Monday PM June 4th, 2007
by: Ed Mayberry, June 4, 2007 5:06:00 am
A former executive of Enron's failed broadband unit was sentenced today to two years in prison. A Houston federal judge sentenced Kevin P. Hannon for his role in Enron's collapse in 2001. The 46-year-old ex-chief operating officer of the broadband unit pleaded guilty to conspiracy in August 2004. He was accused of scheming with other executives to promote Enron's broadband network as being more advanced than it actually was. The alleged purpose was to impress analysts and inflate Enron's stock price. U.S. District Judge Vanessa Gilmore could have sentenced Hannon up to five years in prison. Last year, Hannon testified for the prosecution at the Houston trial of Enron founder Ken Lay and former chief executive Jeff Skilling. He quoted Skilling as saying "they're on to us" at a May 2001 meeting with Lay and former financial executives Andy Fastow and Richard Causey. Hannon is another in a string of former Enron executives being sentenced after cooperating with the government. Former broadband unit CEO Kenneth Rice is to be sentenced on June 18th.
There's a report that the Securities and Exchange Commission has decided to support Enron shareholders in their attempt to sue Wall Street banks for damages over Enron's collapse. The case is now before the U.S. Supreme Court. The Washington Post says the SEC is asking the Solicitor General to file a brief with the court backing the shareholders' position. The agency has been under pressure to do so from unions, state regulators and the shareholders' lawyers. The $40 billion suit contends Merrill Lynch, Barclays and Credit Suisse Group participated in the energy company's massive accounting fraud and should be held liable. A lower court threw out the suit, setting the stage for the Supreme Court to hear the case in the fall.
The main militant group behind attacks on foreign oil installations in Nigeria has announced a one-month cease-fire. That gives Nigeria's new president a chance to resolve the crisis that has contributed to a spike in global crude oil prices. But the movement for the emancipation of the Niger delta did not offer to stop kidnapping foreign oil workers. It did release six hostages as a peace offering to the government. The four Italians, one American and one Croatian were kidnapped May 1st. But hours earlier, gunmen wearing security force garb abducted four other foreign oil workers. Four Schlumberger employees were kidnapped from an employee living facility in Port Harbcourt. The Houston-based company says armed assailants forcefully entered the living facility last Friday. The nationalities of the abductees are Pakistani, Dutch, British and French. Militants launched a campaign of kidnappings and oil installation bombings in late 2005, seeking to force Nigeria's government to give its impoverished region a greater share of oil funds.
Benchmark crude oil prices are easing now that a Nigerian militant group has announced a one-month cease fire and a U.S. gasoline pipeline is flowing again. Gasoline prices have been falling as well. As for prices at the pump, AAA says the national average for regular unleaded is just under $3.16 a gallon. The average has dropped nearly seven cents a gallon in recent days. Along with the news from Nigeria, oil traders have reacted to news that Atlanta-based Colonial Pipelines resumed pumping from Atlanta to North Carolina, helping to ease supply concerns in the U.S.
Pretty slim pickings this week in terms of economic reports. Later in the week, we'll get updates on first-quarter productivity, consumer credit and the trade balance for April.