[A-List] Enron: regulatory crisis

[Keaney Michael]

Enron role in California blackouts investigated

Duncan Campbell in Los Angeles and Matthew Engel in Washington
Thursday February 14, 2002
The Guardian

An investigation was launched yesterday to determine whether the Enron
Corporation was responsible for the blackouts that hit California last
year and whether they artificially inflated the price of electricity in
the state.

The new inquiry comes amid allegations that the company may have
dishonestly manipulated the supply of electricity to west coast states.

The federal energy regulatory commission (Ferc) announced yesterday that
a "fact-finding" initiative into Enron's role was under way.

West coast Democrats have long suspected Enron involvement in the energy
crisis, and there have been calls from Senators Barbara Boxer of
California and Maria Cantwell of Washington to explore the company's
role.

The issue is complicated by the fact that the commission's chairman, Pat
Wood, is the person recommended to the commission by the disgraced Enron
chief, Kenneth Lay.

"I'm an independent guy," said Mr Wood yesterday, adding that his first
move as chairman when appointed last year was to impose price caps which
he said was "clearly to tally antithetical to Enron's point of view".

A further illustration of the labyrinthine connections thrown up by the
scandal is that the California governor, Gray Davis, who is the
politician most damaged by the blackouts, was also a recipient of
campaign funding from Mr Lay.

The investigation will be carried out jointly by the securities and
exchange commis sion, the commodities futures trading commission and the
justice department to establish whether prices were manipulated. "We
want to understand the whole story," Mr Wood said.

Investigators trying to sift through the wreckage of the fallen energy
company have identified two figures they believe can help break the
case. One is Ben Glisan, the company's former treasurer, whom the
justice department reportedly favours as the most likely figure to be
"flipped" - turned into a prosecution witness in return for possible
immunity.

The other is Michael Kopper, who was seen as the right-hand man of
Enron's chief financial officer, Andrew Fastow, and was managing partner
of LJM, involved in one of the partnership deals used to hide Enron's
debts.

Full article at:
http://www.guardian.co.uk/international/story/0,3604,649946,00.html

Michael Keaney
Mercuria Business School
Martinlaaksontie 36
01620 Vantaa
Finland

michael.keaney at mbs.fi