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Show E| TheSalt Lake Tribune BUSINESS Wednesday, May8, 2002 Enron Hid Problems, Directors Claim | Senate panel says board members failed to protect shareholders in collapse SALE BYMARCY GORDON THE ASSOC! TATED PRESS WASHINGTON — Directors of bank: rupt Enron Corp., under scrutiny by a Senate investigative panel, said Tuesday that executives of the company and its auditor Arthur Andersen hid from them in the company’s behavior the information they needed to exercise oversight and deal with problems. makersaid Tuesday. There have been no reports of fires, accidents, claims of property damage or injuries because of the problem, .GM said. It said the midsized SUVs have fuelline connector fittings that maydisconnect at the fuel filter outlet. The automaker said a connectorfitting retainer maynotlatch onto the fuel filter tube as intended. GM dealers will replace the fuel filter connect retainers at no cost to their customers. Owners will be notified of the recall by mail and given pre- cautions to take until their vehicles are repaired. Consumer Reports Recalls Gift Car-Kits WASHINGTON — Con- sumer Reports, the magazine that uncovers safety problems in everything from appliances to beauty products, saysit is guilty of giving consumers a potentially danger- ouspi S ‘The magazine’s publisher, Consumers Union, is recall- “We cannot, I submit, be criticized for failing to address or remedy problems that were concealed from us,” Herbert Winokur,a director and chairman ofthe Enron board's finance committee, testified at a hearing by the investigative panel of the Senate Governmental Affairs Committee. John Duncan,former chairman ofthe board’s executive committee, said that the directors “thoroughly executed their duties” and that management withheld significant financial problems from them. “I do not believe that Enron’s fall would have been avoided”if the directors had asked more questions, Duncan told the hearing. But senators insisted that the direc- tors shared responsibility for Enron's stunning collapse andfailed in their duty to protect shareholders of the energytrading company. “The board must exercise indepenn Sen. Carl Levin, D-Mich., told the five dent judgment,” committee cl Attorney specialized in securities, taught at U., Westminster ‘THE SALT LAKE TRIBUNE. Salt Lake City attorney Norman Stanley Johnson, case and tire pressure gauge that gives inaccurate readings, which could lead peopleto improperly inflate their tires. and Exchange commissioner ‘The National Highway TrafSafety Administration, Tuesday, says customers should remove the flashlight batteries and throw out the flashlight and gauge. Interest Rates To Remain who served as a Securities during the Clinton Administration, died Saturday in St. George at age 71. Johnson, a Republican, worked for the Salt Lake City law firm of Van Cott, Bagley, Cornwall and McCarthy from 1981 to February 1996, when he moved to Washington, D.C., to accept the appoint- monthsofthe year. However, since that time a number of statistics have pointed to an economy that was slowingafterits initial spurt out of the starting gate. The unem- Unchanged ploymentrate shot up to 6 per- centin April, the highestlevelin nearly eight years, and many analysts said it was likely to @ Continued from B-4 climbto 6.5 percent by June or the funds rate for an 1ith time asit was fighting to counteract the effects of last year’s recession and thejolt of the Sept. 11 terrorist attacks. Many analysts had pre. dicted at the last Fed meeting March 19 that the central bank mightbegin raisingrates at the May meeting. They based this forecast on the unexpectedly strong rebound in growth that was occurringin thefirst three July before the recovery picks up enough momentum to start pushing thejobless rate lower. Because of that, analysts have now switched their expectations for the Fed's first rate increase to late summeror earlyfall, thinking it will occur at either the Fed's August meeting or in September. The Fed’s next rate-setting meeting will be June25-26. Probe, Prosecutor Says JOSEPH LIEBERMAN electric powerproject in India that subsequently failed, for example. In addition, many of the directors Democratic senator from Connecticut directors sitting before him. “The board is not supposed to be a rubber stampfor auditors or attorneys.” Levin produced a document presented to the board’s audit committee in February 1999 by David Duncan, Andersen's lead auditor for Enron. Duncan, referring to a series of complex financial transactions, wrote by hand in the lowerright-hand corner:“Obviously, we are on board with all of these, but many pushlimits and have a high. . . risk profile.” offenders,” Newkirk said. U.S. District Judge Melinda Harmon ruled Tuesday that prosecutors can introduce evidence of similar SECallegations regarding the firm’s audit work for Waste Management and » Sunbeam Corp. Last year, Andersen agreed to pay $110 million to Sunbeam shareholders to settle a fraud lawsuitalleging the firm helped the } appliance makerinflate profits in 1997-1998. Hardin vigorously protested theintroduction of Andersen’s earlier “bad acts” and much of ‘ * ‘ | and include a certification pro. 0ess to ensure that only | | someofthem had with the company, and ties they had with charities that received large donationsfrom Enron. The directors “must accept some of the blame for failing to uncover the crookedness in the company’s behavior and books,” Lieberman charged. The subcommittee wasseeking to determine whatthe directors knew of Enron’s complex financial dealings, in- cluding a web of thousands of off balance-sheet partnerships used to hide some $1 billion in debt from investors andfederal regulators. Directors and top Enron executives have been criticized by lawmakers for reaping hundreds of millions of dollars Duncan has pleaded guilty to ordering from selling their company stock in 2000 and 2001. Many ordinary employeeslost nearly all their retirement savings as Enronstock plunged inthefall. the shredding of Enron-related documents and has agreed to cooperate with federal prosecutors in their criminal operations of Coldwell Banker Premier Realty and Mansell and Associates. In addition to the Salt Lake location, Coldwell Banker Commercial NRT has offices in Summit, Utah and Webercounties. Qa Big-D Construction of Salt Lake City has been awarded a contract to build a new corporate headquarters for Mountain America Credit Union. The 100,000-square-foot build. ing, which will be at Jordan Landing, 7181 S. CampusDrive, West Jordan, will replace the credit union’s currentlocation at 660 S. 200 East, Salt Lake City. Big-D expects to begin construction this month with an anticipated completion date offall 2003. Qa Newspaper Agency Corp., the advertising, circulation News, announced a_partnership with Wrap-N-Roll USA, a Sandy-based company that wraps advertisements onauto- Supreme Court law clerk, Heis survived by his wife, Johnson worked at the quickly moving on to a posi- Carol; three daughters, Kelly, agency, which regulates the tion as an assistantat- mentbyPresident Clinton. nation’s securities markets, until May 2000, when hereturned to Van Cott Bagley. torney gen- eral in Utah. Johnson was an SEC trial _attor- Johnson had battled cancer inrecentyears. “His body was so beaten up by cancer treatments that he had a hard time fending off other problems such as dehydration and respiratory problems,” Van Cott Bagley presi- dent Robert M. Andersonsaid. Johnson was born Sept. 28, 1930, in Boise, Idaho, and earned his law degree in 1959 from the University of Utah, where he specialized in securities law. He began his career in 1959 as a Utah of waiting is that outside of energy, there are nosignsof in- flation problems. “The Fed doesn’t want to do anything to derail the economic recovery,” said Neil Wolfson, national partner at KPMG InvestmentConsulting Group.“It is just getting going andit is showing nosigns ofinflation.” Before the Federal Open Market Committee, the panelof Fed board members and regional bank presidents, convened for Tuesday's closeddoordeliberations, the governmentreleased a report showing that Americans’ productivity, the amountof output per hour of work, roared ahead at an annual rate of 8.6 percent in the first quarter, the best quarterly Greenspan has been one of the leading proponents of the ney from 1965 to 1967 and began Catherine and Lisa; and 10 grandchildren. Friends of Johnson have left messages on a Website mobile surfaces. NACwill offer clients the opportunity to ad. vertise their products on NAC. owned vans using Wrap-NRoll’s system. .com.Thesite contains information onthe funeral, which Freestyle Marketing Group,a Salt Lake City-based advertising agency, has been selected as the agency of record is set for Thursday in Salt LakeCity. City-based created by his family at www.normansjohnson for Create-A-Check,a Salt Lake provider of the SECinvestigation into Enron-related shred- over government lawyers’ objections. “Did they ask you to bring in a bunch ofextraneous stuff?” Newkirklater acknowledged hedid not know whether the shredding had anything to do with Andersen'sspotty recenthistory. Thetrial is expected tolastat least three weeks. If convicted, Andersen could face up to a $500,000 fine and 5 years of probation. It could also be fined upto twice any gains or damages the court determines were caused by the firm’s action. Tanzanite, a blue gemstone tofinance the al-Qaida terrorist organization. The sales ban by key U.S. merchants has hurt Tanzania’s mining industry, the east African nation’s governmentsays. A State Department spokes- foundonly in a tiny patch of graphite rock in Tanzania, has grown in popularity among U.S. consumers, who account for about80 percentof its sales. Irving-based Zale, Tiffany & Co. and QVC Ine., which together constitute the world’s largest market for tanzanite, stopped selling the gemstone in the fall after The Wall Street Journal reported that Osama bin Laden loyalists were buying tanzanite in Tanzania, smuggling it out and selling it gem and mineral show in February,said there is no evidence that any terrorist organization is currently using tanzanite to finance terrorism. But he said al-Qaida had undoubtedly sold tanzanite to finance its operations, Zale issued a ‘statement Tuesday saying no one has been ‘able to substantiate a link betweenterrorists and tanzan: ite since the chain pulled the product in the fall. mined and exported gemstones are sold, The rules were announced in February after a meeting in Tucson, Ariz., between representatives of the jewelry industry and Tanzania. man,speakingto reporters at a ac- his own law firm in the “I am humbled and honored to have known Norm” counting software. Q early 1970s. He also taught business said Loretta Gale, a good friend of daughter Kelly and and securities law at Westminster College and the Uni- the Johnsonfamily. MHTN Architects of Salt Lake City was ranked among the nation’s top 500 design firms by Engineering News Record magazine. MHTN em. ploys more than 100 and was the only Utah architectural firm to make the ranking. Johnson versity of Utah. “He was a good trainer and “He treated everyone equally, whether they were the janitoror the presidentof teacher of young lawyers,” Andersonsaid. the United States. That’s just the way he was.” view that productivity growth increases. has shaken off two decades of The national averagefor 30year mortgage rates dropped weakness, reflecting huge in- vestments in the 1990s in high- last week toa six-month low of of its decision, the Fed indi cated thatit wasstill concerned about how strong consumer demand and business invest tech equipment. Higher productivity means 6.78 percent, giving homeown- mentwill be in coming months that employers havetheability to boost workers’salaries and ers who missed last year’s after the initial burst in activ mortgage refinancing boom another opportunity. In its one-page explanation as businesses stopped reducing inventories. pay for the increases through higher output rather than by raising prices. It also should bolster sagging profits. “The stronger productivity, the more likely profit margins are to widenandtheless infla- ity provided in thefirst quarter ASK FOR ONE TODAY AT a TA AAU KUL tion pressure,” said Bruce Steinberg, chief economist at Merrill Lynch in New York. While the Fed directly controls short-term interest rates, it also influences long-term rates, which have beenfalling in recent weeks as financial markets grew less worried about imminent Fed rate a| oa MOTHER'S DAY Newkirk’s testimony, which centered onhis investigations of Sunbeam and Waste Management. He was notinvolved in the Enron probe. Because Newkirk hadnodirect knowledge of Zale Jewelers to Resume Tanzanite Sales * Lake City. The moveto an ex- Sen. Joseph Lieberman, D-Conn., citing consulting contracts worth millions that Robert Jaedicke, who headed the audit committee, told Levin in response to questions that he did not recall seeing Duncan's note or his use of the words “pushlimits.” Coldwell Banker Commercial NRThas relocated its headquarters to the Old Mill Corporate Center I, 6340 S. 3000 East, Suite 200, in Salt panded space of 10,000 square feet is the result ofa merger last year between the commercial themselves hadconflicts ofinterest, said i onthestandinthistrial. “Did [prosecutors] tell you to comein here and throw a bunchof mudonthe wall?” Hardin said @ Continued from B-4 DALLAS — Zale Corp., owner of some of the nation’s leading mall jewelry stores, Saysit will resume sales of tanzanite, which it halted in the fall after reports thatterrorists benefited from trading in the gemstone, Zale said Tuesday it was reSuming the sales after the Tanvanian governmentannounced rules that would regulate trading and allow suppliers to track the origin of gems starting at the mine, plex financial arrangements knowing that Enron's management “handed out bonuses like candy at Halloween” some$50 million for closing a deal on an ding at Andersen, Hardin questioned why he was ‘THE ASSOCIATED PRESS | and books.” performance in 19 years. Part of the reason analysts believe the Fed has the luxury Andersen Anticipated BY DAVID KOENIG* eral court in Houston. Levin said directors approved com- Former SEC Member Johnson Diesat 71 tive to new subscribers. Thekits contain flashlight that can overheat and melt the which announced the recall | | andprinting agentfor The Salt Lake Tribune and the Deseret ing 15,000 glove compartment organizers sent as an incen- fic | accounting firm. Opening statements in the trial were beginning Tuesday in fed- Se * Free Caller I.D. * Free Paging ong Distance & * Free Voice-Mail * Call Waiting/Call hold ¢ Three Way Calling Digital Roaming $39” ECOG Reretsy SLID fen Ronis Tene Tae 0 SST ms $49 WOOWheneser Min ‘MotorolaT-193 z to repair a possibile problem with fuel-line fittings, the auto- obstruction-of-justice case against the i DETROIT General Motors Directors “must accept some ofthe blameforfailing to uncoverthe crookedness beeen eeeseeny GM Recalis SUVs For Fuel-Line Fix Reg. ‘99” sn rh ty hr wria be ina es you oeyout Siren CORRECTION. yo Maye required Wo |