Posted on 04/26/2002 5:02:13 PM PDT by snopercod
California GOP gubernatorial candidate Bill Simon Jr. has portrayed himself as a savvy businessman who can deal successfully with the state's financial woes. But Simon's ties to Enron, the bankrupt energy company that has been charged with manipulating the electricity market in California and is under federal investigation, raise questions about his business acumen and his fitness for the state's top post.
Former business associates of Simon say that he personally persuaded Enron to invest in Hanover Compressor, a Houston company he founded in 1990 and on whose board he sat between 1992 and 1998. Hanover makes pumps that move natural gas and oil through pipelines and from wells. According to several people at Enron and Hanover involved in the transaction, the Enron investment was made in 1995 through an Enron partnership called Joint Energy Development Investments, or JEDI, which is now at the center of the federal investigation into Enron's collapse.
Simon held a 1.4 percent stake in Hanover, which after the JEDI investment was worth tens of millions of dollars. His father, William Simon, the former energy czar and Treasury Secretary under Richard Nixon, runs a private investment firm, William E. Simon & Sons, which owns more than 4 percent of Hanover. The younger Simon declined requests for an interview. He has previously dodged questions about his relationship with Enron.
JEDI was at one time Hanover's second-largest shareholder, with an $84 million stake in the company, according to a Securities and Exchange Commission filing. Last June, JEDI shifted most of its shares to another off-balance-sheet Enron partnership. JEDI's stake in Hanover allowed the Enron executives who managed JEDI to attend Hanover board meetings. Hanover executives said Simon and Enron came up with several joint-venture ideas.
Simon was also involved in Hanover in matters separate from the Enron deals that could raise legal concerns. Hanover said in February that it would have to restate its financial results beginning in January 2000 because of improper accounting for a partnership that--as with Enron--made the company appear more profitable than it was. Over several years during this time, according to the Wall Street Journal, Hanover officers sold millions of shares of stock--again much like Enron, where officers who were allegedly aware of the company's accounting practices were encouraging employees and others to buy shares even as they were selling their own. Hanover is now the target of at least four class-action lawsuits by shareholders who have alleged the company misled investors; and it is also under investigation by the SEC.
Simon wasn't a member of Hanover's board at the time of the improper accounting, but a week before Hanover made the announcement, the company reported that every annual report it has issued since going public in 1997 contained errors. Simon, as a member of Hanover's audit committee, was responsible for approving the company's annual reports. The audit committee, according to Hanover's investor relations department, was held responsible by Hanover for the error.
Simon helped Hanover set up a partnership in the Cayman Islands, Hanover Cayman Limited, as a tax shelter. In addition, he assisted Hanover in setting up a joint venture with Enron and JEDI to construct a natural-gas compression project in Venezuela.
Jamie Fisfis, Simon's campaign spokesman, said Simon has been forthcoming about his business dealings with Hanover and Enron. But when asked about JEDI's investment in Hanover and what role Simon played, Fisfis said he did not know and would only confirm that Simon was a member of the Hanover board at the time. Moreover, he could not offer an explanation when asked about the other joint ventures with Enron that Simon's former business associates said he had a hand in creating. Simon has told reporters on the campaign trail that he was barely involved in Hanover's business activities, but Hanover executives say Simon was intimately involved during his six years on the board. When Simon left the board in 1998, he sold most of his 430,000 shares in the company. However, he still has more than $1 million invested in Hanover, according to the Associated Press.
Sherry Bebitch Jeffe, senior scholar of the University of Southern California's School of Policy, Planning and Development, said Simon has to start answering questions about his dealings with Enron, "whether it be good or bad," or risk alienating voters. "The symbol that Enron has become is negative, cheating and ruthless."
Roger Salazar, a spokesman for Governor Gray Davis, who currently trails Simon according to the latest polls, said Simon's close ties with Enron pose questions about his track record: "For a man who touts himself as a business manager, these types of activities raise questions whether that's true."
I should have known when he never followed up (as he promised he would) on the Prototype Carbon Fund connection in Klamath Falls.
Judging by the dates, his involvement with the company was most likely confined to helping it go public. Once it went public, he locked in his gains and retained only a token relationship with the company.
The Nation is going to have to try a lot harder than this.
D
Agreed. This article is really weak.
Yeah, like Gray never took Enron money. Right. Gag me with a spoon.
The media guys are really working overtime looking for dirt on Simon.
I don't think this amounts to anything!
I on the other hand, do not think it sad, but welcome information. He is an investigative reporter, and this will be reported, if not by Jason, then by LA Times, etc. Where does he spin? Or bash, or shill? He has sources who share information. He reports it - I am able to draw my own conclusions.
And thanks for the ping!
...this will be reported, if not by Jason, then by LA Times, etc. Oh, the "everybody does it" defense? Is it not possible for an journalist who doesn't tow the democrat-socialist line to make a living out there today?
Where does he spin? Or bash, or shill? This was clearly a democrat hit piece, one of many we are seeing in the press lately. The "acusations" were weak, but the piece was written in emotional language designed to inflame.
And why did Jason contact Davis's office for comments, but not Simons? Jason didn't even give the man a chance to defend himself. This is "reporting"? No, it's propaganda, pure and simple.
I had thought that Jason was better than that once. That's what is sad.
OH REALLY, HE DIDN"T SEEK SIMON'S COMMENTS? I am beginning to question your reading comprehension skills.
"Jamie Fisfis, Simon's campaign spokesman, said Simon has been forthcoming about his business dealings with Hanover and Enron. But when asked about JEDI's investment in Hanover and what role Simon played, Fisfis said he did not know and would only confirm that Simon was a member of the Hanover board at the time. Moreover, he could not offer an explanation when asked about the other joint ventures with Enron that Simon's former business associates said he had a hand in creating. Simon has told reporters on the campaign trail that he was barely involved in Hanover's business activities, but Hanover executives say Simon was intimately involved during his six years on the board."
I think this lead in was the only bad part of the article.
For a clown to speak of Enron and to conveniently forget the Grey Davis got THE LARGEST individual contribution from Enron (over $900k) takes some nerve and extreme stupidity!
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