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A judge has ruled that --surprise!--a Texas energy company manipulated the natural gas market to create the phony shortage that cost California consumers billions of dollars last year.

However, the decision faces review by the Federal Energy Regulatory Commission.

From The New York Times:

WASHINGTON, Sept. 23 | An administrative law judge concluded today that the El Paso Corporation illegally helped to drive up prices for natural gas in California during the state's power crisis in 2000 and 2001, the first time any federal regulatory official has determined there was widespread manipulation of energy supplies.

In the ruling, Curtis L. Wagner Jr., the chief administrative law judge at the Federal Energy Regulatory Commission, essentially validates the suspicions of California officials that El Paso, the nation's largest natural gas company, withheld natural gas from the state, thus driving up the cost of electricity that was generated by gas-fired turbines.

"El Paso Pipeline withheld extremely large amounts of capacity that it could have flowed to its California delivery points," Judge Wagner said in the ruling. El Paso's actions significantly increased the price of natural gas flowing to California, he added, and "substantially tightened the supply of natural gas at the California border."

But the decision faces review by the four-member energy regulatory commission and, if upheld there, an almost certain appeal to a federal appellate court.

El Paso predicted that the ruling would be reversed. In a statement, the chairman and chief executive of El Paso, William A. Wise, said: "We are disappointed that today's proposed decision does not recognize the substantial record evidence supporting El Paso Natural Gas's position that the pipeline was operated properly. We are confident in the strength of our position."

Hmm. Seems to be counting on FERC to scuttle this ruling. And why shouldn't he? FERC wasn't even going to investigate this until the press started hammering away at it:

The California Public Utilities Commission filed a complaint at the FERC against El Paso in early 2000, but the case languished for close to a year. In March 2001, The New York Times, as part of a reporting project with the PBS program " Frontline," disclosed that internal El Paso documents showed senior executives discussing a plan to give them more control of gas markets, including the "ability to influence the physical market" to benefit the company.

But surely now that FERC has been FORCED to investigate, and now that a judge has ruled--after considering all the evidence--that El Paso is guilty, the agency will support the decision, right? El Paso has no hope that the big, bad government agency FERC will save their butts by overturning it, right? After all, government regulatory agencies are full of anti-business, meddling bureaucrats -- right?

Wrong. The energy business runs FERC. Here's the way Rep. BILL PASCRELL JR. of N.J put it:

"The Federal Energy Regulatory Commission's mission is to regulate the energy industry. Two of its commissioners, Patrick Wood III, the FERC chairman, and Nora Brownell, were recommended by Kenneth L. Lay, Enron's former chairman. These same commissioners are overseeing FERC's investigation into Enron's practices.

The fox is guarding the henhouse. I have urged Mr. Lay's commissioners to recuse themselves from the investigation to ensure the confidence of the American public. "

And just how did the energy business end up choosing its own regulators? The same way any business gets anything: they bought it. Who from? Check out the numbers as reported to the FEC, and as provided by The Center for Responsive Politics:

El Paso Corp PAC Summary Data:

2002 election (so far):

Contributions from this PAC to federal candidates $585,000
25% to Democrats, 75% to Republicans

2000 election cylce:

Contributions from this PAC to federal candidates $496,550
21% to Democrats, 79% to Republicans

1998 election cycle:

Contributions from this PAC to federal candidates $304,771
23% to Democrats, 76% to Republicans

Guess we know who the great government salesman are. But the PAC donations are nothing compared to El Paso's soft money donations. Check it out:

El Paso's soft money Donations from the 1998 election to the present:

To Republicans: $1,346,364
To Democrats: $7,600

According to my calculator thats 99.43868% to Republicans.

El Paso is, of course, in the "Oil & Gas" sector. And who was the number 1 recipient of donations from that sector during the 2000 election cycle?

The same guy who appointed the FERC commissioners:

1 Bush, George W (R) Pres $1,928,956

The perks given to retired General Electric CEO Jack Welch have made headlines across the country. And while no one denies that Mr. Welch did great things for GE, his contention that the outrage over the revelations of the perks is unfair -- saying that only now, "post-Enron", are they being "misportrayed as an excessive retirement package" rings a little defensive, to our ears.

Just because the public -- and shareholders -- have only now found out what's been going on at the highest levels of corporate power doesn't mean it's been right. It just means they've found out.

The New York Times, among others, is reporting that:

General Electric said today that it had agreed to cooperate with a Securities and Exchange Commission investigation into a compensation agreement with its former chief executive, John F. Welch Jr., and that the company had acceded to a request by Mr. Welch to reduce the compensation he receives.

Mr. Welch, who has come under widespread public criticism over the perks he has been receiving from the company, said in a column in The Wall Street Journal today that he would pay an estimated $2 million to $2.5 million a year for the use of company planes and an apartment.

Exactly what were the perks that GE shareholders are paying for?

...there were all those Yankees, Knicks, Red Sox, Wimbledon, U.S. Open and opera tickets to which Mr. Welch presumably had first dibs. In addition, G.E. provides its former chief executive with the use of the company Boeing 737, four country-club memberships, satellite TV at his four homes and all the costs of maintaining his G.E.-owned Manhattan apartment — from the servants to the food, wine and toiletries.

Mr. Welch...even gets free flowers and toiletries in the $15 million apartment that G.E. maintains for him in Manhattan.

And it's not just that this is all being paid by the shareholders. Again, from The New York Times:

The $2.5 million that Mr. Welch estimated he would pay annually may be far less than the actual cost to G.E. to provide those services because of government rules on how to value perks. For example, under federal rules, it would cost an executive less than $500 to take a corporate jet from New York to Paris on vacation, but the flight would actually cost shareholders at least $15,000.

So what else has GE been doing with their money? Being very generous to Republicans, for one thing. From The Center for Responsive Politics:

General Electric
PAC Summary Data:

2002 election (so far):

Contributions from this PAC to federal candidates $613,300 (41% to Democrats, 59% to Republicans)

2000 election:

Contributions from this PAC to federal candidates $879,050 (42% to Democrats, 58% to Republicans)

1998 Election:

Contributions from this PAC to federal candidates $663,000 (42% to Democrats, 58% to Republicans)

General Electric's Soft-money donations 1999-2002: $521,702

To Dems: $175,500
To Republicans: $346,202

Meanwhile, GE's stock price has fallen from a 52-week high of $41.84 to $26.75.

From The Associated Press:

SEC Charges Three Former Tyco Execs

NEW YORK (AP) -- The Securities and Exchange Commission filed a civil complaint against three former Tyco International executives Thursday for failing to disclose tens of millions of dollars in low- or no-interest loans they took from the company.

The action came as New York prosecutors were expected to file criminal charges against the three men, former Tyco International CEO L. Dennis Kozlowski, former chief financial officer Mark H. Swartz, and former general counsel Mark A. Belnick.

The SEC charged that Kozlowski used $242 million from an employee loan program designed to help workers purchase Tyco stock to instead pay for yachts, fine art, jewelry, luxury apartments and vacations. It accused Swartz of misusing $32 million in company funds and Belnick of $14 million.

The three "treated Tyco as their private bank, taking out hundreds of millions of dollars of loans and compensation without ever telling investors,'' said Stephen M. Cutler, the SEC's director of enforcement. "Defendants put their own interests above those of Tyco's shareholders. Those shareholders deserved better than to be betrayed by the management of the company they owned.''

The company's stock has dropped sharply this year because of questions about its accounting and liquidity and the various investigations of the company and Kozlowski.

From The Center for Responsive Politics:

BELNICK, MARK - NEW YORK, NY TYCO INTERNATIONAL

Giuliani, Rudolph W (R) - $1,000
Collins, Susan M (R) - $250
Ann Arbor National PAC (100% of Contributions from this PAC went to Republicans) - $1,000
Hatch, Orrin G (R) - $2,500
McCain, John (R) - $1,000
Bradley, Bill (D) - $1,000
McPhillips, Julian L Jr (D) - $250

That's 82% to Repubs.

KOZLOWSKI, DENNIS - EXETER, NH TYCO

Giuliani, Rudolph W (R) - $1,000

That's 100% to Repubs.

SWARTZ, MARK MR - RYE, NH TYCO INTERNATIONAL

Bradley, Bill (D) - $1,000

That's 100% to Democrats.

The totals for these three pillars of the business community? $1,350 to Democrats and $6,750 to Republicans. That's 83% to Republicans.

And for those that didn't read the piece in this space on Tyco from August 6, 2002, here's the corporate donation breakdown for Tyco itself (PAC and "softmoney"):

PAC:

Tyco Electronics
2000 PAC Summary Data
Contributions from this PAC to federal candidates $17,750 - 7% to Democrats, 93% to Republicans
1998 PAC Summary Data
Contributions from this PAC to federal candidates $80,500 - 5% to Democrats, 95% to Republicans
Tyco's PAC has made no contributions in the 2002 election cycle.

Softmoney:

Total given, $611,350
Total given to Republicans: $491,350
Total given to Democrats: $120,000.

Executives at Worldcom seem to have had a rewarding relationship with their brokers at Salomon Smith Barney. Presumably Worldcom stockholders and employees weren't getting quite the same level of attention. Several Worldcom execs and directors made fortunes over the last few years in trades of their own portfolios while Worldcom descended into bankruptcy.

Relevant? Ask an ex-Worldcom employee who's worried about making this month's mortgage payment.

From the New York Times:

Bernard J. Ebbers, WorldCom's former chief executive, made more than $11 million in four years on 21 hot stock offerings he received from Salomon Smith Barney, according to documents released yesterday by the House Financial Services Committee.

Other executives at WorldCom profited from the offerings they received from Salomon. Stiles A. Kellett Jr.

[see below]

a director, made $202,000 on shares of 29 companies. Scott D. Sullivan,

[see below]

the former chief financial officer at the company who resigned after WorldCom disclosed $3.8 billion in improper accounting, made $33,176 on initial offerings in his Salomon account during the period. He lost enough money on two of the stocks he received - Telegroup Inc. and Rhythms NetConnections - that those losses almost wiped out his gains from the other seven stocks he received.

Representative Michael G. Oxley, the Ohio Republican who is chairman of the committee that subpoenaed the documents from Salomon, said: "This is an example of how insiders were able to game the system at the expense of the average investor. It raises policy questions about the fairness of the process that brings new listings to the markets."

But there's more at work here than just questionable connections between Salomon Smith Barney and Worldcom. In the last week it's been reported that executives at Worldcom pressured at least one in-house accounting exec to keep quiet about dubious accounting. Again, from the Times:

Congressional committee released copies of internal WorldCom e-mail messages yesterday that it says suggest that David Myers, the company's former controller, tried early this year to silence an executive who had questioned accounting practices at WorldCom.

Worldcom stock, which traded as high as $70 within the last year, ended this week at $0.26.

So how did Worldcom execs spend some of the millions the company made over the last few years? A look at the PAC donations from Worldcom gives a mixed picture:

From the Center for Responsive Politics:

WorldCom Inc PAC Summary Data

2002 election cycle (so far)

$281,837 to Democrats - $212,614 to Republicans

2000 election cycle

$223,991 to Democrats - $290,891 to Republicans

1998 election cycle

$255,761 to Democrats - $315,889 to Republicans

So a slight edge to Republicans. But when you look at soft money donations the picture gets clearer:

Soft money Donations found for WORLDCOM:

2002 election cycle (so far)

To Democrats: $198,250
To Republicans: $231,719

2000 election cycle (the one that mattered)

To Democrats: $202,833
To Republicans: $627,660

1998 election cycle

To Democrats: $422,565
To Republicans: $719,825

In other words, in the last three election cycles Worldcom's softmoney donations totalled $823,648 to Democrats and $1,579,204 to Republicans. That's 66% to Republicans.

And what of personal donations by the Worldcom execs mentioned above?

It has been the policy of www.201k.com, when researching the political donations of businesses, to ignore the personal donations of individuals -- even executives in the news -- employed at the companies. This is in keeping with our belief that one's personal politics are one's perogative. So we've concentrated on corporate donations. Notable exceptions were the enormous donations made by Mr. and Mrs. Ken Lay and Mr. Jeff Skillings of Enron to George W. Bush, as that particular connection is itself an ongoing news story.

In researching Worldcom donations, however, we've decided once again that personal donations are worth noting. Given the personal profit made by some officers of that now-bankrupt company, and given that their political donations were of significant amounts, we feel that this public information would be of interest to the many Worldcom employees and shareholders who have lost a great deal in the last year.

From the Center for Responsive Politics

Mr. Scott D. Sullivan (Former Worldcom CFO):

Charles W. "Chip" Pickering Jr (R) $1,500
Bob Kerrey (D) $1,000
Jim DeMint (R) $1,000
Elizabeth Dole (R) $500
Orrin G. Hatch (R) $500
Saxby Chambliss (R) $2,000
Edward J. Markey (D) $1,000
George W. Bush (R) $1,000

That's $6,500 to Republicans and $2,000 to Democrats.

Mr. David F. Myers - (former Worldcom controller accused of pressuring an in-house accounting exec):

George W. Bush (R) $500
(Also: A Mrs. David F. Myers gave Charles W. "Chip" Pickering Jr (R) $1,000)

Mr. Stiles A. Kellett Jr (A Worldcom Director), listed for the most part as from "KELLETT INVESTMENT CORPORATION" or "KELLETT INVESTMENTS" of Atlanta, Georgia:

Mack Mattingly (R) $1,000
Rudolph Giuliani (R) $1,000
Steve Forbes (R) $1,000
"Georgia Republicans" $7,000
Saxby Chambliss (R) $2,000
Roger F. Kahn (D) $500
"RNC/Repub National State Elections Cmte" $70,000
"Republican National Cmte" $10,000
George W. Bush (R) $2,000
"National Republican Congressional Cmte" $16,750
Sunny Warren (R) $1,000
Bob Barr (R) $2,000
Orrin G. Hatch (R) $500
Rick A. Lazio (R) $250 (Must have been lukewarm on Lazio, huh?)
Paul Coverdell (R) $1,000
"1999 State Victory Fund Cmte" (We're guessing this doesn't mean Democrats) $15,000
John H. Isakson (R) $2,000
"Common Sense Leadership Fund"(Once again we're guessing this doesn't mean Democrats) $5,000
John McCain (R) $1,000

That's a whopping $138,500 to Republican candidates and groups, and $500 to Democrats. For an interesting sidenote, you can go to the Center for Responsive Politics and check out equally generous (and Republican) donations from a Mr. Samual Kellett of the "KELLETT INVESTMENT CORPORATION" of Atlanta, Georgia, and a Ms. Carol Kellett (Homemaker), also of Atlanta, Georgia.

I'm sure Worldcom employees and shareholders will be gratified to know their execs and directors were so publically minded. For those keeping score, Worldcom is in the "Telephone Utilities" sector. The number one recipient of donations from this sector during the campaign of 2000?

1 Bush, George W (R) Pres $282,925