson who wrote (3032)	2/25/2002 1:59:20 PM
From: Mephisto	Read Replies (1) \| Respond to of 5185

Baldur, one of the states on the East Coast had to raise rates for garbage collection to cover costs of losses in Enron. Enron Executives want people to pitch in and help them with legal bills. See following article.

To: Baldur Fjvlnisson who wrote (3032)	2/25/2002 2:00:41 PM
From: Mephisto	Respond to of 5185

Oregon Asks Bankruptcy Court to Block Legal Aid for Enron The New York Times February 25, 2002 By JONATHAN D. GLATER The Oregon attorney general's office has asked a New York bankruptcy court to block a request by the Enron Corporation to advance up to $30 million in insurance money to its directors and officers to help them pay their fast-growing legal fees. In a court document filed on Friday, the Oregon attorney general, Hardy Myers, argued that shareholder litigation might ultimately find the directors and officers guilty of committing fraud for their role in the company's demise. The filing states that more than 30 states support Oregon's position, and Florida - whose State Board of Administration lost hundreds of millions of dollars when Enron collapsed last year - earlier this month filed its own objection to Enron's request that insurers advance money to directors and officers. If directors and officers are found guilty of fraud, theoretically they are not entitled to assistance in paying for their defense, and must repay the company or insurance firm any money advanced. But in this case, it may be that the directors and officers do not have the ability to pay back any money advanced to them, Oregon argues in its filing. That could mean that there would be less money available to pay off creditors. "Whether Enron has a duty to indemnify officers and directors and whether the depletion of insurance coverage could affect the interests of shareholders are questions intertwined with the ultimate outcome of these still-nascent matters," Oregon's filing states. That means that the money should not be advanced until it is clear whether Enron's executives and directors committed fraud, the filing suggests. Separately, the Securities and Exchange Commission said on Saturday that it would scrutinize the behavior of audit committees in every investigation it begins into companies' financial reporting - a development that, like the battle over insurance coverage for Enron's directors and officers, cannot be reassuring to board members. Because Enron is chartered in Oregon, the attorney general's office has the power to dissolve the company's charter if it improperly advances money to help directors and officers, according to the state's filing. It is unclear what would happen if Enron's charter were revoked, but it would certainly hamper the company's ability to borrow or conduct other basic corporate functions, lawyers said. "I have never heard of a state doing that," said Michael R. Young, a lawyer at Willkie Farr & Gallagher in New York who defends corporate directors and officers, of the efforts by Oregon to block insurance funds from being paid out in advance. He noted that the move could backfire on the states, though, because if the states insist that directors and officers insurance cannot be touched until a court determines whether they committed fraud or not, then the insurance money may never be available to pay off Enron's creditors because shareholder suits almost always settle before a court can reach that conclusion. nytimes.com