Enron board shrinks with resignations

Posted 7:44AM on Wednesday 13th February 2002 ( 22 years ago )

HOUSTON - Nearly half of the directors who were in charge when the seeds were planted for Enron Corp.'s descent into bankruptcy are gone or soon will be. But Enron plans an aggressive search for someone to fill Kenneth Lay's shoes as chairman and other directors to help in the company's plan to return to its roots as a mover of natural gas and electricity. The company said in a filing Tuesday with the Securities and Exchange Commission that three of its longest-serving members and the three international members would resign in a month. Notice of the resignations was filed after directors met in New York. Charles Elson, director of the Center for Corporate Governance at the University of Delaware, said the string of resignations was no surprise since Enron's directors don't have much control over Enron these days -- particularly those overseas. "At this point you're working with a corpse," Elson said. "If you're the board, you have to remember that you're a paper tiger. The real decision-making is in the hands of the bankruptcy judge and the creditors." The company also said in the SEC filing that it will move forward with reorganization plans that include selling off money-losing assets. Swiss investment bank UBS Warburg acquired Enron's once-envied trading business last week, and cranked up the new operation Monday. Lay stepped down from the board Feb. 4 after resigning as chairman and chief executive of Enron on Jan. 23. After resignations announced Tuesday the board, which had 15 members before Lay stepped down, was left with eight. The three international members who resigned, Ronnie C. Chan, Paulo V. Ferraz Pereira and Lord John Wakeham, were on the board's six-member audit committee, responsible for double-checking Enron's bookkeeping. Also, three of the longest-serving domestic directors who stepped down were former University of Texas M.D. Anderson Cancer Center president Charles A. LeMaistre, 78; former Stanford University Graduate School of Business dean Robert K. Jaedicke, 73; and Houston businessman John H. Duncan, 74. Chan, 52, is chairman of the Hang Lung Group, a Hong Kong real estate powerhouse. Ferraz, 47, is executive vice president of Group Bozano, a Brazilian banking conglomerate. Wakeham, 69, was appointed to the House of Lords in 1992 and chairman of the UK Press Complaints Commission, a body designed to deal with complaints about media misconduct. He has focused on protecting the royal family from intrusive coverage. Wakeham also has been a $6,000-a-month consultant to Enron since 1996, advising the company on European issues. Jaedicke is chairman of the board's audit committee. His resignation, along with the three foreign directors, leaves only Wendy Gramm and Dr. John Mendelsohn on the panel. Gramm, the wife of Sen. Phil Gramm, R-Texas, took a seat on Enron's board in 1993, just five weeks after resigning as chairwoman of the Commodity Futures Trading Commission. While at the CFTC she pushed through a key regulatory exemption that benefited Enron. Mendelsohn is LeMaistre's successor as president at M.D. Anderson. Jaedicke, along with director Herbert S. Winokur and former Enron chief executive Jeff Skilling, testified last week before one of the multiple congressional committees investigating Enron's collapse. During that testimony, Jaedicke took issue with a report of an internal investigation into alleged accounting abuses that fueled Enron's downfall. The report said Enron's financial managers enriched themselves with financial partnerships that damaged the company while the board and top executives failed to keep watch. The internal probe was conducted by a team of three directors led by William C. Powers, dean of the University of Texas Law School, who was appointed to the board for the task last October. Raymond Troubh, also appointed to the board late last year to investigate finances, and Winokur rounded out the probe team.

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