The State Davis' Energy Advisors Draw SEC Attention Probe: Under review is 
the possible use of inside information to buy power company stocks. GOP rival 
of governor requested the inquiry.
Los Angeles Times, 07/31/01
Davis' top spokesman bought stock in power firm / Adviser denies conflict of 
interest
The San Francisco Chronicle, 07/31/01

Davis press secretary confirms buying energy company stock
Associated Press Newswires, 07/31/01

India's Power Boards Lose $5 Bln as Subsidies Rise, Paper Says
Bloomberg, 07/31/01

India To Evaluate Options On Enron Stake Buy Out Offer
Dow Jones International News, 07/31/01

INDIA PRESS:Govt Asks Lenders To Bail Out Dabhol Pwr Proj
Dow Jones Asian Equities Report, 07/31/01

Report: Indian government orders financial institutions to save Dabhol power 
project, as Enron wants to pull out
Associated Press Newswires, 07/31/01

FIs asked to work out deal for Dabhol completion
The Economic Times, 07/31/01

Houston-Area Firms Brace for Onslaught by Code Red Computer Worm
KRTBN Knight-Ridder Tribune Business News: Houston Chronicle - Texas, 07/31/01

Calif Gov Spokesman Says He Bought Calpine Stock In June
Dow Jones Energy Service, 07/30/01

Functioning In The Bandwidth Market No One Expected
Dow Jones Energy Service, 07/30/01

INDIA: India evaluating Enron's offer to quit Dabhol.
Reuters English News Service, 07/30/01

California Governor's Spokesman Says He Bought Calpine Stock
Bloomberg, 07/30/01


California; Metro Desk
The State Davis' Energy Advisors Draw SEC Attention Probe: Under review is 
the possible use of inside information to buy power company stocks. GOP rival 
of governor requested the inquiry.
WALTER HAMILTON JEFFERY L. RABIN; DARYL KELLEY
TIMES STAFF WRITERS

07/31/2001
Los Angeles Times
Home Edition
B-1
Copyright 2001 / The Times Mirror Company

The Securities and Exchange Commission has launched a preliminary inquiry 
into whether energy consultants advising Gov. Gray Davis used inside 
information to trade stocks of power companies doing business with the state, 
a source with knowledge of the matter said Monday. 
The federal agency began its review late last week, the source said, in 
response to a request from California Secretary of State Bill Jones. A 
Republican rival of Davis, Jones charged that stock trading by consultants 
may have violated federal laws barring buying and selling based on 
information not available to the public.
On Friday, top aides to the governor disclosed that five consultants had been 
fired for possible conflicts of interest between their official positions and 
their personal finances. 
As news of the SEC inquiry spread through the capital Monday, Davis officials 
were confronted by a flurry of questions about who in the administration owns 
energy stocks. 
Financial disclosure records filed by the governor's spokesman, Steve 
Maviglio, show that he owns between $10,000 and $100,000 in a Texas company 
he and his boss have accused of making "obscene" profits while California has 
been "on its knees." Maviglio said he bought the shares in Houston-based 
Enron Corp. in 1996. 
"It's not a crime to own energy stock," Maviglio said. 
He also owns 300 shares of San Jose-based Calpine Corp., which has the 
largest share of the $43 billion in long-term state power contracts. 
Maviglio placed the order for the stock on May 31, one day after San Jose's 
mayor dropped his opposition to a controversial Calpine plant favored by the 
governor and others. Under the terms of Maviglio's purchase, the transaction 
was completed about three weeks later when the stock reached $40 a share, a 
value of $12,000. It has since fallen in value. 
"I viewed it as a good long-term investment," Maviglio said, adding that he 
purchased the shares for his retirement account based on publicly available 
information. 
The Davis administration has spared Calpine the kind of fierce criticisms 
that it has leveled at other electricity suppliers, such as Enron. But 
California's grid operator has identified the company as one of many energy 
merchants to overcharge the state millions of dollars. 
The fired consultants also owned shares in Calpine, ranging in value from 
several thousand dollars to more than $100,000, records show. 
Another top Davis administration official, legal affairs secretary Barry 
Goode, disclosed in his economic interest statement that he recently held 
between $100,000 and $1 million in another out-of-state company accused of 
multimillion-dollar price gouging. 
In a statement, Goode said he sold his stock in Williams Co's. a month after 
he began working for the governor in February. Goode said the shares were 
supposed to be sold before he went on the state payroll, but his broker 
failed to do so. 
In light of the recent disclosures, Secretary of State Jones said the 
governor must do more to ensure the public that its interest comes first. 
"The governor should direct all of his staff to immediately file updated 
conflict of interest statements that reflect current holdings and any 
activity since their last statement of economic interest was filed," said 
Jones, who is seeking the GOP nomination for governor. 
Word of the SEC's entry into California's energy problems comes as the 
governor faces harsh criticism from lawmakers and others for the quick and 
broad hiring of highly paid private consultants to guide him through the 
crisis. 
In his written request to the SEC, Jones said that recently filed disclosure 
documents showed that at least one consultant bought and sold shares of two 
energy companies within the same month, raising "a red flag" about the 
possibility of insider trading. 
State law prohibits officials from participating in decisions involving their 
personal financial interests. 
The five consultants fired last week were among 11 named in Jones' letter, 
delivered to the San Francisco office of the SEC last Wednesday. It was not 
clear which individuals are the focus of the SEC's inquiry, or whether the 
agency's review would result in any charges. 
Two of the former traders said Monday that they had not been contacted by 
federal investigators and knew nothing of an inquiry into possible insider 
trading. 
But William Mead, fired Thursday, said it is no mystery why so many of his 
colleagues owned Calpine stock. 
Mead said he bought it 2 1/2 years ago and made so much money he recommended 
it to his colleagues last year, while they all still worked for the 
now-defunct California Power Exchange in Alhambra. Calpine power was not 
traded on that exchange, so there was no conflict of interest, he said. 
Mead and three other energy traders--hired by the state in February and 
March--were terminated by the Davis administration for allegedly buying power 
for the state from Calpine while owning the company's stock. Fired traders 
Herman Leung, Peggy Cheng and Constantine Louie did not list the date of 
their Calpine purchases on financial statements that the state required to be 
filed only two weeks ago. 
"But I'm sure they bought it while they were still at the power exchange, 
because that's when we discussed it," Mead said. "It was kind of like a 
hobby. I'm sure it wasn't done with the intent to manipulate." 
Former trader Elaine Griffin, who also owned Calpine stock and resigned two 
weeks ago to take another job, said she didn't know she owned energy 
securities until she checked with her financial advisor July 13, just before 
leaving her state job. 
Griffin said she and her husband own about $10,000 worth of Calpine stock in 
individual retirement accounts managed by their advisor, who bought the stock 
Feb. 1 without their knowledge, she said, after research found it to be a 
good investment. 
"I kind of feel like we've been used for political reasons," Griffin said. 
"We would have disclosed anything right at first, but they never asked." 
As a trader, Griffin said she occasionally bought Calpine power for the 
state, but only at market prices. 
Meanwhile, two Democratic political consultants, who helped Davis polish his 
image after the ongoing energy crisis caused his poll numbers to plummet, 
have agreed to accept no payment for their work as part of an out-of-court 
settlement of a taxpayer lawsuit. 
Tom Hiltachk, a lawyer for conservative anti-tax activist Lewis Uhler, said 
the settlement was reached last Friday after negotiations with lawyers for 
communications consultants Mark Fabiani and Chris Lehane. 
"Now they will not receive one red cent," said Hiltachk. "Very simply Mr. 
Fabiani and Mr. Lehane have agreed to cease all activities for the governor, 
to accept no payments for their services and to basically get out of the 
consulting business with the governor." 
As his part of the agreement, Hiltachk said, Uhler withdrew his lawsuit 
Monday morning. 
Uhler had filed a lawsuit against the two consultants and Controller Kathleen 
Connell in June contending that they should not receive any payments because 
of a conflict of interest. The two men also did consulting work for 
financially troubled Southern California Edison, which was seeking help from 
Davis and the Legislature. 
Connell, a former Los Angeles mayoral candidate who has been at odds with 
Davis since he endorsed an opponent, had held up the payments pending the 
outcome of the lawsuit. 
Under an agreement with Davis, the men were to have been paid $30,000 a month 
for six months. 
Fabiani and Lehane could not be reached for comment. 
* 
Times staff writers Nancy Vogel and Virginia Ellis in Sacramento and Robert 
J. Lopez in Los Angeles contributed to this story.

Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. 

NEWS
Davis' top spokesman bought stock in power firm / Adviser denies conflict of 
interest
Lynda Gledhill
Chronicle Sacramento Bureau

07/31/2001
The San Francisco Chronicle
FINAL
A.1
(Copyright 2001)

Already on the defensive over its energy advisers' financial holdings, Gov. 
Gray Davis' administration came under fresh attack yesterday when his chief 
spokesman admitted buying $12,000 worth of Calpine Corp. stock last month. 
Steve Maviglio, Davis' acting director of communications, denied that his 
purchase of the San Jose energy company's stock constituted a conflict of 
interest. He said he would sell the stock if Davis or administration lawyers 
asked him to.
"I invested in a growing California company," Maviglio said. "It's sad when 
somebody tries to link owning energy stock with a conflict of interest." 
The revelation came the same day that two high-priced consultants Davis 
brought in earlier this year to help sell his energy policies to the public 
agreed not to take any money for the work they have done. Davis was 
criticized for hiring the two, partly because they had also worked as 
consultants for Southern California Edison. 
On Friday, Davis fired five energy advisers for possible conflict- 
of-interest problems after they helped negotiate state spot-market purchases 
or long-term power contracts. Four of the five owned stock in Calpine, and 
the fifth held Enron shares. 
ON THE DEFENSIVE 
Maviglio, who had the task of explaining the firings, was on the defensive 
himself yesterday. 
He bought the Calpine stock in June after asking his broker to invest in it 
when shares hit a certain price, he said. He said that showed he had made his 
decision independently of whatever action he might have taken in the 
governor's office on any particular day. 
Calpine's stock has dropped some in the past month. As of yesterday, the 300 
shares that Maviglio bought for $12,000 were worth about $11,100. 
Maviglio said he had spoken out against Calpine as much as other energy 
companies. He also owns Enron stock that he bought in February 1996 and has 
disclosed on all forms, he added. 
"I've called them pirates and gougers and lumped them in with all the rest of 
the generators," Maviglio said. 
Secretary of State Bill Jones, an announced GOP opponent of Davis for 
governor in 2002, said Maviglio should be fired. 
"These actions are unethical and unacceptable," said Jones, who called on the 
governor's staff to release updated conflict-of- interest statements. "He had 
the power to promote Calpine through press releases. That seems to me to be a 
clear conflict of interest." 
Calpine sold the state $14 million worth of power earlier this year and has a 
large share of the $43 billion in long-term contracts for electricity that 
the state has entered into. 
Earlier this month, when he threw the ceremonial switch on a new Calpine 
plant in Pittsburg, Davis singled out the company as being more cooperative 
with California than out-of-state suppliers that the governor has 
characterized as gougers. 
IMAGE-POLISHING 
The Davis administration tried to put another energy-related controversy 
behind it yesterday as the two consultants brought in by the governor to 
burnish his image agreed to forgo more than $50,000 in work they did for the 
state. 
Chris Lehane and Mark Fabiani will receive no compensation and will leave the 
Davis administration immediately, under a settlement in a lawsuit filed on 
behalf of a national taxpayer rights group. 
Lehane and Fabiani -- nicknamed the "Masters of Disaster" for their work in 
getting former President Bill Clinton out of political jams -- started in the 
governor's office in May and were originally supposed to be paid $30,000 a 
month. 
It was later revealed that they had also worked as consultants for Southern 
California Edison, which is trying to swing a deal with the state to avoid 
bankruptcy. State Controller Kathleen Connell said she would not pay the two. 
"It really raises the question in my mind, what is it about 
conflict-of-interest and other ethical rules that the governor's office 
doesn't understand?" said Lewis Uhler, president of the National Tax 
Limitation Committee, which filed the lawsuit. 
In June, Davis said Fabiani was no longer a communications consultant because 
his work had been "successfully implemented." Lehane, on the other hand, 
dropped his contract with Edison and signed a new agreement with Davis. 
Lehane's new contract required him to work a maximum of 66 hours a month at 
$150 an hour. His payments were to be capped at $76,000 for work from June 26 
to Nov. 20, 2001. 
'OUTRAGEOUS EXPENSE' 
"This was an outrageous expense to taxpayers," Uhler said. "I believe there 
was a clear violation of conflict-of-interest laws." 
The consultants decided it was not worth the legal fees to fight the lawsuit, 
Maviglio said. The two could not be reached for comment. 
"It's shameful when people have to surrender their jobs in public service 
because of a lawsuit," Maviglio said. 
Jones, who filed a complaint with the Fair Political Practices Commission 
concerning the two consultants, said, "I think it's clear from recent actions 
by the governor's office that there have been rampant violations of the 
state's conflict-of-interest laws. Their attempts to mitigate the damage from 
these violations is too little, too late." 
Jones said Davis should immediately require all of the consultants hired 
during the energy crisis to file financial statements. There are 21 advisers 
involved in power purchasing whom Davis has exempted, he said. 
All the contractors who are required to file reports have done so, said 
Maviglio. 
In a related development, the Los Angeles Times quoted a source as saying the 
Securities and Exchange Commission has launched a preliminary inquiry into 
whether energy consultants advising Davis used inside information to trade 
stocks of power companies doing business with the state. 
The federal agency began its review late last week, the source said, in 
response to a request from Jones.

Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. 


Davis press secretary confirms buying energy company stock
By ALEXA HAUSSLER
Associated Press Writer

07/31/2001
Associated Press Newswires
Copyright 2001. The Associated Press. All Rights Reserved.

SACRAMENTO, Calif. (AP) - Gov. Gray Davis' press secretary recently purchased 
the same energy stock as five consultants the governor fired last week, he 
disclosed Monday. 
Steve Maviglio confirmed that on June 20, he bought 300 shares of stock in 
Calpine Corp., a San Jose-based power generator that has received about $13 
billion in state contracts to supply electricity for up to 20 years.
Maviglio's disclosure comes after Davis' office hastily ended the contracts 
of five consultants who helped negotiate state power contracts and held stock 
in energy companies. 
In a related development, an anonymous source told the Los Angeles Times on 
Monday that the Securities and Exchange Commission has launched a preliminary 
inquiry into whether the consultants used inside information to trade the 
energy stocks. 
About two dozen Davis energy consultants were required to fill out financial 
disclosure statements after complaints of conflict of interest by Republicans 
and consumer groups. 
"When we reviewed them, we found possible violations of the law and took 
swift action," Maviglio said Monday before Secretary of State Bill Jones 
issued a press release calling for his termination. 
Jones, a Republican, is a candidate for the GOP nomination to challenge Davis 
in November 2002. 
Maviglio defended his purchase, saying that he "owns several stocks in 
companies in all fields that are growing and are based in California." 
Maviglio said Monday that he requested on May 31 to purchase the stock if it 
dipped to $40 a share, which it did two days after a June 18 ruling by 
federal energy regulators restricting wholesale electricity prices in 
California and 10 other states. 
Maviglio served as Davis' chief spokesman urging the Federal Energy 
Regulatory Commission to impose price ceilings on electricity wholesalers. 
He also said he owns between $10,000 and $100,000 stock in Houston-based 
Enron Corp. He said he purchased the stock in 1997 and has reported it on 
financial disclosure forms. He said that it is "closer to $10,000." 
Meanwhile, two energy consultants to Davis have agreed to forgo more than 
$50,000 in work they did for the state. 
Chris Lehane and Mark Fabiani will forgo the payments as part of a settlement 
with a Sacramento-area resident who filed a lawsuit objecting to their 
hiring, calling it a conflict of interest. 
Fabiani could not be reached for comment Monday. In the settlement, they 
admitted no wrongdoing. 
Lehane issued a statement through the governor's office, calling it "simply 
not worth the bother to challenge the controller in court." 
Davis has come under fire for his May hiring of Lehane, former press 
secretary for Vice President Al Gore, and Fabiani, a deputy campaign manager 
for Gore's presidential run. 
They were hired to help shape Davis' response to the energy crisis, and 
helped craft Davis' aggressive attack on Texas-based energy companies and 
President Bush. 
Both also have advised Southern California Edison, which is negotiating for 
state help in avoiding bankruptcy. Financial disclosure forms showed they 
have each received at least $10,000 from Edison in the past year. 
Davis announced at the end of June that Fabiani terminated his contract, and 
Davis scaled back Lehane's role with the state. 
State Controller Kathleen Connell then said she would not pay Lehane and 
Fabiani for any of their work and now the two have agreed they will not fight 
her decision, Maviglio said. 
Lewis K. Uhler, the Placer County man who filed the lawsuit, said the 
settlement "accomplished our objectives." 
"We wanted to block the egregious use of taxpayer funds for essentially 
political spinmeisters," he said. Uhler is president of the Roseville-based 
National Tax Limitation Committee. 
Maviglio said that Fabiani and Lehane "did good work for the state" and 
helped the state win victories with federal regulators.

Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. 

India's Power Boards Lose $5 Bln as Subsidies Rise, Paper Says
2001-07-31 01:53 (New York)


     New Delhi, July 31 (Bloomberg) -- India's state
electricity boards that distribute power lost 260 billion
rupees ($5.5 billion) in the year ended March because of rising
subsidies and electricity thefts, the Business Standard
reported, citing government figures.
     Power subsidies, mainly to farmers, rose 12 percent to
370.37 billion rupees last year and made up for half the
average tariff of 2.12 rupees a kilowatt-hour. Subsidies have
risen 83 percent since 1997.
     Power costs have risen 41 percent the past three years to
3.03 rupees a kilowatt-hour though the growth in tariffs has
been lower at 28 percent, leading to losses, the paper said.
     Forced to sell subsidized power to farmers and hurt by
power thefts, electricity boards are unable to pay power
generators. Two U.S. power producers, Enron Corp. and AES
Corp., have asked the government to buy out their stakes in
local power projects because of unpaid bills.



India To Evaluate Options On Enron Stake Buy Out Offer

07/31/2001
Dow Jones International News
(Copyright (c) 2001, Dow Jones & Company, Inc.)

NEW DELHI -(Dow Jones)- India will evaluate all options before making a 
decision on U.S. energy major Enron Corp.'s (ENE) offer to sell its majority 
stake in the controversial Dabhol Power Co. to the government, a senior 
Indian Power Ministry official said Tuesday. 
"We are closely watching all the developments. Enron hasn't formally 
approached us with an offer. It will be premature to say anything on the 
issue now. The government will take a stand on the Enron matter only after 
thoroughly studying all the prospects and consequences," said the official.
A spokesman for Dabhol Power Co. said his company has had no contact with the 
federal government lately. 
Enron said Saturday the company wanted to sell its stake in Dabhol Power Co. 
to India's federal government or one of the project's lenders. 
Enron holds a controlling 65% equity in Dabhol Power Co., located in the 
western Indian state of Maharashtra. The Dabhol Power Co. plant has a 
capacity to generate 740 megawatts but is currently not operating because of 
payment disputes with its sole buyer, the Maharashtra State Electricity 
Board. MSEB stopped drawing electricity from Dabhol May 29, saying the 
company's tariffs were "unaffordable." 
Work on an 85% complete 1,444 MW phase II of the Dabhol project was stopped 
in mid-June because of Dabhol Power Co.'s financial difficulties. 
At $2.9 billion, Dabhol Power Co. is the single largest foreign investment in 
India to date. 
-By Himendra Kumar; Dow Jones Newswires; 91-11-461-9426; 
himendra.kumar@dowjones.com -0- 31/07/01 10-09G

Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. 


INDIA PRESS:Govt Asks Lenders To Bail Out Dabhol Pwr Proj

07/31/2001
Dow Jones Asian Equities Report
(Copyright (c) 2001, Dow Jones & Company, Inc.)

NEW DELHI -(Dow Jones)- India's federal government has directed financial 
institutions, led by the Industrial Development Bank of India (P.IDB), to 
work out a package for saving the controversial $2.9 billion Dabhol power 
project in the western Indian state of Maharahtra, reports the Financial 
Express. 
U.S. energy company Enron Corp. (ENE) holds a controlling 65% stake in Dabhol 
Power Co., which operates a 740-megawatt power plant.
The move comes on the heels of Enron's decision to pull out of India's power 
sector, says the newspaper report. 
The package is aimed at completing the 1,444-megawatt phase II of the Dabhol 
project. A sum of $550 million is required to complete the project, of which 
lenders have agreed to pump in around $320 million. As Enron doesn't want to 
inject fresh money into Dabhol, the financial institutions will either have 
to scout for a new investor for the project or pump in the remaining $230 
million themselves, the report said. 
Web site: http//www.financialexpress.com 

-By Himendra Kumar; Dow Jones Newswires; 91-11-461-9426; 
himendra.kumar@dowjones.com

Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. 

Report: Indian government orders financial institutions to save Dabhol power 
project, as Enron wants to pull out

07/31/2001
Associated Press Newswires
Copyright 2001. The Associated Press. All Rights Reserved.

NEW DELHI, India (AP) - The federal government has told financial 
institutions to pump in more money or find a new investor to save the Dabhol 
power project, now that U.S.-based Enron Corp. has said it wants out, The 
Financial Express reported Tuesday. 
The Industrial Development Bank of India, and other institutions, have been 
told to work out a package to complete the dlrs 2.9 billion project in 
western Maharashtra state, the paper said, quoting unidentified officials of 
the banks and the Power Ministry.
Power Ministry officials were quoted as saying that Enron had agreed in 
principle to finish the project if the dlrs 230 million can be found, and 
then Enron could sell its majority stake. 
The project was billed as the world's largest natural gas-fired power plant, 
able to generate 2,184 megawatts once completed at Dabhol, 335 kilometers 
(210 miles) south of Bombay. The second phase, to be run on liquefied natural 
gas, was to be commissioned by the end of the year. 
Enron, based in Houston, Texas has invested dlrs 875 million in the project - 
India's biggest foreign investment. Enron said July 28 it wants the Indian 
government and lenders to buy out its 65 per cent stake. 
The plant stopped production in May after its only customer, the Maharashtra 
State Electricity Board, said it was canceling a seven-year-old power 
purchase agreement. The state also stopped buying power from Enron's 
two-year-old naphtha plant. 
The state says Enron's prices are too high and has demanded the contract be 
renegotiated. 
The Financial Express said that lenders are ready to pump another dlrs 320 
million into Dabhol, but there is a shortfall of an additional dlrs 230 
million. 
The financial institutions will have to find a new investor or provide the 
money themselves, the newspaper quoted its sources as saying. 
It also quoted Power Ministry officials as saying it would be difficult to 
find a buyer until the project is completed. Some of the needed money may be 
sought from Maharashtra state, which had committed to making payments, the 
paper quoted Power Ministry officials as saying. 
The current charges for power are still a matter of contention, however. 
The paper said Enron had reduced its price demands, after the government 
offered various tax and customs duty concessions, but the government wants 
the price for electricity to be cut further. 
(lak)

Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. 

FIs asked to work out deal for Dabhol completion
Soma Banerjee

07/31/2001
The Economic Times
Copyright (C) 2001 The Economic Times; Source: World Reporter (TM)

FINANCIAL institutions led by Industrial Development Bank of India have been 
directed by the Centre to work out a package by which the controversial 
Dabhol Power plant can be completed which in turn could pave the way for the 
sale of equity by Enron. 
Enron, which has a $2.9 billion stake in the project has recently announced 
its decision to pull out of India. This comes barely weeks after the visit of 
Enrons chairman Kenneth Lay who had then maintained that the 'company is 
committed to India' and is looking forward to 'positive talks'.
The package which will be submitted to a high level committee, which is 
represented by the finance, power and law ministry and headed by union 
finance secretary Ajit Kumar. Representatives of the Union power and finance 
ministry met last week to thrash out the main objectives of the package. 
According to FI sources, the package which is expected to be finalised 
shortly will have to have a twin objective of completing the project and 
finding takers for the power to be generated. 
The phase II of the project (phase I of which is already operational) 
requires an additional investment of $550 million to be completed of which 
$320 million has already been tied up with the lenders. 
Another $230 million has to be pumped in into the project. Given the fact 
that Enron is unwilling to pump in any more funds in the project, the FIs 
will have to look for the additional resources. 
The required resources can be moped up only through the infusion of fresh 
investments by a new developer or if the FIs are willing to put in the money 
themselves. 
FIs are also holding discussions with MSEB to honour their obligation and pay 
up the fixed charges of about Rs 95 crore which could then be used for 
completing the project. 
Sources said although Enron has decided to call it a day in the Indian power 
sector, the company is not averse to the proposal of completing this project 
without any further investments. Experts are of the view that this would make 
sense even for Enron who could then expect a better price for its equity. 
On the sale of power and restructuring of tariff, the FIs are holding 
negotiations with DPC and the various agencies who play a role in 
contributing to the tariff. While DPC has offered a tariff of Rs 3.59 per 
unit, the FIs will try and work towards a tariff close to Rs 2.80 per unit. 
Apart from aspects like working a separate arrangement for the LNG plant, 
reduction in Customs duty and sales tax on LNG, attempts would be made to 
also try and reduce LNG prices by asking the suppliers to rework their rates. 
Official sources indicated that Enrons decision to finally announce its 
intention to exit from the Dabhol project is likely to lead to some decision 
this way or the other. 
The Centre which has till now played a passive role and has left the issue to 
be resolved bilaterally is now playing a more proactive role and will 
definitely take every step to avoid litigations at the international lenders 
level.

Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. 

Houston-Area Firms Brace for Onslaught by Code Red Computer Worm
Tom Fowler

07/31/2001
KRTBN Knight-Ridder Tribune Business News: Houston Chronicle - Texas
Copyright (C) 2001 KRTBN Knight Ridder Tribune Business News; Source: World 
Reporter (TM)

Technicians at Reliant Communications and other Internet service providers 
will burn the midnight oil tonight and well into Wednesday, fighting the 
rebirth of an Internet worm some say could be the worst threat to the Web to 
date. 
The Code Red worm, an online infection first spotted on July 19, is expected 
to awaken from its dormant state on hundreds of thousands of computers around 
the world at about 7 p.m. CST today. Tuesday. It will then start flooding the 
Internet with traffic as it tries to replicate itself, creating the 
equivalent of an overwhelming number of surfers hitting the Web at once.
Dave Power, senior vice president of technology at Reliant Communications, 
said nearly every Internet service provider is taking the threat seriously 
and will monitor it carefully as it develops. 
"At the end of our staff meeting today the message we all left with was, `Be 
prepared for the siege,'" Power said. 
Unlike a virus, which spreads when a user opens an e-mail attachment, Code 
Red is a self-propagating worm that spreads itself without human 
intervention. 
When Code Red first showed up earlier this month it infected more than 
250,000 systems in just nine hours, security officials say. It tried to shut 
down the White House's Web server by sending a flood of data requests its 
way, but officials changed the Internet Protocol address, the numeric 
reference to a computer's location on the Internet, of the White House site 
before the attack began. 
When the worm reactivates Tuesday tonight it could begin spreading more 
quickly, bringing sporadic but widespread Internet slowdowns and defacing Web 
pages. 
The potential threat to Internet service is so severe that several federal 
agencies and companies, including the FBI and Microsoft, held a joint press 
conference Monday. 
"The Internet has become indispensable to our national security and economic 
well-being," said Ron Dick, head of the National Infrastructure Protection 
Center, an arm of the FBI. "Worms like Code Red pose a distinct threat to the 
Internet." 
Code Red scans the Internet for Web servers, sending a string of code to 
those machines that takes up residence not in the hard drive but in the 
buffer memory where it is difficult to detect. The worm targets servers 
running Microsoft Windows NT and Windows 2000 with Internet Information 
Server, or IIS, software versions 4.0 and 5.0. 
The worm isn't likely to infect the computers most people have at home or on 
their desktops at work, but rather will infect Web servers, the powerful 
machines kept in air-conditioned data centers that let people view Web sites 
online. That means any sort of Web surfing, from checking e-mail to buying 
books online to looking up stock quotes, may be anywhere from significantly 
slow to nearly impossible. 
"So the ordinary person using a cable modem or DSL won't be infected, and 
they don't need to worry about their privacy or confidentiality," said Chris 
Pick, vice president of product strategy for Houston-based PentaSafe Security 
Technologies. "But they will notice that some of the Web sites they want to 
hit are either running slowly or are simply not available." 
Unlike an e-mail virus, which spreads when a user opens an e-mail attachment, 
Code Red is a self-propagating worm that spreads itself without human 
intervention. 
Code Red scans the Internet for Web servers, sending a string of code to 
those machines that takes up residence not in the hard drive, but in the 
buffer memory where it is difficult to detect. The worm targets servers 
running Microsoft's Internet Information Server, or IIS, software versions 
4.0 and 5.0. 
From within a server Code Red begins scanning a randomly generated list of 
Internet addresses to find another server to infect. If the infected server's 
default language is English, all Web pages served by that machine will be 
defaced with the message "HELLO! Welcome to http://www.worm.com! Hacked by 
Chinese!" 
Officials say they have not identified the author of the program, but its 
name is said to be a reference to a soda made by Mountain Dew that is popular 
with hackers, and the name is not a reference to "Red" China. 
Officials say they have not identified the author of the virus, but its name 
is said to be a reference to a popular soda made by Mountain Dew with hackers 
and not China. 
The real problems created by Code Red are not related to security or privacy 
issues, or even the Web page graffiti, but rather the amount of traffic that 
will be generated by hundreds of thousands of Web servers sending out data 
packets searching for other machines to infect. 
The first 19 days of a month the worm is set up to scan and infect, but from 
day 20 until day 27 the worm floods a certain Internet address -- in this 
case the White House Web server -- with information requests causing a 
denial-of-service attack. 
The White House changed its Internet address prior to the attack earlier this 
month and avoided being knocked out, but that didn't kill off Code Red. The 
worm has been sitting dormant on servers for the past two weeks, but when the 
date changes from 31st to the 1st, it will begin scanning for new hosts to 
infect again. 
A software patch to fix the Microsoft IIS program's vulnerability has been 
available since June, a few weeks after developers and security experts found 
the problem. Unfortunately, not enough system administrators and Web masters 
installed it before the outbreak. 
"Hacker groups in general are aware of these vulnerabilities, but they can be 
taken care of relatively easily with just a little vigilance," Pick said. 
Jeremy Hewlett, security administrator for Reliant Communications, said 
downloading the software patch should be the first priority for any system 
administrator. In addition to the Microsoft site, the National Infrastructure 
Protection Center, www.nipc.gov, and Symantec Co., www.symantec.com cq for 
both addresseshave information about detecting and removing the worm. 
Observers say Microsoft products are common targets for virus writers because 
the software is found running on so many sites and because Microsoft has not 
always been as attentive to security issues as it could be. 
"With Windows NT and Windows 2000 they were engineered to work in tandem with 
a lot of other systems at once, so security was not engineered into the 
products from the start," Pick said. "They haven't focused on it much in the 
past but are starting to become more aware of it." 
Microsoft is known for not testing its products as well as it could either, 
Power said, which also leads to many post-release patches and updates. 
"They're not very forthcoming with problems, which is why you'll see most 
people go to the public and press with issues first," Power said. 
Microsoft took part in the public warnings about Code Red on Monday and has 
been providing the patch for free on its Web site for weeks. 
Hewlett said the staff at Reliant Communications has already cleared its 
network of the worm but is expecting to work late Tuesday night monitoring 
incoming attacks from other infected servers. University networks are among 
some of the likely breeding grounds since schools' Information Technology 
departments tend to be particularly short-staffed in the summers. 
"We saw enormous volumes of traffic from the schools last time, but nobody 
really monitors the university networks for this," he said. 
While the denial-of-service attack aimed at the White House could have been 
damaging if it had not been redirected in time, there's nothing stopping a 
virus writer from setting his or her sights on another target, like a 
company's Web site. 
"It could be Enron's site, it could be any other government site, or any part 
of the net's infrastructure that's vital to the economy," Pick said. "Houston 
is just as likely as any other city to be infected."

Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. 

Calif Gov Spokesman Says He Bought Calpine Stock In June

07/30/2001
Dow Jones Energy Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

LOS ANGELES -(Dow Jones)- A spokesman for Gov. Gray Davis purchased shares of 
Calpine Corp (CPN) on June 20, 2001, he said Monday, but declined to say how 
many shares he purchased. 
This is the first time an official in Davis' office has admitted to 
purchasing shares in energy companies since the state took on the job of 
buying power in January in lieu of the utilities.
As reported, the U.S. Securities and Exchange Commission has been 
investigating Davis administration officials for more than a month to see if 
they purchased stock in energy companies using information that was 
unavailable to the public. Davis spokesman Steve Maviglio said, however, that 
his stock holdings did
not represent a conflict of interest. Maviglio has not been named in the
SEC investigation, and says he made his purchases based on public
information. 

"There's no crime in owning energy company stocks," Maviglio said. "My 
purchase of Calpine was based on information I read in the newspapers." 
Maviglio also owns between $10,001-$100,000 in Enron Corp (ENE) stock, 
according to a 2000/2001 financial disclosure form. He said he has owned 
Enron stock since 1996. 

Last week, five state energy consultants were fired by Davis' staff for 
conflicts of interest because they helped California buy power from Calpine, 
a company in which they owned stock, state officials said. 
The consultants, who were hired by the state in January, did not file 
economic interest statements until July, when Secretary of State Bill Jones 
revealed that the consultants and energy traders held stocks in energy 
companies they were buying from. Jones said Monday that Maviglio's actions 
were "unethical, unconscionable and unacceptable." 
"The Governor should direct all of his staff to immediately file updated 
conflict of interest statements to reflect current holdings and any activity 
since their last Statement of Economic Interests was filed," Jones said in a 
statement. Jones, a Republican who hopes to challenge Democrat Davis next 
year for governor and who has been highly critical of Davis' handling of the 
energy crisis, also called for an expansion of investigations. 
"The SEC, the Attorney General and the Fair Political Practices Commission 
must now expand their investigations to include all of the Governor's staff 
in addition to the consultants who are already under investigation," the 
statement said. 
Attorney General Bill Lockyer has not yet decided whether he will launch an 
investigation into the Davis administration, a Lockyer spokeswoman said. 
The governor's own investments are in a blind trust, meaning a trustee 
handles Davis' financial affairs and the governor has no knowledge of the 
investments. 
"I have always owned mutual funds and have never bought stock in individual 
companies. That has been my policy since the beginning of my administration," 
Davis said Monday at a bill-signing event in Los Angeles. 
State conflict-of-interest laws say that public officials cannot negotiate 
contracts for companies in which they hold stock, and officials cannot use 
their positions to influence the state's decisions with respect to those 
companies. 
The conflict-of-interest laws apply to all state bodies, including the 
California Public Utilities Commission and the California Independent System 
Operator, which runs the state's real-time energy market. 
The five members of the ISO Board of Governors listed no holdings in energy 
companies since Jan. 24 on their most recent disclosure forms, signed between 
Jan. 24-July 24. The board was appointed by Davis in January. Disclosure 
forms for the CPUC and employees with the California Department of Water 
Resources, the state's power-buying arm, could not be immediately obtained. 
SEC investigators said Sunday that a preliminary investigation has revealed 
that several employees and consultants working directly with Davis on energy 
issues have purchased "significant" shares of Calpine stock between January 
and July. Individuals purchased stocks in other energy companies, but 
invested heavily in Calpine, the investigators said. Nearly half of the 
state's $43 billion in long-term energy pacts will come from Calpine, 
according to details of contracts released last month. Some of the contracts 
were signed as early as February, but Davis had refused to release the 
details of the supply until a Superior Court Judge ordered the administration 
to do so in mid-June after news organizations filed a lawsuit. 
Davis has accused power suppliers of price gouging, and his attorney general 
hopes to send power company executives to jail. But Davis has spared Calpine 
the invective, touting the San Jose-based generator as a "California company" 
helping to keep the lights on in the state. 
Maviglio has said the governor has praised Calpine because its prices are 
well below those charged by other generators and because the company has 
invested in California for the long haul. 
Calpine is "not attempting to suck every dime out of the state and throw 
parties in Houston," he said. 
-By Jessica Berthold and Jason Leopold, Dow Jones Newswires; 
323-658-3872/3874; jessica.berthold@dowjones.com, jason.leopold@dowjones.com

Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. 

Functioning In The Bandwidth Market No One Expected
By Erwin Seba
Of DOW JONES NEWSWIRES

07/30/2001
Dow Jones Energy Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

HOUSTON -(Dow Jones)- Band-X Ltd., the longest-lived bandwidth exchange, has 
survived by moving as the market has developed, said a London-based analyst 
of the London-based company. 
"Their business model is sound," Ciara Ryan, senior manager in the bandwidth 
trading department at Arthur Andersen's London office, told Dow Jones 
Newswires. "They understand the limitations of the market. They didn't try to 
fix the world overnight."
Band-X began trading bandwidth in 1997, two years before Enron Corp. (ENE), 
announced it was going to be a market-maker in bandwidth trading. 
But, a company executive said part of the reason for his company's success is 
it lacks an energy- merchant background. 
"The difference between gas and bandwidth is you can't store bandwidth," 
Donald Noonan, vice president of Networks, told Dow Jones. In 2000, the 
privately held company saw $80 million in bandwidth trades, Noonan said. 
The company has offices across Europe, Asia and in the U.S. 
The company also operates a telecommunications minutes exchange and a 
colocation exchange, which is increasing business as companies seek to gain 
some return on an investment in a network with rapidly declining profit 
potential, while others seek to buy or lease what they would otherwise build. 
"We are constantly seeing the leasing of capacity," Noonan said. 
But the contract time periods are shifting from the previously common 20-year 
lease to 1-year or 10- or 20-year contracts, he said. 
And the company has won favorable reviews from the most conservative part of 
the market, the carriers, Ryan said. 
"They have a lot critical mass and lot of support in the marketplace," she 
said. 
-By Erwin Seba, Dow Jones Newswires; 713-547-9214; erwin.seba@dowjones.com

Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. 

INDIA: India evaluating Enron's offer to quit Dabhol.

07/30/2001
Reuters English News Service
(C) Reuters Limited 2001.

NEW DELHI, July 30 (Reuters) - Indian officials said on Monday they were 
evaluating an offer by U.S. energy firm Enron to sell its stake in troubled 
Dabhol power project to the federal government. 
A spokesman for the Dabhol Power Company, in which Enron holds a 65-percent 
stake, said on Saturday the firm and its partners wanted to sell equity in 
the project to the federal government or the lenders.
"We are assessing the situation. It is too premature to say anything right 
now," a senior federal power ministry official, who did not want to be 
identified, told Reuters. 
He said the federal government had not received any formal offer from Enron 
to sell its equity in the controversial project. 
Government sources said that ministry officials were talking to Indian 
financial institutions to assess Enron's statement. 
A power ministry official said if the federal government picked up Enron's 
equity in the project, it could save the government millions of dollars in 
penalties which it would have to pay if it lost an arbitration case over the 
project. 
Apart from Enron, DPC's shareholders include U.S. group General Electric and 
Bechtel, which own 10 percent each, and a local utility, the Maharashtra 
State Electricity Board (MSEB), which holds 15 percent. 
Enron has been locked in a bitter payment dispute with MSEB, which had signed 
a contract to buy all the power produced by Dabhol, whose first phase of 740 
MW was completed last year, and the second phase of 1,444 MW is nearly 
complete. 
A BLESSING 
India's western state of Maharashtra, where the project is located, welcomed 
Enron's offer to sell its equity in the controversial project, the Press 
Trust of India reported. 
"It will be God's biggest blessing for us," the agency quoted the state's 
Energy Minister Padamsinh Patil as saying in Bombay. 
It also quoted the head of a negotiating committee, M. Godbole as saying that 
the panel's next meeting, scheduled after a month, would be cancelled in view 
of Enron's statement that it wants to exit Dabhol. 
MSEB and Enron's dispute escalated in April, when the U.S. firm notified the 
government it was applying to an arbitration court in London to consider its 
claim for 1.02 billion rupees owed by MSEB for power it purchased in December 
from DPC. 
The company also sent a political force majeure notice to MSEB. Such a notice 
is a contractual clause dissatisfied parties give as a first step towards 
possibly dissolving a contract. 
In May, the defaulting utility stopped buying power from Dabhol, saying it 
was expensive.

Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. 

California Governor's Spokesman Says He Bought Calpine Stock
2001-07-30 21:36 (New York)

California Governor's Spokesman Says He Bought Calpine Stock

     Sacramento, California, July 30 (Bloomberg) -- A spokesman
for California Governor Gray Davis said bought $12,000 worth of
stock in energy producer Calpine Corp. in June as the state was
working with the company to open new power plants and buying
millions of dollars a day in electricity.
     Davis spokesman Steve Maviglio purchased 300 shares of
Calpine on June 20 after putting in an order on May 31 to buy the
stock when it fell to $40, he said. The purchase is being reviewed
by the Governor's legal office, Maviglio said.
     ``These purchases were based on no knowledge of anything,
just public information about a growing California company,''
Maviglio said. ``I've informed the governor, the chief of staff
and our legal counsel today. I'd be glad to divest myself if
that's what required.''
     Maviglio also said he owns between $10,000 and $100,000 in
Enron Corp. shares, which he said he purchased in 1996. His
purchases came to light three days after California officials said
they fired five consultants hired to advise California on energy
after they disclosed that they owned shares of Calpine.
     The consultants worked for the Department of Water Resources,
which at the time was buying millions in electricity from Calpine
and other energy generators. California has spent almost $8
billion buying electricity for its two largest utilities, which
have been insolvent since January.
     Nine energy consultants were ordered by Davis's lawyer Barry
Goode last week to sell any energy-company stock they owned,
including shares of Enron Corp., Calpine Corp., and Dynegy Inc.,
after Secretary of State Bill Jones pressured Davis to release
details of their holdings.
     Jones said today in a statement that Maviglio should be fired
for the purchases.
     ``These actions are unethical, unconscionable, unacceptable
and heads should role,'' Jones said. ``Mr. Maviglio should be
fired immediately.''
     Jones has publicly called on Davis to force the 50
consultants hired by the state to disclose their holdings in
energy companies. Last week he urged the Securities and Exchange
Commission to investigate whether any of the consultants or
advisers traded stock based on non-public information.
     Maviglio said no one in the administration or at the
Department of Water Resources had been contacted by the SEC. ``No
one's been contacted either here or at DWR,'' Maviglio said.
     A spokeswoman for the SEC in San Francisco, Helane Morrison,
said the agency would not confirm or deny an investigation.
     Calpine shares are down 6.8 percent since June 20, when
Maviglio says he purchased the shares.