Enron Names New CEO
Cooper replaces former chief executive and chairman Kenneth Lay, who resigned last week under pressure from Enron’s bankruptcy committee and multiple congressional investigations.
Enron’s directors and bankruptcy committee will continue its search for a permanent company chairman, though Lay will remain on the board.
As a managing principal of New York restructuring firm Zolfo Cooper, Cooper has helped reorganize insolvent companies like Sunbeam, Federated Department Stores, and Morrison Knudson.
Cooper most recently served as chief restructuring officer and vice chairman of Laidlaw Inc., a financially troubled bus company.
Enron president and chief operating officer Lawrence Whalley resigned on Tuesday and accepted a position with UBS Warburg, a large Swiss investment bank that recently purchased Enron’s trading unit.
Whalley will be replaced by Chief Financial Officer, Jeff McMahon, while Treasurer Ray Bowen fills McMahon’s shoes.
Despite the reshuffling of top management, Enron’s board said it will focus on salvaging the company’s main operations and reviving its financial status. At its peak, Enron reported the seventh-highest earnings of any U.S. company. It filed for bankruptcy on Dec. 2 after its stock plunged below eighty cents, causing thousands of Enron employees to lose their 401(k) retirement savings.
Analysts predict Enron’s remaining assets will be sold off to its creditors or other energy companies.
Senate hearings begin
The selection of the new CEO came as the Senate Committee on Energy and Natural Resources opened its hearings on how Enron’s bankruptcy could affect deregulated energy markets and how lawmakers could prevent a similar crisis. The heads of various regulatory groups, including the Federal Energy Regulatory Commission (FERC) and the Commodity Futures Trading Commission (CFTC) attended the hearing.
FERC Chairman Patrick Wood III and CFTC Chairman James Newsome both testified Enron’s sudden demise did not mean existing energy regulations had failed. Both men, along with several senators, said no new energy market laws appeared to be needed.
“[Enron’s collapse] appears to be a story of lies, of deceit, shoddy accounting, corporate misconduct and cover-up,” Sen. Frank Murkowski (R-Alaska) said. “But we can not lose sight of the fact that this is a business failure, not an energy market failure.”
Several committee members voiced concerns about whether energy trading should be subjected to the same federal oversight as other traded commodities, noting the sudden drop in long-term energy prices one day after Enron declared bankruptcy.
“That certainly raises questions about whether Enron was manipulating the West Coast market,” Sen. Ron Wyden (D-Ore.) said.
The majority of Enron’s trading activities occurred in unregulated energy markets exempt from regulation by the CFTC, the watchdog of energy market transactions.
Robert McCullough, an consultant for large energy companies like Northwest Utilities, testified that the one-third drop in long-term energy prices was a “very clear implication… that Enron may have been using its market dominance to set forward [future energy] prices.”
The Senate committee is exploring whether energy markets should face the same regulations as other commodities.
CFTC Chairman James Newsome testified that his commission had no evidence that Enron inflated energy prices on the futures market.
At least eight other congressional committees are investigating different aspects of Enron’s collapse.