The Oregonian — Editorials
Looting persists at a modern shrine to greed
When Weil, Gotshal & Manges of New York -- Enron's primary bankruptcy attorneys -- racked up $67 million in fees in 15 months, including such gems as hiring a temp paralegal in Houston for $28 an hour and billing her time to Enron at $105 an hour...
When the "administrative fees" in Enron's reorganization exceed $360 million and increase by $1 million each day...
You can hardly blame the city of Portland for trying to steer Portland General Electric, Oregon's lifeboat on this Titanic, back into Oregon waters before the state's largest utility, like the rest of the Enron "estate," disappears in the whirlpool of greed.
Sixteen months after Enron filed for bankruptcy protection, its creditors and most of its former employees are still unprotected, and another set of profiteers is getting rich looting the ruins.
"The pigs are feeding at the trough," Lynn LoPucki, a bankruptcy expert at UCLA, told The New York Daily News in February. Added Texas Attorney General Greg Abbott in the same article, "The widows and orphans are being left out in the cold, while the lawyers are lining their warm, wool pockets."
True, the $930-an-hour accountant eventually settled for $700 an hour when the bankruptcy fee committee squawked, but similar examples of altruism are few and far between. As Jane Shepperd, Abbott's press secretary, noted Tuesday, "The attorney general has long been concerned about the legal and professional fees that are eating away at the Enron estate. Frankly, we remain very concerned that little or no money will be left for the unsecured creditors at the end of the day."
At the beginning of the week, the difference between the secure and unsecured at PGE/Enron was clarified by the news that five top employees at PGE are collecting a total of $1.95 million in retention bonuses while company employees who lost $1.3 billion in pensions are waiting for crumbs from the bankruptcy table. That quintet, by the way, includes Mary Turina, who's only working part time.
How does Executive Vice President Fred Miller justify accepting retention bonuses of $400,000 and a performance bonus of $100,000 when so many of his colleagues have lost their retirement accounts? He protests he's getting less than what he was promised when Enron bought PGE in 1997.
Miller and Peggy Fowler, the chief executive officer, haven't had much good to say about the city's pitch to buy PGE. One wonders what's not to like for cash-strapped creditors in the $2 billion-plus offer the city has on the table?
"What we're hearing," said Roy Hemmingway, the Public Utility Commission chairman, "is there have been multiple offers. But none of those deals has reached the point where the powers that be, including Enron and the creditors, think there's enough money to make the sale."
And, heck, why hurry to finalize anything when you are a bankruptcy buffet line for 2,750 lawyers and 650 accountants, according to the Daily News?
The PUC has the power to veto any sales proposal that isn't in the public interest, Hemmingway said, but it's hard to imagine the agency being particularly aggressive, given that it waited almost two years to propose an investigation into deceptive trading practices at PGE.
Thus, city Commissioner Erik Sten is left to make the case that Oregon is a lot better off if the city buys the utility rather than a profit-seeking shark like Kohlberg, Kravis, Roberts & Co.
"We bring a pretty strong argument to buy it," Sten said. "The question is are we competent to run it?" He envisions a regional operator motivated by unique incentives: "They should get more profit when your rates go down, not incentives to pad their pockets by raising rates or playing games with taxes."
Rewarding civic responsibility and not greed? How un-Enron can you get? And given the feeding frenzy at this legal trough, how completely un-American.
Reach Steve Duin at 503-221-8597, Steveduin[AT]aol.com or 1320 S.W. Broadway, Portland OR 97201.
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