LNG Danger To Our Communities TimRileyLaw.com 760-683-5898
ENERGY INDU$TRY CORRUPTION & ENERGY MARKET MANIPULATION
July 26, 2013
Halliburton has agreed to plead guilty to destroying evidence
WASHINGTON L.A. Times "Oil-field services giant Halliburton has agreed to plead guilty to destroying evidence in connection with the 2010 Gulf of Mexico oil spill, the Justice Department announced Thursday."
"The April 2010 explosion and sinking of the Deepwater Horizon drilling rig was the largest offshore oil disaster in U.S. history, killing 11 workers and spewing nearly 5 million barrels of oil into the gulf. The Macondo well was owned by a consortium of energy companies, led by BP. Transocean owned the drilling rig that BP was leasing for the venture. Halliburton was contracted by BP to do the cement work on the well.
The plea agreement was the third that the Justice Department has obtained in the criminal investigation of the disaster. Transocean agreed to pay $400 million as part of its criminal plea, and BP, $4 billion. A civil suit against the three companies brought by the Justice Department and others is continuing."
February 2009
KBR pleads guilty in Nigerian bribery case REUTERS UK "Appearing in U.S. District Court in Houston, KBR General Counsel Andrew Farley admitted that the company paid bribes to high-ranking Nigerian officials between 1994 and 2004 to secure four contracts for a KBR joint venture to build and expand Nigeria's Bonny Island liquefied natural gas terminal. Under a deal reached with the U.S. Justice Department, Houston-based KBR and Halliburton will pay a $402 million fine, of which Halliburton has agreed to pay $382 million. In a separate settlement with the U.S. Securities and Exchange Commission, Halliburton will disgorge $177 million in profits to settle parallel criminal charges that its former subsidiary violated the Foreign Corrupt Practices Act (FCPA)."
January 2007
ALERT: Congressional Probe Launched Regarding EPA Reversal Regarding BHPB's LNG Cabrillo Port Letter to EPA Administrator from Chairman of Committee on Oversight
US Justice Department, Nigerian and French Officials Launch Investigation
Business Report Online
Full Story: http://www.busrep.co.za/index.php?fSectionId=561&fArticleId=342422
By Curt Anderson
ABSTRACTS:
"Washington - The US justice department is looking into allegations that a subsidiary of Halliburton was involved in payment of $180 million in bribes to win a contract for a natural gas project in Nigeria, according to officials.
The $4 billion liquefied natural gas plant was built in the 1990s by a consortium that included Kellogg, Brown & Root during a time when US vice-president Dick Cheney headed Halliburton.”
February 6, 2004
HoustonChronicle.com
Nigerians
Join KBR Inquiry
Bribery Allegations at Halliburton Unit
Full Story: http://www.chron.com/cs/CDA/ssistory.mpl/business/2391984
From staff and wire reports
ABSTRACTS:
Nigeria ordered an investigation Friday into allegations that a Halliburton Co. subsidiary paid $180 million in bribes to land a natural gas project contract in the West African nation.
At that time, Vice President Dick Cheney was head of Halliburton, which is now based in Houston…
The $4 billion Nigerian Liquefied Natural Gas Plant was built in the 1990s by a consortium that included Halliburton subsidiary KBR, formerly known as Kellogg, Brown & Root.
March 5,
2004
Financial Times FT.com
Halliburton Under Attack On Home Front
Full Story: http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1078381545973
By Thomas Catan, Joshua Chaffin, Sheila McNulty, Michael Peel and William Wallis
ABSTRACTS:
“The probe centers on a series of payments totaling $180m (£97m, €145m), by a consortium that includes Halliburton's KBR subsidiary, to a London-based middleman between 1995 and 2002.
It is the only significant inquiry that centers on acts alleged to have taken place while Dick Cheney, US vice-president, was at the helm of the company. And the investigation is the only one occurring outside the auspices of the US government.
While the US Justice Department is investigating, the case has been most vigorously pursued by a French magistrate. The French press has reported that Judge Renaud van Ruymbeke is looking at whether charges should be brought against Mr Cheney for any misuse of funds that may have occurred. Nigerian authorities are also investigating.
The French judge is looking into whether - as a former director of the consortium has contended - the payments were funneled to Nigerian officials as bribes to secure contracts to build the Nigeria Liquefied Natural Gas project (NLNG)…
Investment in NLNG has already surpassed $9bn and will reach $11bn-$12bn by 2006, in what is already one of the largest such projects in the world.”
Jun. 11, 2004
SEC
probes bribery allegations involving Halliburton subsidiary
http://www.mercurynews.com/mld/mercurynews/business/financial_markets/8899978.htm?1c
KRISTEN HAYS
HOUSTON - The
Securities and Exchange Commission is formally investigating allegations that a
Halliburton Co. subsidiary was involved in paying $180 million in bribes to get
a natural gas project contract in Nigeria. Vice President Dick Cheney was head
of the oil services conglomerate at the time.
Halliburton on
Friday announced that the SEC has started a formal probe. The SEC's informal
investigation of the contract was disclosed in February.
The SEC isn't alone
in examining the contract, in which Halliburton subsidiary KBR, formerly known
as Kellogg, Brown & Root, is a 25 percent owner. Nigeria in February ordered
an investigation, and a French magistrate has been probing the payments for
months. The Justice Department is reviewing documents voluntarily provided by
Halliburton.
The company also
has been under fire for allegedly overcharging the government on contracts
related to the U.S. invasion of Iraq. Halliburton says the company is a
political target and denies wrongdoing.
The other partners
in the Nigerian project under scrutiny were Technip SA of France, ENI SpA of
Italy and Japan Gasoline Corp. Halliburton refers to the consortium as TSKJ.
The allegations
center on a $4 billion Nigerian liquefied natural gas plant built in the 1990s
by the four partners. The payments for the gas plant contract were allegedly
made to Nigerian officials.
Cheney was
Halliburton's CEO from 1995 to 2000 - five of the seven years in which the
clandestine payments were allegedly made. He resigned in 2000 to be President
Bush's running mate.
Halliburton said
the SEC and the Justice Department have asked the company to cooperate and
provide information in reviewing matters related to the project in light of
requirements of the U.S. Foreign Corrupt Practices Act. Halliburton spokeswoman
Wendy Hall said Friday that the company will continue cooperating with the
agencies, and noted an internal investigation into the matter is continuing.
Company
representatives also recently met with the French magistrate to express
willingness to cooperate with that investigation, Halliburton said.
"It is
important to our company that our clients, suppliers and host countries know
that Halliburton's code of business conduct is expected to be followed in every
country in which we operate," Hall said. That code sets standards that, at
a minimum, comply with U.S. laws.
Halliburton
officials don't believe the company has violated the Foreign Corrupt Practices
Act, but the company said "there can be no assurance that government
authorities would not conclude otherwise."
The company also said TSKJ and other similarly owned entities have entered into various contracts to guild (sic) and expand the liquefied natural gas project for Nigeria LNG Ltd., which is owned by the Nigerian National Petroleum Corp., Shell Gaqs B.V., Total affiliate Cleag Ltd. and Agip International B.V.
June 19, 2004
Halliburton
Severs Link With 2 Over Nigeria Inquiry
Full
Story: http://www.nytimes.com/2004/06/19/business/19halliburton.html?th
By SIMON ROMERO
ABSTRACTS:
HOUSTON, June 18 -
Halliburton said Friday that it was severing all ties with Albert J. Stanley,
until recently one of its highest-ranking executives, after investigations
showed he secretly enriched himself by channeling as much as $5 million from an
elaborate payment scheme for a Nigerian energy project to a Swiss bank account.
Halliburton, one of
the world's largest oil services companies, also said it was cutting ties with
another executive it suspects of being involved in the scheme, William Chaudan.
The two men retired from KBR, Halliburton's large engineering and construction
unit, but continued to work as consultants for the company. Mr. Stanley was
chairman of KBR until last December and kept an office at its headquarters in
Houston until this week.
The dismissal of
the two executives is the latest development in investigations under way in
France and the United States that have uncovered a $180 million web of payments
in connection with efforts to win contracts to build a $4 billion natural gas
complex in Nigeria. Some of the payments were made while Vice President Dick
Cheney was Halliburton's chief executive; he retired from that post in 2000. The
development also comes as Halliburton is being investigated by the government
because of accusations that it overcharged on its contracts in Iraq. The company
has defended its work and says the allegations are politically motivated.
Halliburton's
decision to cut ties with Mr. Stanley and Mr. Chaudan, for its part, is a
reversal for the company after it dismissed suggestions for several weeks that
they had been involved in improper or illegal activities.
Halliburton's
dealings in Nigeria have been a sensitive issue for the company for some time.
In May 2003, Halliburton disclosed to the S.E.C. a separate set of questionable
practices in Nigeria, when it said employees had made $2.4 million in improper
payments to Nigerian officials to obtain favorable tax treatment.
In a filing with
the S.E.C., Halliburton disclosed it had dismissed several employees for their
involvement in the payments but that none of its senior officers had been
involved in the matter. Halliburton's acknowledgment on Friday, however, that
KBR's chairman had been receiving his own payments as part of other dealings in
Nigeria reveals how illicit schemes may have reached the highest echelons of the
company.
By 2002,
Halliburton and its partners had completed much of the work on the natural gas
complex, which is on Bonny Island in Nigeria and is controlled by that country's
national oil company and Royal Dutch/Shell. Work is continuing there, however.
The companies freeze gas at the complex so it can be shipped in liquefied form
to customers in southern Europe and Turkey.
Craig S. Smith, in Paris, contributed reporting for this article.
November 8, 2004:
CNNMoney
Halliburton: Nigerian bribes probed
Company led a consortium that may have kicked back $180 million to win Nigerian natural gas project.
http://money.cnn.com/2004/11/08/news/fortune500/halliburton.reut/
NEW YORK (Reuters) - U.S. oil services giant Halliburton Co., plagued by several probes into its offshore operations, disclosed in a regulatory filing that improper payments to Nigerian officials may have been made in order to win a multibillion dollar contract.
The company also said that U.S. officials have issued subpoenas to current and former employees of Kellogg Brown & Root, its engineering and construction unit.
In its quarterly filing with the Securities and Exchange Commission, dated Friday, Nov. 5, Halliburton said that -- based on its own internal investigation as well as continuing government probes -- that "payments may have been made to Nigerian officials."
In September, Halliburton (Research) said that an internal probe found information suggesting that members of the TSKJ consortium, which it helps lead, considered bribing Nigerian functionaries a decade ago. Nigeria is investigating allegations that the consortium kicked back as much as $180 million to secure a contract for the TSKJ liquefied natural gas project.
At the time, the company turned over the evidence to the Justice Department, the SEC and a French magistrate who in turn gave the information to a Nigerian tribunal. Published reports have stated that Jeffrey Tesler, a TSKJ agent and British lawyer, is under investigation by the French magistrate.
The company added in its latest filing that "TSKJ has suspended the receipt of services from and payments to TSKJ's agent, Tri-Star Investments, of which Jeffrey Tesler is a principal, and is considering instituting legal proceedings to declare all agency agreements with Tri-Star terminated and to recover all amounts previously paid under those agreements."
In June, Halliburton severed ties with the chairman of its Kellogg Brown & Root unit, Jack Stanley. After retiring as chairman in December 2003, Stanley was accused of receiving "improper personal benefits" related to TSKJ and Nigeria.
"We understand that the SEC has issued a subpoena to A. Jack Stanley ... and to other current and former Kellogg Brown & Root employees," Halliburton said in the filing.
"We further understand that the Department of Justice has invoked its authority under a sitting grand jury...for the purpose of obtaining information abroad," it added.
Copyright 2004 Reuters All rights reserved.
April 9, 2004
Full Story: http://www.venturacountystar.com/vcs/news/article/0,1375,VCS_121_2795547,00.html
By David Kravets, AP Legal Affairs Writer
ABSTRACTS:
“Reliant and its four of its top-level workers were indicted by a federal grand jury Thursday on accusations that, among other things, they illegally manipulated prices by shutting down the power plants during a two-day period.”
“Reliant Energy Services Inc., its former vice president, a former director, a manager and a trader are accused of illegally increasing electricity costs while creating a ‘false and misleading appearance of an electricity supply shortage.’"
"The company and the four officials were charged with conspiracy, wire fraud and commodities manipulation.”
“The indictments, unsealed Thursday, said the company and officials disseminated false and misleading rumors to brokers about the maintenance status of power plants and the availability of power for three summer months in 2000 at the time of rolling blackouts in California.”
“Artificially high spot-market power prices were the result of "defendants' conspiracy, scheme to defraud and manipulation," the indictment said.”
“California Attorney General Bill Lockyer is also suing the company in federal court here on similar allegations.”
"Several other energy companies have paid fines stemming from the energy crisis. Three former Enron Corp. traders have been charged with wire fraud related to power price manipulation in California. Two of them have pleaded guilty and a third awaits trial in October.”
Copyright 2004, Ventura County Star. All Rights Reserved.
Ventura County Star
URL: http://www.venturacountystar.com/vcs/business/article/0,1375,VCS_128_2430334,00.html
Exxon Mobil hit with huge judgment
Alabama jury orders company to pay state $11.9 billion for gas royalties fraud
By Phillip Rawls, The Associated Press
November 15, 2003
MONTGOMERY, Ala. -- A jury ordered Exxon Mobil Corp. to pay $11.9 billion in damages Friday after finding the oil giant had cheated the state of Alabama out of natural gas royalties.
The jury, which began deliberating Thursday, awarded $63.6 million in compensatory damages and $11.8 billion in punitive damages, a record in the state.
Jurors had to find Exxon Mobil committed fraud to return the multibillion-dollar verdict Alabama sought. If the damages are upheld on appeal, the money would go into state coffers.
"We felt Exxon thought they were going to get away with this," said jury foreman Joe King, a teacher. "We wanted to send a message that they were not, and that this corporation can't get away with doing wrong."
Exxon Mobil spokesman Bob Davis said the verdict was excessive and the company would appeal. "We did not engage in fraud, pure and simple," Davis said.
The state sued Irving, Texas-based Exxon Mobil in 1999, contending the company had violated its leases for natural gas wells in state-owned waters along the Alabama coast. The state accused the company of cheating Alabama out of millions of dollars by intentionally deducting too much in expenses for operating the wells.
Exxon Mobil's attorneys said the company has followed its leases with the state and owed Alabama nothing.
The trial was conducted while the state has been going through a financial crisis that has resulted in about 800 state workers getting layoff notices. Some of the courthouse workers who dealt with the jury are due to lose their jobs Nov. 26, but the judge prohibited everyone involved in the case from mentioning the state's financial troubles or Exxon Mobil's financial condition.
Despite no mention of it, juror L.A. Wallace said Exxon's size and the state's problems were a factor in the decision to award more than the state's attorneys sought against Exxon Mobil.
"A billion dollars to them is chump change," said Wallace, who works at a plastics factory.
Attorneys said an appeal of the verdict means it could be years before the state knows whether it will collect any money.
The case was first tried in 2000, when a Montgomery jury awarded the state $3.5 billion. The decision was overturned by the Alabama Supreme Court, which said the jury was wrongly allowed to see an internal oil company memo. That prompted the new trial, which began Oct. 20.
Copyright 2003, Ventura County Star. All Rights Reserved.
Exxon backing off LNG plans?
Company dismisses report that it may reconsider Mobile project, but admits it has not begun permit process
01/16/04
By BEN RAINES
Staff Reporter
Full Story: http://www.al.com/news/mobileregister/index.ssf?/base/news/107424841113040.xml
ABSTRACTS:
"ExxonMobil officials on Thursday disputed this week's
industry reports that the company is reconsidering its decision to build a
liquefied natural gas facility on Hollinger's Island, two miles south of
Mobile's city limits."
"Davis' comments Thursday marked the first time the energy giant has drawn a connection between the fate of the LNG terminal and an Alabama jury verdict against ExxonMobil for a record-setting $11.9 billion in a separate royalty dispute. A Montgomery County jury agreed with state claims that ExxonMobil committed fraud in violating lease agreements for natural gas wells in state-owned waters along the Alabama coast."
"The state accused ExxonMobil of cheating
Alabama out of millions of dollars in royalty payments by intentionally
deducting too much in expenses for operating the wells. The Nov. 14, 2003, jury
award, which is being appealed, included $11.8 billion in punitive damages."
"In previous interviews with the Register, ExxonMobil officials stated that the outcome of the court case had no bearing on the company's LNG proposal."
"But Davis said Thursday, 'The court ruling, I think, is indicative of a general environment in Alabama that certainly concerns us.'"
Jun. 11, 2004
SEC
probes bribery allegations involving Halliburton subsidiary
http://www.mercurynews.com/mld/mercurynews/business/financial_markets/8899978.htm?1c
KRISTEN HAYS
HOUSTON - The
Securities and Exchange Commission is formally investigating allegations that a
Halliburton Co. subsidiary was involved in paying $180 million in bribes to get
a natural gas project contract in Nigeria. Vice President Dick Cheney was head
of the oil services conglomerate at the time.
Halliburton on
Friday announced that the SEC has started a formal probe. The SEC's informal
investigation of the contract was disclosed in February.
The SEC isn't alone
in examining the contract, in which Halliburton subsidiary KBR, formerly known
as Kellogg, Brown & Root, is a 25 percent owner. Nigeria in February ordered
an investigation, and a French magistrate has been probing the payments for
months. The Justice Department is reviewing documents voluntarily provided by
Halliburton.
The company also
has been under fire for allegedly overcharging the government on contracts
related to the U.S. invasion of Iraq. Halliburton says the company is a
political target and denies wrongdoing.
The other partners
in the Nigerian project under scrutiny were Technip SA of France, ENI SpA of
Italy and Japan Gasoline Corp. Halliburton refers to the consortium as TSKJ.
The allegations
center on a $4 billion Nigerian liquefied natural gas plant built in the 1990s
by the four partners. The payments for the gas plant contract were allegedly
made to Nigerian officials.
Cheney was
Halliburton's CEO from 1995 to 2000 - five of the seven years in which the
clandestine payments were allegedly made. He resigned in 2000 to be President
Bush's running mate.
Halliburton said
the SEC and the Justice Department have asked the company to cooperate and
provide information in reviewing matters related to the project in light of
requirements of the U.S. Foreign Corrupt Practices Act. Halliburton spokeswoman
Wendy Hall said Friday that the company will continue cooperating with the
agencies, and noted an internal investigation into the matter is continuing.
Company
representatives also recently met with the French magistrate to express
willingness to cooperate with that investigation, Halliburton said.
"It is
important to our company that our clients, suppliers and host countries know
that Halliburton's code of business conduct is expected to be followed in every
country in which we operate," Hall said. That code sets standards that, at
a minimum, comply with U.S. laws.
Halliburton
officials don't believe the company has violated the Foreign Corrupt Practices
Act, but the company said "there can be no assurance that government
authorities would not conclude otherwise."
The company also said TSKJ and other similarly owned entities have entered into various contracts to guild (sic) and expand the liquefied natural gas project for Nigeria LNG Ltd., which is owned by the Nigerian National Petroleum Corp., Shell Gaqs B.V., Total affiliate Cleag Ltd. and Agip International B.V.
June 3, 2004
Associated Press
Ventura County Star
Traders at Enron had jokes for California
Newly released tapes show employees 'gaming' system
http://venturacountystar.com/vcs/business/article/0,1375,VCS_128_2934469,00.html
By Kristen Hays, The Associated Press
HOUSTON -- Enron Corp. traders openly discussed manipulating the California power market and joked about stealing from grandmothers during the Western energy crisis in 2000-2001, according to transcripts of telephone calls filed with the Federal Energy Regulatory Commission.
The transcripts, some littered with profanity, were filed by a public utility district near Seattle.
The calls on the transcripts are central to the Justice Department's investigation of Enron's trading practices.
John Forney, a former top trader in Enron's defunct Western trading operation based in Portland, Ore., is slated to stand trial on charges of wire fraud and conspiracy. Two other former Portland traders, Timothy Belden and Jeffrey Richter, have pleaded guilty to one count of wire fraud and are helping prosecutors.
Energy merchants regularly tape trader conversations to keep a record of transactions.
"These tapes provide concrete evidence that there was manipulation and fraud perpetrated by energy companies in the 2000-2001 energy crisis in California," said Sen. Dianne Feinstein, who called on the California legislature to take action on AB 2006, the Reliable Electric Service Act, which would reregulate and protect small consumers served by utilities.
"This type of market manipulation can and will happen again if the energy market is not restructured," Feinstein said.
According to the Snohomish County Public Utility District, which obtained audiotapes of trader conversations from the Justice Department and transcribed them, traders openly discussed creating congestion on transmission lines, taking generating units offline to pump up electricity prices and overall manipulation of the California power market.
For example, in one transcript a trader asks about "all the money you guys stole from those poor grandmothers of California."
To which the Enron trader responds, "Yeah, Grandma Millie, man. But she's the one who couldn't figure out how to (expletive) vote on the butterfly ballot."
Conversations that involve Forney, Belden and Richter appear throughout the transcripts.
In one of those transcripts, a trader says to Richter, "So, uh, somebody's figured out how to set congestion?"
Richter: "Well, we ... we can set it if we want. I mean, it's not a hard game to do ... ."
In another, an Enron trader identified as David discusses shutting down a steamer from a generating unit to increase prices.
"I was wondering, um, the demand out there is er ... there's not much, ah, demand for power at all and we're running kind of fat. Um, if you took down the steamer, how long would it take to get it back up?
"Oh, it's not something you want to just be turning on and off every hour. Let's put it that way," another trader says.
"If we shut it down, could you bring it back up in three -- three or four hours, something like that?" David asks.
"Oh, yeah," the other trader says.
"Well, why don't you just go ahead and shut her down, then, if that's OK," David says.
Eric Christensen, a lawyer for the utility district, said it is seeking to convince a FERC administrative law judge that Enron should be ordered to surrender as much as $2 billion in unjust profits.
Copyright 2004, Ventura County Star. All Rights Reserved.
June 19, 2004
LA TIMES
EDITORIAL
Jolting
FERC Into Action
Federal energy regulators seldom seem to do
their jobs until the state of California gives them a swift kick. This time,
state Atty. Gen. Bill Lockyer had to deliver a Florsheim to the fanny of Federal
Energy Regulatory Commission Chairman Patrick H. Wood III, in the form of a
lawsuit against Enron Corp.
True to form, FERC officials ignored
recordings that demonstrated the outrageous tactics Enron traders used to game
the California energy market — until Lockyer's suit made it difficult to keep
pretending they didn't exist. During the height of the state's energy meltdown,
traders boasted of creating false congestion on power lines, ignoring price caps
and promising to make available power that the company never intended to
deliver. They even invented a name for their fictional victim: Grandma Millie.
As Lockyer said Thursday, "Grandma Millie ought to get her money
back."
The tapes build
upon evidence that California officials have been accumulating since the energy
market meltdown of 2000-2001. Past investigations produced strong evidence of
trading schemes that Enron and other energy companies used to manipulate
wholesale power prices, forcing Californians to endure roving blackouts and
sky-high utility bills. The latest tapes and transcripts, released as part of a
Washington state utility's lawsuit against Enron, describe even more schemes,
with names like Ping Pong, Donkey Punch and Russian Roulette.
Just hours before Lockyer filed his suit
against Enron on Thursday, FERC finally agreed to review the tapes to determine
whether California can use them in its long-running battle to force $8.9 billion
in refunds from companies that allegedly overcharged Californians during the
energy crisis. FERC Chairman Wood on Thursday described the tapes as indicating
a "corrosive attitude" throughout Enron. He's right, but why did it
take years to come to that conclusion?
The commission has been playing political
games since the energy market imploded. Rather than saving Californians billions
of dollars by immediately establishing stronger controls over wholesale power
prices, commissioners sat idle. They argue that Californians deserve only a
third of the amount being sought from power providers.
California's senators have had enough. Sen.
Dianne Feinstein is demanding that Wood promptly force energy companies to
refund what Californians are owed. Sen. Barbara Boxer wants to go even further.
In a June 16 letter to President Bush, she calls for the president to force the
resignation of commissioners who don't immediately side with Californians by
ordering the $8.9 billion in refunds. It's a clarion call that Wood should heed.
It's time for the FERC chairman to lead or leave.
Copyright 2004 Los Angeles Times
February 4, 2005
New York Times
Tapes Show Enron Arranged Plant Shutdown
http://www.nytimes.com/2005/02/04/national/04energy.html?oref=login&th
By TIMOTHY EGAN
EVERETT, Wash., Feb. 3 - In the midst of the California energy troubles in early 2001, when power plants were under a federal order to deliver a full output of electricity, the Enron Corporation arranged to take a plant off-line on the same day that California was hit by rolling blackouts, according to audiotapes of company traders released here on Thursday.
The tapes and memorandums were made public by a small public utility north of Seattle that is fighting Enron over a power contract. They also showed that Enron, as early as 1998, was creating artificial energy shortages and running up prices in Canada in advance of California's larger experiment with deregulation.
The tapes provide new details of market manipulation during the California energy crisis that produced blackouts and billions of dollars of surcharges to homes and businesses on the West Coast in 2000 and 2001.
In one January 2001 telephone tape of an Enron trader the public utility identified as Bill Williams and a Las Vegas energy official identified only as Rich, an agreement was made to shut down a power plant providing energy to California. The shutdown was set for an afternoon of peak energy demand.
"This is going to be a word-of-mouth kind of thing," Mr. Williams says on the tape. "We want you guys to get a little creative and come up with a reason to go down." After agreeing to take the plant down, the Nevada official questioned the reason. "O.K., so we're just coming down for some maintenance, like a forced outage type of thing?" Rich asks. "And that's cool?"
"Hopefully," Mr. Williams says, before both men laugh.
The next day, Jan. 17, 2001, as the plant was taken out of service, the State of California called a power emergency, and rolling blackouts hit up to a half-million consumers, according to daily logs of the western power grid.
Officials with the Snohomish County Public Utility District in Washington State, which released the tapes, said they believed Enron officials had taken similar measures with other power plants. This tape, they said, was proof of what was going on.
At the time, power plants in the greater West Coast grid were under a federal emergency order to keep their plants running.
A spokeswoman for Enron, Jennifer Lowney, would not comment on the tapes, citing a blanket policy of the energy trading company, which is operating under bankruptcy protection and facing multiple criminal and civil proceedings. "We continue to cooperate with all ongoing investigations," she said.
Conversations between energy traders and power plants were routinely recorded to give a record of transactions. The tapes were part of a large seizure of evidence by the F.B.I. The Snohomish County utility, which is in a court battle with Enron, obtained them through a legal action.
Previous tapes released by the district last summer showed Enron officials joking about how they were "stealing" more than a $1 million a day from California and fleecing "Grandma Millie" while bringing Enron record profits.
Other tapes released on Thursday showed Enron executives discussing their fear of going to jail for manipulating power markets in Canada and the United States. And memos showed that Enron practiced as early as 1998 to create artificial shortages and run up prices and extend the market manipulation to Canada.
Three former Enron traders have pleaded guilty to federal criminal charges of fraudulently manipulating the West Coast energy market. Enron's former chairman, Kenneth L. Lay, and former president, Jeffrey K. Skilling, are under federal indictment for fraud.
In cooperating with federal officials, West Coast traders have told how they devised schemes named "Death Star" and "Get Shorty" to make billions of dollars out of California's disastrous experiment with energy deregulation.
But until the tapes were released on Thursday, there had been few public details of how Enron set in motion the phony power shortages.
Company officials had long denied that they illegally shut down plants to create artificial shortages. In March 2001 - two months after the recording showed how the Nevada plant was shut down- Mr. Lay called any claims of market manipulation "conspiracy theories."
Memos uncovered by Snohomish County also show that Enron rewarded midlevel executives based on their performance in manipulating the West Coast market.
The tapes and memos were filed this week with the Federal Energy Regulatory Commission, as part of a broad investigation into how much money was lost by Enron market manipulation. Snohomish County is seeking to void a $122 million lawsuit by Enron over an energy contract the utility said was based on fraud.
Copyright 2005 The New York Times Company
February 9, 2005
Ventura County Star, Editorial
Utility district gets the goods
It reveals Enron manipulation
http://www.venturacountystar.com/vcs/opinion/article/0,1375,VCS_125_3533048,00.html
Call it the little power utility that could. Maintaining it was swindled by Enron, the Snohomish County Public Utility District is fighting Enron's $122 million lawsuit. The Seattle-area utility district's latest salvo came Thursday when it released audio transcripts and documents that showed Enron apparently knew of loopholes in California's electricity deregulation plan in November 1997, nearly five months before the plan went into effect. By May 1998, one month after deregulation was in place, Enron was already falsifying transmission schedules to inflate prices, the district said.
The district first gained prominence in May when it released profanity-laced transcripts of Enron traders cackling over stealing money from "Grandma Millie" in California during the state's 2000-01 energy crunch. In the latest transcripts, Enron traders are laughing in June 2001 as they conspire to take a power plant in Las Vegas off line on the same day blackouts hit an estimated 1 million customers in California. Doing so was a direct violation of U.S. Energy Secretary Bill Richardson's order to have generators send energy to California.
The evidence against Enron is damning. An internal Enron memo from May 1998 states that, when Enron receives a call from California's independent system operator to tell it it is out of balance, "tell them we intend to correct the imbalance in the 'hour-ahead' market. In fact, we really intend to do nothing."
By keeping power transmissions out of balance, Enron could increase the price of electricity and its own profit.
It seems strange such information comes from a utility district near Seattle rather than from the Federal Energy Regulatory Commission, but it is not surprising, as FERC has long dragged its feet, first in investigating the manipulation of the energy market and then in demanding appropriate refunds.
We would like to believe these newest revelations will prompt FERC to demand a substantial increase in refunds to California from energy generators that supplied energy to California during the energy crisis, but we're not holding our breath. That didn't happen when the utility district's attorneys gave FERC the transcripts from last year's revelations.
Energy users up and down the West Coast -- especially California, which is seeking $8.9 billion in refunds and an order that long-term contracts made during this period be renegotiated -- should be thankful the Snohomish County Public Utility District does not believe in letting suspected fraud go unpunished. It has used its meager resources to do what FERC should have been doing since the energy-market manipulations were first uncovered.
Snohomish County customers have been well-served by the district's three elected commissioners and district staff. The district deserves whatever support other utilities that have been gouged can give it.
Copyright 2005, Ventura County Star. All Rights Reserved.
April 13, 2005
Report: California "Energy Crisis" II Energy Giants Banking on Environmental Disaster
By Kelpie Wilson and Marc Ash t r u t h o u t | Report
SUMMARY: “At a time when oil men are running the federal government and energy issues have come to dominate our foreign policy, it is distressing to see the state of California, long a leader in renewable and clean energy, going down this path.” Kelpie Wilson and Marc Ash
"It's strange that men should take up crime when there are so many legal ways to be dishonest." -- Al Capone California, March 2001: rolling blackouts sweep through major cities, leaving entire communities without power. The explanation offered by private energy generators was simple: "There is a crisis, and we don't have enough power to meet the demand."
Three years, hundreds of investigations, and billions of taxpayer dollars later, a web of deceit, corruption and illicit profit are well documented and part of the public record. California State officials now acknowledge that power companies withheld more than enough power to have averted the blackouts, and they did it to drive up prices and profits. In fact, CBS News reported, federal investigators have power plant control room audio tapes of traders from Williams Energy telling plant operators to "turn off the juice."
Lesson learned? Apparently not.
The California Public Utilities Commission, charged with protecting California ratepayers and implementing a sensible state energy plan, is about to deliver ratepayers into the hands of oil companies wanting to hook the state into a dependency on expensive, imported liquefied natural gas (LNG) that comes at the end of a long supply chain over which Californians have no control...
Full More: http://www.truthout.org/docs_2005/041305A.shtml#
May 13, 2005
Pacific Coast Business times
http://www.pacbiztimes.com/index.cfm?go2=articles/wk_051305d
Consumers get shafted as politicians debate LNG
Henry Dubroff Business Times Editor
Liquified natural gas has been big news lately in California.
The Bush Administration is touting the need for the United States to build facilities to import massive quantities of this super-cooled energy source to fuel the economy of the West Coast.
The administration wants federal authorities to pick whether the Port of Long Beach, two locations off the coast of Ventura County or another location will be the point of entry for fuel shipped thousands of miles from Qatar or Australia. Over the objection of local politicians, such as Ventura County Supervisor John Flynn and U.S. Rep. Lois Capps, D-Santa Barbara, it wants to bypass local environmental reviews and put LNG ports on a fast track.
The rationale for LNG is that natural gas is in short supply.
But the reality is that North America is swimming in natural gas, so much so that some of the world’s largest energy companies believe prices could plunge by 80 percent or more if just one new source came on line.
If you read between the lines of the LNG debate, you will see clearly that the politics of natural gas have trumped the economics of natural gas at every turn. American consumers and businesses are getting ripped off every time we take a shower or turn on a heater.
That’s because the current market price for natural gas, something like $6.65 per thousand cubic feet, assumes that huge reserves in Alaska and Mexico will never be tapped. Indeed, it only makes sense to ship LNG from Qatar or Australia to Oxnard or Long Beach if North American sources remain bottled up. That seems to be a very safe bet, for now.
How much gas is there? In Alaska, supplies could be as much as 200 trillion cubic feet, enough to meet U.S. demand for decades, perhaps centuries.
Easily available is 20 trillion cubic feet that ExxonMobil, Conoco Phillips, and BP have been injecting back into the ground as part of their North Slope oil drilling.
This reservoir alone is so vast that it could displace one-third of current U.S. imports for decades, if a single 48-inch pipeline were constructed to bring it to the lower 48 states.
But the pipeline plan is going nowhere because everybody involved in Alaska wants a free lunch. Construction companies want government-guaranteed loans. Canada, a major exporter to the U.S., wants to collect charges for connecting the Alaska pipeline to its Mackenzie River gas gathering operation.
Even worse, the piggish oil giants are insisting on a guarantee that the U.S. government—that means you—will support natural gas prices should they fall below $1.25 per thousand cubic feet. This is an outrageous demand that carries with it the implication that North American reserves are so vast that prices could plunge 80 percent from current levels.
Environmentalists are equally piggish. They would rather oppose the Alaska pipeline, then stage confrontations over plans to open up hard-to-drill areas in Colorado in Wyoming to meet growing demand. These high-profile fights are great for fund raising, but they don’t solve our long-term energy problems.
The third outrage is Mexico, which currently soaks up 1 percent of U.S. natural gas output even through its supplies are so vast as to be incalculable. Mexico is a laggard because cash-strapped Pemex, the government-owned oil company, refuses to bring in private parties to develop its natural gas fields.
In the Wall Street Journal on May 6, Pemex Chief Luis Ramirez begged for outside help to develop the gas fields “even if they crucify me.”
Natural gas is a clean fuel for creating electricity. It probably will have wider use as a fuel to generate hydrogen for the next generation of autos.
Natural gas is abundant, and there’s no reason for the current price other than the fact that natural gas does not have the kind of political constituency that made Terry Schiavo front page news.
Depending on your perspective, LNG is either a sham or a scam. And the current price of natural gas is one of the biggest rip-offs of the 21st century.
--Henry Dubroff can be reached via e-mail to hdubroff@pacbiztimes.com
August 15, 2005
Reliant Energy Will Pay $460 Million to Settle Claims
New York Times, United States
By VIKAS BAJAJ
Reliant Energy and the state of California said today that the company will pay $460 million to settle claims that it profited from the California energy crisis in 2000 and 2001.
The settlement would cover a host of claims brought against the company by officials from three states - California, Washington and Oregon - electric utilities, and ratepayers, and it would bring the total fines and settlements Houston-based Reliant has paid thus far to $525 million.
Officials say Reliant and other power companies like Enron manipulated the West Coast electricity market, which had been recently deregulated, by creating artificial power shortages to boost profits. Consumers in California, meanwhile, saw soaring electricity rates.
Including today's deal, power companies have agreed to or have been forced to pay a total of $5.29 billion to settle charges related to the California energy crisis, according to the California attorney general's office. The Reliant settlement has to be approved by the Federal Energy Regulatory Commission and the California Public Utility Commission.
"Along with Enron, Dynegy and El Paso Corp., they broke the rules and violated the law," Bill Lockyer, the California attorney general, said in a statement. "This settlement holds Reliant accountable for its substantial role in the rip-off that was the Energy Crisis."
Without directly admitting or apologizing for any wrongdoing, Reliant said in a statement that it is "responsibly addressing legacy issues such as these."
"Today, Reliant is a very different company than it was in 2000 and 2001," Joel Staff, the company's chairman and chief executive, said in a statement, noting that the company has new board members and senior executives.
About $150 million of the settlement announced today will be paid in cash to the states and other parties. The remainder of the settlement will be made as waivers of unpaid bills from Reliant to electric utilities, which bought power from the company through the state's deregulated power grid.
California agencies and utilities will collect $453 million, and Washington and Oregon will take $7 million. Mr. Lockyer's office said most of California's proceeds - $430.5 million - will eventually go to ratepayers through refunds, credits and lower electricity rates. Attorney fees and costs will total $15 million; plaintiffs in private class-action lawsuits will receive $4.5 million; and municipalities and local water districts will get $3 million.
Copyright 2005 The New York Times Company
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