Monday PM March 19th, 2007
by: Ed Mayberry, March 19, 2007 5:03:00 am
A federal appeals court rules that Enron shareholders cannot pursue a class action lawsuit against investment banks for their alleged role in accounting fraud that led to Enron's collapse. The 5th U.S. Circuit Court of Appeals reverses a ruling by U.S. District Judge Melinda Harmon in Houston, who had ruled that shareholders could sue as a class. Investors are trying to recover as much as $40 billion in losses. The appeals court says class certification may place "insurmountable pressure on a defendant to settle, even when the defendant has a good chance of succeeding on the merits." Policyholders attorney William Lerach expresses disappointment, saying that even if banks knowingly participated in a scheme to defraud investors, this ruling means there cannot be a class action against them. He says he and other shareholders' attorneys are likely to appeal the ruling to the U.S. Supreme Court. Lawyers for Merrill Lynch, Credit Suisse Group and Barclays had asked for their April 16th trial in Houston to be postponed until it was decided whether the lawsuit by Enron shareholders could proceed as a class-action case. Lerach says it's likely the trial will be postponed in light of the appeals court ruling.
A U.S. regulator said that BP's board failed to oversee process safety at the company's refineries before a fatal Texas City refinery explosion. Fifteen people died and more than 170 others were hurt in the March 2005 explosion. Carolyn Merritt chairs the U.S. Chemical Safety and Hazard Investigation Board. She says executive management and BP's corporate board "either did not get, or failed to respond to process safety audits and risk information.'' Merritt made her comments in a speech to the annual meeting of the National Petrochemical and Refiners Association in San Antonio. She says the British oil company often assessed risks at its refineries. But she says the focus was on personal safety, rather than process safety. Merritt's agency will release its final report into the March 2005 accident Tuesday.
Dignitaries including former President George H.W. Bush and Governor Rick Perry are in Qatar for the dedication of a new Texas A&M University facility. Texas A&M University at Qatar has been sharing space with another university since the program's start in 2003. It offers undergraduate degrees in chemical, electrical, mechanical and petroleum engineering. Officials say the new building will allow the school to expand enrollment to about 100 students and begin a graduate program this fall. School spokeswoman Desi Burns Porter says the new building cost an estimated $142 million. The Qatar Foundation for Education, Science and Community Development paid for the new building. It's located at a 2,500-acre site in Doha known as Education City. The new building has more than 30 labs.
Hercules Offshore is buying Todco in a $2.3 billion deal. Hercules is adding Todco's fleet of barge and jackup drilling rigs. The combined company will have 3,900 employees in ten countries, working with 33 jackup rigs, 3 semisubmersible drilling rigs and 27 barge rigs. The deal points to further consolidation in the drilling services sector. Susquehanna Financial Group analyst Brian Niemiec says the sector has become more appealing as rental rates for offshore drilling have risen with oil companies expanding exploration.
Republican presidential hopeful Rudy Giuliani is defending his law firm's role in representing Citgo Petroleum--the oil company controlled by Venezuelan President Hugo Chavez. A lawyer with Bracewell & Giuliani of Houston has been representing Citgo before the Texas legislature. The firm has had a contract with Citgo since before Giuliani joined it. Giuliani says what they're doing is lawful and honorable and helping to protect jobs for more than 100,000 Americans. Although Citgo Petroleum is a U.S.-based company, it was bought by Petroleos de Venezuela --the national oil company of Venezuela. It employs 4,000 people in Texas and other states. Giuliani says indirectly more than 100,000 people have jobs because of the company. Venezuela's Chavez has been an outspoken critic of President Bush and is close to Cuban President Fidel Castro. Because of that, Citgo has become unpopular with some Americans. While in Florida, Giuliani says Chavez is one of the reasons why the United States needs to develop alternative fuels and become energy independent.
Former Democratic Congressman and gubernatorial candidate Chris Bell will has started a new job with the Washington, D.C.-based lobbying firm Patton Boggs. Bell tells the San Antonio Express-News that the job plays to his strengths. He will work to bring in clients and develop a public policy lobbying business in Texas for the firm. Bell finished second to Texas Governor Rick Perry in last year's election. The former Houston city councilman gained attention as a freshman Congressman. He filed the complaint that led the House Ethics Committee to admonish then-House Majority Leader Tom Delay for ethics violations. Bell argued for ethics reform during his gubernatorial bid. He says it won't be difficult to work as a lobbyist after emphasizing ethics. He described Patton Boggs as "a very ethical firm'' and says he'll conduct himself properly.
A fire at a Frito-Lay manufacturing plant in Wisconsin damaged a conveyor belt and knocked out one production line. However, the Plano-based company says overall production was largely unaffected. The fire at the snack-chip giant's Beloit plant was reported around 6:30 p.m. Friday. Firefighters responded promptly and contained the fire within about 45 minutes. It was unclear what caused the fire but the company says the blaze was most likely connected to a faulty conveyor belt along the production line. The plant's 750 employees were evacuated. Frito-Lay, based in Plano, Texas, has 32 plants across the country. The Beloit plant produces Cheetos, Doritos, Fritos, Tostitos and Lay's brands.