Friday, July 1, 2022

Should Businesses Make Political Statements?

Introduction

Should businesses make political statements? To attempt to answer this question I spent some time reviewing the opinions of the US Supreme Court (SCOTUS) and their evolving decisions on corporate rights. It has been 213 years since SCOTUS made its first opinion regarding corporate rights. 

Corporate Rights History

Following the ratification of the US Constitution, in the 1st Session of Congress, the Judiciary Act of 1789 was passed. This established the Federal Judiciary and also established diversity jurisdiction in Federal District Courts. This jurisdiction requires two conditions to be heard in Federal court: first, the plaintiffs and defendants must be from different US states; and second, the "amount in controversy" must be greater than $500. That amount has been updated five times by Congress, and the most recent updated amount is $75,000.

1806 Strawbridge v. Curtiss - Federal diversity jurisdiction is upheld by SCOTUS and confirms that it requires that no plaintiff is from the same state as any defendant.

1809 Bank of the United States v. Deveaux - Chief Justice John Marshall held that citizens or shareholders that comprise a corporation could sue in Federal Courts on the grounds of diversity jurisdiction. All plaintiffs and defendants must be in their same respective states to have diversity jurisdiction. Meaning if a corporation had members in Virginia and Maryland it could not sue a citizen or corporation in New York because the plaintiffs are not in the same state. It also held that corporations may sue on behalf of the citizens or shareholders, but they cannot be citizens. 

1844 Louisville, Cincinnati & Charleston Railroad Company v. Letson - Associate Justice James Wayne held that corporations are considered citizens in the US state they are incorporated.

1853 Marshall v. Baltimore & Ohio Railroad Company - Held that corporations are to be treated as citizens for deciding court jurisdiction, but do not have the same constitutional rights as the citizens.

1886 Santa Clara County v. Southern Pacific Railroad Company  - Even though it is not explicitly stated in the High Court's Opinion, later rulings cited Santa Clara that it was "well settled" whether corporations were persons and the 14th Amendment of the US Constitution which establishes citizens' equal protection under the law also extends to them.

1898 Smyth v. Ames - Although this case was ultimately overturned, the Court held that the State of Nebraska did violate the corporations14th Amendment rights by not extending proper due process under the law.

1906 Hale v. Henkel - Held that like citizens, corporations have the same 4th Amendment rights. They are protected from unreasonable searches or seizures.

1931 Russian Volunteer Fleet v. United States - Held that foreign corporations were protected against  unlawful government seizures, under the 5th Amendment which provides for fair treatment in the legal system,  

1977 United States v. Martin Linen Supply Company - Held that the double jeopardy rule is also extended to corporations

2010 Citizens United v. Federal Election Commission - Held that the government cannot limit independent campaign donations because it is considered a type of speech. The Court extended the freedom of speech to corporations.

2014 Burwell v. Hobby Lobby Stores, Inc. - Held that requiring corporations to provide contraception to their employees violated the corporation's freedom of religion. This Court concluded that the corporation can exercise the religious rights of its owners. 

My Take

After reviewing the history of corporate personhood and rights, I would agree with the SCOTUS. It is only logical to say corporations comprised of owners, employees, and shareholders who are entitled to the rights in the US Constitution's Bill of Rights should be extended to those same corporations and businesses. 

Now, I would argue that just like how a citizen is able to say most things freely, the question is should they make statements? 

We've established that a company can make a public political statement, but should corporations commit to any side? I would argue that a company's sole focus is to bring in revenue and profits for its owners or shareholders. Making any political statement on any side of the spectrum could be detrimental to its business. In making statements, it may be virtuous, but at the same time, your customer base shrinks, and potential revenue and profits shrink. One could argue that in those scenarios the leadership of the company did not perform their legal fiduciary duty.

It is my own opinion that it is best/proper for a company to remain neutral politically across the spectrum and focus on its customers and business revenues and profits. 

Sunday, April 24, 2022

US District Judge Strikes Down CDC Mask Mandate

 

In a recent court case, US District Judge Kathryn Kimball Mizelle struck down the CDC's mask requirement that went into effect on February 3, 2021; concluding that the CDC exceeded its statutory authority and violated APA procedures required for agency rulemaking. There are mixed feelings about this decision, but the decision does not remove the right to wear a mask. There are plenty of comments on news shows, internet forums, Reddit, etc where people say the logic surrounding the decision is flawed or outright wrong because the Judge tossed out one of the definitions of a word arbitrarily. The Judge's reasoning for vacating 86 Fed. Reg. 8025 (Feb 3, 2021) and remanding it to the CDC are below.

The CDC published the Mask Mandate without public participation as required by the APA procedures and the Mandate also claimed it wasn't a rule under the APA. In her judgment, she did not accept the CDC's defense that public participation would've created too much of a burden. Why would the CDC argue it would be too much of a burden if they also claimed that it wouldn't need public participation because it wasn't a rule?

The CDC relied on the Public Health Services Act of 1944 (PHSA) to empower its Mask Mandate through § 264(b)-(d), whereby courts have already vacated decisions regarding the CDC's decision to shut down the cruise industry and prohibit landlords from evicting tenants for not paying rent. The remaining Mask Mandate was still in effect using § 264 for legal standing and authority to enforce such a federal mandate. As with the other two, the third use is likely to exceed CDC's authority to publish and enforce the Mask Mandate.

§ 264(a) of PHSA does not authorize the CDC to issue a Mask Mandate because the text suggests methods of preventing communicable diseases by active cleaning or preserving cleanliness. Masks “neither sanitize the person wearing a mask nor sanitizes the conveyance”. The text suggests methods of “identifying, isolating, and destroying the disease itself”.

Finally, § 264(a) extends to property whereas § 264(b)-(d) extends to personal liberty. It empowers authorities to detain and quarantine individuals who are traveling interstate or coming from a foreign country who are “reasonably believed to be infected with a communicable disease in a qualifying stage” and found upon examination to be infected. The Mask Mandate would then be considered the “conditional release” as it allows freedom of use of conveyances as well as freedom of movement of the individual. The Mask Mandate would violate both (c) and (d).

It surprises me when news pundits or people on the internet boil down a decision to one thing. There were many issues with the Mask Mandate that violated the law or exceeded its statutory authority. It is not simply that the Judge arbitrarily chose a definition to suit her decision, or that she spun her decision to match political ideologies.

Tuesday, June 5, 2018

SCOTUS Masterpiece Cakeshop v Colorado Civil Rights Commission

SCOTUS

The Masterpiece Cakeshop v Colorado Civil Rights Commission Supreme Court case opinion created a large outrage among the LGBTQ+ community as well as social justice warriors. Liberals and left-leaning news organizations started using their media outlets to spin and outright lie about the case itself. They frame this as a SCOTUS court case about whether the actions of a baker are constitutionally allowed when this is not the case!

TLDR; In this court case, the baker sued the Colorado Civil Rights Commission. SCOTUS said that the Commission violated the baker's free exercise of religion and that the Commission lacked religious neutrality. It did not rule on the merit or legality of the actions of the Baker.

SCOTUS didn't say that the bakery or the baker could discriminate against homosexuals. All discrimination in Colorado is illegal under CADA. “It is a discriminatory practice and unlawful for a person, directly or indirectly, to refuse, withhold from, or deny to an individual or a group, because of disability, race, creed, color, sex, sexual orientation, marital status, national origin, or ancestry, the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of a place of public accommodation.” 

In 1993, it was decided by SCOTUS: "The government, consistent with the Constitution’s guarantee of free exercise, cannot impose regulations that are hostile to the religious beliefs of affected citizens and cannot act in a manner that passes judgment upon or presupposes the illegitimacy of religious beliefs and practices." SCOTUS's opinion in the bakery case was only that the Colorado Civil Rights Commission did not afford the baker "to a neutral and respectful consideration of his claims in all the circumstances of the case."

In the opinion, SCOTUS actually strengthened religious liberty and civil rights; it stated: "recognizing that these disputes must be resolved with tolerance, without undue disrespect to sincere religious beliefs, and without subjecting gay persons to indignities when they seek goods and services in an open market." It reiterated again from the Obergefell case, "the First Amendment ensures that religious organizations and persons are given proper protection as they seek to teach the principles that are so fulfilling and so central to their lives and faiths." but adds "Nevertheless, while those religious and philosophical objections are protected, it is a general rule that such objections do not allow business owners and other actors in the economy and in society to deny protected persons equal access to goods and services under a neutral and generally applicable public accommodations law."

I'd encourage you to read the opinion. (Link below). You'll find that rulings tend to be hyped up or framed in a certain way by media sources.


Tuesday, December 13, 2016

Culpeper County, VA Denies Islamic Center Permit Request

Remember the investigatory journalism of the past. Few online journalists appear to write this way anymore. The online network of news has lowered the standards for reporting news. News has been distorted for ratings or readers. It was not enough to share facts. That does not cause the ratings to rise or readers to view the article. Now, social media is covered with articles, and those articles are short with one fact in a poorly written article. In some cases, it's barely a paragraph. Sometimes, articles conveniently forget to include facts to fit a narrative or an agenda they are pushing. I have a perfect example. There was a controversial vote in Culpeper, VA in April 2016. Recently, the DOJ decided to bring a lawsuit against Culpeper County. Below is the article that I read from NBC4, a local news network in Washington, D.C.

Article via NBC4

Justice Department Sues Virginia County for Blocking Islamic Center


  • Culpeper County Board voted 4-3 to deny permit because it did not fit the requirements
  • Room cheered when vote was denied
  • The ICC, a group of about 15, wanted a proper place for prayer
  • The property the group had purchased was an abandoned house surrounded by weeds

Facts via Culpepper Star*Exponent

  • Culpeper County Board voted 4-3 to deny permit because it did not fit the requirements.
  • Health Department found that the land doesn't support traditional drain field and no alternative was proposed and the land is not near public utilities
  • Permit for pump and haul for hardship and emergency
    • Those Board members who voted to deny found no hardship since this property had just been purchased and is not an emergency.
  • Room cheered when vote was denied and were quickly rebuked for their actions

Conclusion

I think omitting the facts and relying only on a reference linking back to a previous story is lazy. When people click on a link to read an article, they are expecting to read the facts. They are not thinking that there is more to the story. They are not thinking that they would have to go to multiple sources to understand the context. Please, include the facts. We are not living in an age where we have to save disk space or the website can't handle a lengthier article. As a journalist, you can provide the facts on both sides, and not write articles that are fitting your narrative or agenda.

My Take

Now, let me tell you my thoughts on this whole ordeal. The ICC bought a property at an extremely low value with clear knowledge that the property would not pass a percolation test because of the poor soil quality. They apparently could not provide an accurate number of the amount of attendees, which would be required for sizing a septic system for pumping and hauling. The Culpeper County policy states that these permits are only approved by the elected board in accordance with its adopted policy only in cases “where it is shown that a unique, temporary situation exists which goes beyond simple hardship conditions.” I, personally, do not believe that it is a hardship when you buy a property with knowledge that it cannot perc. If a soil test was not done prior to purchasing the property, ignorance is not hardship.

There were 18 of these permit requests approved since 1995. These are not requested often. I would like to see the 1 permit that was disapproved, and the reasoning behind it as well. 


If the DOJ's lawsuit continues through the Trump Administration, I would be interested in whether a judge would see that the hardship clause was the reason for disapproval rather than religion. It would be great to buy cheap land, and then submit for a hardship pump and haul permit. I've seen some great property, located in a decent locations, but the property would not perc.

Drop the lawsuit and locate different empty lot that percs. It's not the religion; it's the lack of hardship.

Tuesday, January 28, 2014

Unionizing NCAA College Football

Chief Legal Officer Donald Remy – “This union-backed attempt to turn student-athletes into employees undermines the purpose of college: an education,” Remy said in the statement. “Student-athletes are not employees, and their participation in college sports is voluntary. We stand for all student-athletes, not just those the unions want to professionalize.

My take:


In speech, they say its voluntary, but in reality it really isn’t. By holding a monopoly on opportunity for exposure and opportunity for draft positioning (especially for CBB or CFB), it isn’t quite as voluntary as they portray.

NCAA is like a major highway to the NFL – all other avenues are like single lane roads. Yes, you voluntarily choose the college route, but the choice is rigged. If your goal is the NFL, you choose the best possible route to achieve your goal.

I would be interested in knowing if alternative means to get to the NFL existed with the same opportunity for exposure, what the numbers would be like between CFB and the alternate means.

The other issue:


Student-athletes may not be direct employees. They sure are stakeholders in the team by competing and bringing in millions of dollars. The 2011 – 2012 top earners are listed below:

  • Texas Longhorns – $77.9 million
  • Michigan Wolverines – $61.6 milion
  • Georgia Bulldogs – $52.3 million
  • Florida Gators – $51.1 million
  • Alabama Crimson Tide – $45.1 million
  • LSU Tigers – $44.8 million
  • Auburn Tigers – $43.8 million
  • Notre Dame Fighting Irish – $43.2 million
  • Arkansas Razorbacks – $39.9 million
  • Nebraska Cornhuskers – $36.4

Sure, student-athletes receive full rides, which is a type of compensation. Let’s look at the average single year expenses for college. If the yearly tuition and fees are say $50,000 (accounting for only out of state since it is higher than in-state), and there is an 85 scholarship limit, we are looking at $4.3 million per year. Using the profits above, the schools scholarship cost ranged between 6% and 11% of the profits. In the very least, student-athletes are stakeholders of the team, and should share in the profits of the team. Don’t call it pay, call it a dividend.

Let me know your thoughts.

Thursday, January 28, 2010

The Rise and Fall of Enron

Enron Logo

The Rise and Fall of Enron

What is Enron?

Enron is the company that altered international finance forever. The company shook the corporate world. This company became the catalyst for many changes in federal and international law as well as other policies dealing with corporate accounting practices. Inquiries surrounding the rise and fall of Enron emerged because of the shifty techniques used to deceive investors and corporate watchdogs. How did this corporation pull the wool over so many people’s eyes? This essay will briefly describe the rise, fall, and international aftermath of the Enron Corporation.

Before delving into the gruesome details, let us go over the details of the Enron Corporation. In 1985 the Northern Natural Gas Company, became what will be known as the core of the Enron Corporation when the company purchased the smaller Houston Natural Gas Company. With the latest acquisition, Enron was formed. The new formed company originally dealt in the transmission and distribution of gas and electricity in the United States. In later years leading up to ultimate demise, the company dealt with multiple of other companies such as water sector, broadband, plastics, and steel. The company also became one of the world’s largest energy companies. Enron became the seventh largest corporation in the United States which interestingly enough also became the largest business scandal in United States’ history. At its epitome, its profits were $101 billion and employed over 20,000 individuals. The question arises, were these claims actual profits? This is where the accounting practices and techniques used by Enron come into question.

Let us briefly introduce the main players. We will focus on three main players. These men are Kenneth Lay, Andrew Fastow, and Jeffrey Skilling. Kenneth Lay is the Founder and former Chairman. Andrew Fastow is the Chief Financial Officer. Jeffrey Skilling is the former Chief Executive Officer, who “dreamed of creating a new business model that could change American capitalism forever”. (Swartz and Watkins, p. 40)

The Rise and Fall

The rise of Enron is beautiful. From 1985 forward, the company grew substantially. “Enron grew wealthy, it claimed, through its pioneering, marketing and promotion of power and communications bandwidth commodities and related derivatives as tradable financial instruments, including exotic items such as weather derivatives.”[1] (wikipedia.com) Enron gained prominence not only through its acquisition, but also through publicity of awards. It was named “America’s Most Innovative Company” by Fortune Magazine for six consecutive years, from 1996 to 2001, the year of the disclosures. Another award was also given by Fortune magazine. Ironically, this time it was Fortune’s year 2000 list of “100 Best Companies to Work for in America”.

The fall begins one day when Skilling explains to the risk management team of a plan to keep the money they made off investments in smaller businesses, specifically Rythms NetConnections. Rhythm NetConnections company value jumped over time to about $300 million. Enron could not sell the investment value earned. This plan would insure that Enron would keep the profits made by the sudden rise in the market. Andrew Fastow designed the plan.

The plan was to create a private partnership in the Cayman Islands that would protect -- or hedge -- the Rhythms investment, locking in the gain. Ordinarily, Wall Street firms would provide such insurance, for a fee. But Rhythms was such a risky stock that no company would have touched the deal for a reasonable price. And Enron needed Rhythms: The gain would amount to 30 percent of its profit for the year.” (Behr and Witt)

This entity that Fastow creates is named LJM after his wife and kids. In the future LJM buys poor performing Enron assets. These poor performing assets became burdens on Enron and hurt its bottom-line. The profits were taking hits because of the lack of performance of these smaller companies. In effect, the LJM partnership became a device used to hide Enron’s debt.

The whole thing was really just an accounting trick. The arrangement would pay Enron to cover any losses if the tech stock dropped. But Skilling proposed to bankroll the partnership with Enron stock. In essence, Enron was insuring itself. The risk was huge.”(Behr & Witt)

The accounting trick allowed Enron to embellish its profit record for its investors. This in effect raised stock prices due to the lack of information of the company’s business practices.

The demise started when these tricks and improper use of accounting began. From 1999 to 2000 the profits rose 50%. Profits in 1999 were around $50 billion, whereas in 2000 profits rose to $100 billion. This dollar amount would be impressive, but under just one year it raised some eyebrows. “Some people had nagging suspicions. But like the cowed townspeople in the children's story, few questioned the emperor's new clothes.” (Behr & Witt)

Indictments and Trial

Once the company’s fault was released to the public the slippery slope to bankruptcy was inevitable. Though everything was not disclosed to the public at first, as things were still kept secret, investigations started. Several top executives were charged with multiple counts of securities fraud, or other illegal business activities. Skilling was indicted with 28 counts of securities fraud and wire fraud, and Lay was indicted with six counts of securities and wire fraud.

The trial began January 30, 2006. Within five months, the jury reached its verdict. Lay and Skilling were found guilty. In the sentencing that took place October 23, 2006 Skilling was convicted of 19 of the 28 counts of securities fraud and wire fraud. However, the other nine he was acquitted. Lay on the other hand was convicted on all six counts of securities and wire fraud. However, Lay passed away 3 months before the sentencing occurred. Upon autopsy, Kenneth Lay died of a heart attack. The judge therefore vacated his conviction on October 17, 2006. Several other individuals were found guilty from other companies such as Merrill lynch.

There are certain aspects that the demise of this company has had on our society. It has been estimated that $60 billion was lost in investments. In the wake of the collapse, there have been numerous companies to follow Enron’s path. Investor awareness has risen. Companies are held more accountable for their accounting as well as there business practices. Congress suddenly pushed through legislation on accounting reform. The terms of the bill creates an oversight board. When violations occur in corporations, each accounting violation is punished, the “chief executives and financial officers must certify the accuracy of financial statements. White-collar criminals will face fines will face fines as high as $5 million and prison terms of up to 20 years.”(Behr & Witt)

Enron’s Global Influence: Europe

Wing and Mark

In the late 1980s, Margaret Thatcher was trying to deregulate the UK’s utility markets. This was fabulous for Enron’s big ideals, for they were trying to execute a plan to get their first big power plant online in the global market. Enron had to convince larger British power companies to support an ambitious young company to build such a massive power plant project. The plant would be “the world’s largest natural gas-fired power plant.” It would generate both electricity and steam. The massive plant would add 4% to the United Kingdom’s power grid. (Swartz, p. 37) Teesside would cost $1 billion to construct, which included contracts and other construction costs, but brought in more than $200 million profits for Enron. (Swartz, p. 37) The success of this power plant made Enron a power player in the global market.

The ambitious Teesside project for Enron was lead by a “Brilliant strategist” (Swartz & Watkins, p. 36) whose name is John Wing. Wing was responsible for Enron’s first big power plant in Texas City, Texas; it is no surprise that he had much bigger plans in store for this up and coming multifaceted company. As stated in the previous paragraph, the Teesside plant was a massive power plant that brought in a lot of revenue, but one of the big changes brought forth from this project was that Wing persuaded Lay to approve a “new way of compensating Enron executives on project development deals”. (Swartz & Watkins, p. 37) This new way allowed Wing to receive the compensation when the deal was closed, not before the plant went online.

Wing was a tough executive. He abused people, and treated individuals lower than they should have been treated. His protégé felt a lot of this pressure and abuse, but through this trial, she came out transform. His protégé was Rebecca Mark, a young woman who was in the right place at the right time, learning all the she could from examples in the corporate world as well as traditional education, earning her MBA from Harvard. Once John Wing left Enron, Rebecca Mark was promoted. Ken Lay did not promote her slightly, he gave her a CEO position of her own company, Enron Development Corporation. “Her mandate was to open energy markets for Enron around the world.” (Swartz & Watkins, p 40)

Now let us shift gears and explored other effects of this company. Though the huge energy giant was based in Houston, Texas, its scope of influence and power spread across the globe. Therefore, its collapse created an aftershock. Enron was not only in the energy market across the globe, but it was in numerous European sectors. This paper will discuss several areas of the world where Enron influenced and subsequently was affected by its collapse.

Pricewaterhousecooper, the accounting firm was named the administrator of European arm of Enron Thursday, November 29, 2001 in a move that is similar to the Chapter 11 bankruptcy in the United States. The same day as the firm taking over, Enron Europe stopped its wholesale electricity and was expected to cut jobs of its 5400.(Pfanner)  Pricewaterhousecooper, also took over PX limited a company that was set up to operate and manage the 1875 MW Teesside power and gas station. Therefore Enron’s collapse did not greatly effect this power plants production in England.

The initial response would point fingers at the banks because of their continued support of a fraudulent company. Between the years 2000 and 2001 Milan Bank loaned Enron an estimated $20 million.(Fairlamb) The Royal Bank of Scotland reportedly gave the largest loan to Enron, which was between $500 and $800 million. (Fairlamb) “Deutsche Bank AG said its exposure was $100 million; Centrica PLC, a british trader, put its exposure at $43 million.” (Pfanner) All totaled the European banks have loaned $2 billion. (Fairlamb) Monetarily these companies are at fault for supporting Enron, but giving the circumstance that Enron was the company with whom you do not say no to because they control vast amount of the markets. “…Enron’s reach is so vast – it accounts for 20 percent of the energy trading in the United States and Europe…” (Pfanner)

At first, the concept of the fall of Enron in European minds was “the product of flawed U.S. accounting practices”. (Fairlamb) They shrugged it off as something that was solely in the United States. But as the investigations of this huge and spectacular collapse unfolded, corporate fraud not only in accounting but in the leadership was found. The European Union realized that its own companies were vulnerable to the same corporate fraud. The collapse of Enron pushed the European Union to reflect on its own management and regulation of its Capital Markets. “Getting regulation right is critical to successful economic management, and to our long-term growth prospects.” (Fairlamb)

Not only were the investigations pushing regulation of the markets in Europe, but the United States Congress legislated with the Sarbanes-Oxley Act, which was aimed at avoiding a repeat of corporate disasters, pushed it as well. The act which was passed in 2002 covers any company worldwide that is traded on the U.S. stock markets. “Foreign companies had less than a year to get in line with the Sarbanes-Oxley Act, which came into force in June 2005.” (Stamp)




What firms must and must not do



  • Financial disclosures must be complete and fairly present financial position

  • Internal controls must be adequate and any deficiencies reported

  • Store e-mails and other electronic data for at least five years

  • Ban on extending personal loans and most forms of credit to executives

  • All off-balance sheet transactions must be reported

  • Audit committees must be set up and chief auditor rotated every five years

  • Auditors must register with new regulatory body

(http://news.bbc.co.uk/1/hi/business/3849867.stm)


The Sarbanes-Oxley Act is having far-reaching impact on Europe. “Adecco, the Swiss recruitment company, is currently being investigated by the U.S. Securities and Exchange Commission after it revealed that it had discovered ‘material weaknesses’ in the internal controls of its North American subsidiary.” (Stamp) The cost of compliance has been costly to some of the companies. Many of the companies are not happy with the legislation. These companies see the rising costs as more significant than the benefits.

After the reflection on its own practices in its Capital Markets, the European Union as a whole started tightening corporate financial reporting and accounting standards. This regulation required all E.U. listed companies to apply International Accounting Standards. The next tightening was the enforcement of accounting standards, “to ensure harmonized application of I.A.S. within the E.U.” (Fairlamb)

However before the E.U began its centralized corporate governance, the United Kingdom developed corporate governance through certain reform effort. “In the early 1990s, the United Kingdom explored governance reforms on a ‘comply or explain’ basis through the adoption of the Cadbury Code,” which later became the Combined Code. (Philips & Saft)

The Combined Code is the Cadbury Code, which was published in 1990, and several other important contributions were added over the years to form a set of voluntary practices, which “governed” the companies that were traded on London Stock Exchange. “Companies must disclose whether they comply with its provisions and if not, why.” (Philips & Saft) The combined code has over the years influenced rules and regulations governing these publicly traded companies. Other E.U. states have adopted the same comply-or-explain methodology of compliance. With the collapse of Enron these methodologies along with new ideas were adopted to help prevent corporate fraud.

Enron International Today

On March 19, 2003, Enron’s Board of Directors voted to create a new entity that it would be able to transfer its 3 North American pipelines to, instead of selling its interests in the areas. The new company will be temporarily called “PipeCo”. (Palmer)

On May 9, 2003 Enron Corporation announced that it was creating a new entity that will be temporarily called “InternationalCo”. This company was determined a viable option to maximize value, which will be distributed to its creditors. As the press release says, “InternationalCo is expected to hold all or portion of Enron’s interests in its international electric and natural gas utilities and pipelines.” (Ambler)


Business Interests Expected to be Held by InternationalCo


Asset

Current Enron Ownership*

Location

Description

Gas Transboliviano S.A. (GTB)

30%

Bolivia

Gas Pipeline
348 miles

Transportadora Brasileira Gasoduto Bolivia - Brasil S.A. (TBG)

7%

Brazil

Gas Pipeline
1620 miles

Transredes S.A.

25%

Bolivia

Gas & Liquids Pipeline
3,437 miles

Centragas

55%

Colombia

Gas Pipeline
357 miles

Gasoriente Boliviano Ltda. (GasBol)

50%

Bolivia

Gas Pipeline
226 miles

Gasocidente Do Mato Grosso Ltda. (GasMat)

56%

Brazil

Gas Pipeline
175 miles

Accroven SRL

49%

Venezuela

NGL Facility

Vengas S.A.

97%

Venezuela

LPG Distribution

Elektro Eletricidade e Servicos S.A.

88%

Brazil

Electric Distribution
Company

Bahia Las Minas Corp.

51%

Panama

Power Generation
280 MW

Empresa Energetica de Corinto Ltd.

35%

Nicaragua

Power Generation
71 MW

Puerto Quetzal Power LLC (PQP)

38%

Guatemala

Power Generation
234 MW

Smith/Enron Cogeneration LP (SECLP)

85%

Dominican Republic

Power Generation
185 MW

Empresa Producora De Energia Ltd. (Cuiaba EPE)

72%

Brazil

Power Generation
480 MW

Trakya Elektrik Uretim ve Ticaret A.S.

39%

Turkey

Power Generation
478 MW

SK-Enron Co. Ltd

50%

Korea

City gas distribution, LPG importer and marketer

Enron America del Sur S.A. (EAS)

100%

Argentina

Power Generation
70 MW

Elektrocieplownia Nowa Sarzyna Sp. z.o.o. (ENS)

75%

Poland Power Generation
116 MW


Marianas Energy Company LLC (Guam)

50%

Guam

Power Generation
88 MW


*All or a portion of such interests are expected to be held in InternationalCo

http://www.enron.com/corp/pressroom/icoassets.html

March 1, 2007, Enron Corporation legally changed its name to Enron Creditors Recovery Corporation. The name change was prompted because it better applies to the companies duties at this time.



Works Cited

Ambler, John. "Press Release: April 30, 2007." Enron.Com. 9 May 2003. 30 Apr. 2007 <http://www.enron.com/corp/pressroom/releases/2003/ene/docs/050903release.pdf>.


"Europe Escapes Enron Knock." BBC News. 30 Apr. 2007 <http://news.bbc.co.uk/1/hi/business/1685457.stm>.


"Enron." Wikipedia. Wikipedia. 31 Jan. 2007 <http://en.wikipedia.org/wiki/Enron>.


Fairlamb, David. "Aftershocks in Europe." Business Week Online. 17 Dec. 2001. 30 Apr. 2007 <http://www.businessweek.com/magazine/content/01_51/b3762008.htm>.


Fairlamb, David. "Eurotrashing Enron." Foreign Policy. Nov.-Dec. 2002. 1 May 2007 <http://www.foreignpolicy.com/Ning/archive/archive/133/BTL-eurotrashing-enron.pdf>.

 

Green, Scott, and Holly J. Gregory. "The Ripple Effect: International Corporations are Feeling the Effects of Governance Practices That are Evolving on a Global Scale and Adjusting the Way They Operate Accordingly." Find Articles. 2002. 1 May 2007 <http://findarticles.com/p/articles/mi_m4153/is_1_62/ai_n13821850>.


Hidden Debts, Deals Scuttle Last Chance.” Behr, Peter and Witt, April. WashingtonPost.com. Washington Post. 31 Jan. 2007 <http://www.washingtonpost.com/wp-dyn/content/article/2005/06/10/AR2005061000707_5.html>.


 “H.R. 3763.” 107th Congress. Findlaw.com. Sarbanes-Oxley. 31 Jan 2007 <http://fl1.findlaw.com/news.findlaw.com/hdocs/docs/gwbush/sarbanesoxley072302.pdf>.


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[1] Wikipedia.com is not used as a source. It is used for the specific wording of the sentence.


Tuesday, September 29, 2009

General George S. Patton III

I had struggled with finding a leader that I admire and respect. There are so many individuals in this world who have show strong leadership skills and have through their demeanor and actions have required admiration and respect. One person, who for me has been a leader I looked to, respected, and admired is General George S. Patton III. While some might question using this man as a personal model for leadership, I believe his tactics on the battlefield during World War II warrant at least respect and admiration.
The exuberance and powerful Oscar winning performance of George C. Scott acting as George Patton has misled many people in understanding Patton. While the film does portray his battlefield tactics and some of the personal elements of his life accurately, it is not well known that the General was soft spoken, but commanded with might.
George S. Smith was born November 11, 1885. He was born into a military family. His family had taken part in the United States Civil War, which meant that from an early age he was surrounded by military ideology, which might, as we will go over, explain his leadership on the battlefield. He read classics and military history, and was surrounded by stories of military glory. These bread in him a desire to become a military hero and aspired to become a General.
Through Patton’s desire to become a General and a hero, he pursued military education at Virginia Military Institute and eventually transferred after his first year to the United States Military Academy, who forced Patton to retake his first year. He passed the first year at the United States Military Academy with honors, which set him on the correct path he was aspiring for. He graduated from USMA in 1909 and immediately received his commission as a cavalry officer.
Patton took part in numerous battles and wars, starting with the Mexican Revolution. The Mexican Revolution brought fame to Patton. After Pancho Villa’s forces had crossed into New Mexico, killed several Americans, Patton was instructed to move on the town of Columbus where the opposing forces were located.  He and ten others from the 6th Infantry Regiment, with 3 armored cars (early tanks) performed an attack. This was the world’s first armored vehicle attack, and it would not be the last for Patton. Patton along with his fellow infantry men killed 2 leaders of the Mexican forces, and brought them back to Brigadier General Pershing’s Headquarters. Patton brought them back in such spectacle that he was regarded with fame throughout the United States.
The most well-known portion of Patton’s career took place in World War II. He took part in the North African Campaign, Sicily Campaign, Normandy Campaign, Lorraine Campaign, and Ardennes Campaign. After several defeats, Major General Patton replaced Major General Lloyd Fredendall as the commander of the II Corps. At the same time, he was promoted to Lieutenant General. It is well documented that Patton’s leadership style attributed to the success the II Corps had. It is said that his troops preferred to serve under Patton rather than Fredendall because they believed they had a higher chance of survival with Patton.
Patton believed in manliness and discipline as a soldier. He instituted a requirement that all personnel wear metal helmets, his troops wear lace-up canvas leggings which prevented injury from the natural elements including scorpions, spiders, and rats. He instituted a system of fines that insured discipline among the men in their uniforms. While it is said that these new approaches were strict, they did restore discipline and a sense of unit pride that was lacking under the previous leadership. Through his leadership the II Corps were able to attack on the counter-offensive, which pushed the Germans and Italians eastward. His military strategies and leadership were very instrumental in the successes of his campaigns throughout the European Arena.

Even though there is conflicting evidence to the Great Man Theory, I do believe that this theory does explain that leadership qualities in George Patton. While yes, the qualities of leaders can be learned and acquired, there are certain qualities that are just inherent within individuals, and I believe that Patton’s qualities were inherent. Patton as a general was a very exploitative autocratic ruler, which means that he demanded and ordered things to his subordinates expecting no questions in return. Patton was very efficient in communicating to his officers during the campaigns. Patton was especially good at military strategy. He planned and implemented military maneuvers which proved a success in the war. Patton did not believe that he knew it all, and continuously studied military tactics in order to achieve a higher success than he already had achieved. Another one of Patton’s leadership qualities was in his control. Patton was able to control II Corps. While most of the control was set forth in the people Patton either placed as a subordinate to himself or promoting individuals within the II Corps to position of leadership. Through his example, the II Corps was successful both in the military battlefields off those fields within the military.