Waxman Seeks Justice Inquiry of Rove
The Washington Post, 07/18/01
Business World: How To Execute 10%, Nicely
The Wall Street Journal, 07/18/01

RUSSIA: INTERVIEW-Russian Tyumen Oil says foreign ties to grow.
Reuters English News Service, 07/18/01

COMMODITIES & AGRICULTURE - Enron Metals to pay fine to LME.
Financial Times, 07/18/01

City - Exchange fines Enron metals group #190,000.
The Daily Telegraph, 07/18/01

Exxon Mobil, U.A.E. Min Discuss Dolphin Gas Proj - Report
Dow Jones Energy Service, 07/18/01

Bush switch on conservation saves credibility
Chicago Tribune, 07/18/01
COMPANIES & FINANCE INTERNATIONAL - Energy trading unit fuels 27% leap in Duke earnings.
Financial Times, 07/18/01
Letters to the Editor: India, Pakistan and the U.S.
The Wall Street Journal, 07/18/01
Business: Briefs - London Exchange fines Enron $264,000
Houston Chronicle, 07/18/01

A Section
Waxman Seeks Justice Inquiry of Rove

07/18/2001
The Washington Post
FINAL
A27
Copyright 2001, The Washington Post Co. All Rights Reserved

Rep. Henry A. Waxman (D-Calif.) called yesterday for a Justice Department review of White House senior advisor Karl Rove's repeated discussions with executives and representatives of companies in which he held stock. 
In a letter to White House counsel Alberto R. Gonzales, Waxman said Rove appeared to be in violation of federal conflict-of-interest laws.
Gonzales has said he was satisfied that Rove "took care to avoid" any impropriety in meeting in March with Intel Corp. executives, and in participating in broad discussions about administration energy policy while owning more than $100,000 worth of Intel Corp. stock and more than $200,000 worth of stock in Enron Corp., General Electric Co. and other energy companies. On June 7, Rove sold more than $1 million in stock in companies doing business with the government. 
Waxman, ranking Democrat on the House Government Reform Committee, said federal law requires executive branch departments and agencies, including the White House, to report "any information, allegation or complaint" involving potential criminal conduct by an employee to the Justice Department. He said he was not aware of any reason Rove should be exempt from such outside investigation. 
White House spokesman Dan Bartlett said Waxman's letter is under review, but added, "We are confident that Karl followed all ethical guidelines and statutes in his role as senior adviser to the president." 
-- George Lardner Jr.


http://www.washingtonpost.com 

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


Business World: How To Execute 10%, Nicely
By Holman W. Jenkins Jr.

07/18/2001
The Wall Street Journal
A19
(Copyright (c) 2001, Dow Jones & Company, Inc.)

How come Ford adopts the same white-collar performance review system as General Electric but gets vilified for it, hounded by discrimination lawyers and AARP? Last week, less than a year after launching it, CEO Jacques Nasser was moved to dump a brand new executive grading system designed to weed out the least capable 10% of Ford's managers. 
The short answer is that Ford isn't GE, though Jack Welch has been a model for what Mr. Nasser seeks to accomplish at the auto company.
Bringing such a Torquemada system into a firm that faces slowing sales and whose own boss considers his colleagues notoriously flabby and easy on themselves meant it was a downsizing scheme from the start, whether advertised that way or not. GE didn't introduce its version until a decade after the Neutron Jack phase. But never mind. Trumpeting a win last week, AARP declared its victory goes way beyond Ford. It sure does. 
Forced ranking has waxed and waned as a fad over the decades, and most students of management hold their noses around it. Its resurgence, at a time when many employers are contemplating their first layoffs in years, can only mean that companies are nervous about preserving their freedom to hire and fire in a world run increasingly by the job-discrimination bar. 
Ask any non-deluded European. What makes the U.S. economy relatively nimble is that companies are not afraid to take on workers because they know they can always get rid of them later. Harsh as this sounds, it's why we have a lush job market compared to the employment Saharas of the Old World. 
Yet firing in America has been a work in progress. Half a decade ago, enlightened companies tried employee buyouts, but the lawyers descended, forcing companies to offer the buyouts indiscriminately. Result: Highly marketable workers took the windfall and immediately found other jobs, while people who considered themselves unemployable skipped the loot and clung to their cubicles. 
Other companies, on the theory that it was OK to tell people they had to go because their functions or departments were being discontinued, bravely downsized the old-fashioned way. But this was no proof against lawsuits. Remember Texaco, Coca-Cola and others where the very existence of affirmative-action programs became fodder for litigation by both minorities and older white employees? 
Searching for a way out of the legal maze, Ford tried two years ago to combine forced ranking with buyouts, aiming offers exclusively at low-ranked employees. Result: grumbling in the hallways of "rewarding failure" and good employees angling for low grades so they could become eligible for a golden parachute. Finally, starting this year, Ford opted for an out-and-out forced ranking system, which would have given 10% of white-collar employees annually a "C" grade that meant either shape up or you're gone next year. 
Microsoft, Lucent, Conoco, Enron and EDS all have used forced ranking to maintain or improve the quality of their work forces. While many find the idea distasteful or complain it substitutes a yearly spasm for what should be a continuous process, at least it solves a real problem. Survey after survey finds that even the happiest worker-bees gripe about their employer's reluctance to get strict with poor performers. A recent McKinsey poll of managers at big companies found that only 16% said their employer could even recognize the difference between stars and slackers. 
But Ford was already in the soup over the Explorer/Firestone fiasco. It didn't stand a chance when the Detroit papers opened a new front over its A-B-C grading system for 18,000 managers. Accentuating the coverage was a simmering quest to discover any sort of rift between Mr. Nasser and his chairman, Bill Ford, great-grandson of the founder. 
Mr. Ford has somehow been anointed keeper of the company's conscience because of blood chemistry or something. Inevitably, he wants to be liked and wants the company to be liked. Putting a Ford in the chairmanship was probably the worst thing the company could have done at a time when Mr. Nasser was clearly set on giving the place a kick in the pants. 
In the ranking controversy, Mr. Ford soon was reported to be "concerned about the system's impact on morale." Notice how this differs from "the system is an urgent necessity so Ford can become a better company." With this kind of support, management quickly wilted in the face of pressure from the old-folks lobby (which has appointed itself guardian of anybody over 45) and other victim contingents. 
Mr. Nasser didn't help himself by appearing in a Ford diversity video haranguing an audience for containing "too many white faces" or by installing rewards for executives who meet minority hiring goals. Presto, lawsuits galore. The ones Ford will have the most trouble with are those filed by white males claiming they were victims of age discrimination in order to make way for blacks and women. 
One of the ironies, as Ford shows, is that companies these days have reasons of their own for recruiting minorities and women. Were the supposedly archaic, 19th-century principle of freedom of contract still in effect -- i.e., employers are free to hire and fire at will -- there would be a lot more affirmative action, a lot more honestly pursued. 
GE may not exactly be the rainbow coalition, but it does have a lesson for Ford. Under its version of forced rankings, 10% of managers are assigned to a bottom grade each year, which means they're cut off from the rich booty GE awards the top 20% and the job security of the workaday 70%. If low-ranked managers don't improve, they are asked to move on. 
A big difference, though, is that the process is not concentrated in a single, highly neuroticized annual ritual. GE carries on with much year-round mentoring and bellowing and measuring, so nobody has cause to be surprised by the score he gets. In fact, anyone who went to work there in the past 15 years would have known exactly what he was getting into. 
Here's the lesson: Nobody doubts that GE's hiring and firing, whatever the color or gender of the fodder, is all about business. It takes time to build a reputation for heartlessly focusing on the bottom line, but once you do, it can be liberating.


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



RUSSIA: INTERVIEW-Russian Tyumen Oil says foreign ties to grow.
By Sujata Rao

07/18/2001
Reuters English News Service
(C) Reuters Limited 2001.

MOSCOW, July 17 (Reuters) - Russia's Tyumen Oil Company said on Wednesday it planned huge expansion of its upstream and downstream profile through ventures with foreign oil majors. Company President Simon Kukes told Reuters in an interview that Tyumen - Russia's fourth-largest oil producer with output of 800,000 barrels per day (bpd) - would also seek a New York Stock Exchange listing in 2002 after market conditions improved. 
"We aim to be a multi-national company and the first step is in Ukraine, where we will within a year be the number one retailer of oil products," he said.
Kukes said Tyumen was also interested in Eastern Europe and in talks on projects that a included a stake in Lithuania's Mazeikiu refinery , but he declined to elaborate. 
"Eastern Europe has logistical advantages for Russian firms. We can bring in oil easily and get a significant market share. I also see a role for us in China, India and the Middle East." He said Tyumen, controlled by Russia's Alfa conglomerate, saw foreign oil majors' involvement as a key to its growth. 
"We would welcome a strategic partner to take a stake in the firm and, in fact, we are now in talks with several foreign partners, including Texaco ," Kukes said. 
He added earlier talks with Phillips had had no result. 
Tyumen is involved in the $11 billion Kovykta project with BP and several Russian firms to produce and ship gas to China, as well as in Transneft's Adria pipeline project to link outlets for Russian crude in north and south Europe. 
In August Tyumen will take a key downstream step. 
With Texaco in Moscow it will open Russia's first Star Mart convenience store in a partnership expanding its 800-strong filling network by combining them with the U.S. Star Mart brand. 
Earlier this year the firms inked a deal to jointly produce lubricants at Tyumen's LINOS refinery in Ukraine. Kukes said total investments in 2001 are planned at $800 million, with another $1 billion earmarked for each of the coming years. 
Tyumen also got a boost by being rated the World's Best Oil Company in 2000 by Financial Times Energy for "phenomenal growth in the past year, breaking into the world's top 15 oil firms." 
"By year end, we could jump from fourth to third place among Russian oil producers," said the U.S.-educated Kukes, who is part of Tyumen's efforts to boost its profile internationally. 
VERTICALLY INTEGRATED 
Tyumen is now eyeing natural gas, angling to up its Kovykta stake and in Rospan, with 600 billion cubic metres in reserves. 
Kukes sees gas as part of a strategy to develop Tyumen on the lines of Enron - producing crude, gas and power. 
"Gas is an essential component of a vertically-integrated oil company and in the way we see ourselves in future," Kukes said. "We aim that in five years, 10-15 percent of our revenues will come from gas and condensate." 
But aggressive expansion has brought Tyumen into conflict with competitors. It has locked horns with arch-rival Interros to wrest control over a stake in Kovykta, and its role in oil firm Sidanco - where BP owns 10 percent - has been criticised. 
"We'd like to get at least 25 percent in Kovykta," Kukes said, noting Tyumen was keen for BP, which has a 31 percent stake, to remain project leader. 
Tyumen also angered influential gas trader Itera by trying to obtain control over its bankrupt gas producer, Rospan. 
"Rospan is a profitable firm but for some reason was losing money," Kukes said, adding Tyumen would turn the company around.


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


COMMODITIES & AGRICULTURE - Enron Metals to pay fine to LME.
By ADRIENNE ROBERTS.

07/18/2001
Financial Times
(c) 2001 Financial Times Limited . All Rights Reserved

Enron Metals Limited - formerly MG - has agreed to pay a #190,000 fine to the London Metal Exchange after EML's systems and procedures for ensuring compliance with the exchange's rules were found to be "seriously inadequate". 
With the exception of hefty fines imposed after the Sumitomo copper scandal, this is the largest sum an LME member has yet paid. Fines for procedural shortcomings over the past four years have been between #20,000 and #90,000.
EML is charged with "persistently" failing to ensure warrants needed to settle exchange contracts reached the London Clearing House by the required time. This happened between August 1999 and February this year. 
The LME said EML's actions had jeopardised confidence in the exchange's delivery mechanism, a key aspect of its business. 
The exchange also found that between May 2000 and February 2001 EML repeatedly failed to enter trades into the exchange's matching system correctly. 
In both cases "EML frequently provided explanations that were either inadequate to explain the particular incident, or inadequate to explain the persistence of that type of incident", said the LME. 
Enron Metals, formed after Enron's purchase of UK metals trader MG last June, said the disciplinary charges related to "operating procedures during a period prior to, and the first months immediately following, Enron's acquisition of MG". 
The company added that Enron had now "implemented a series of measures to tighten up existing procedures and ensure that the operating systems meet with Enron's high standards". 
(c) Copyright Financial Times Ltd. All rights reserved. 
http://www.ft.com.


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


City - Exchange fines Enron metals group #190,000.

07/18/2001
The Daily Telegraph
P35
(c) Telegraph Group Limited, London, 2001

THE London Metal Exchange (LME) has fined Enron Metals #190,000 for breaching its compliance regulations. 
The exchange said Enron Metals, a subsidiary of the American-owned energy giant, failed to meet deadlines for delivering warrants needed to settle its metals exchange contracts.
Warrants denote the ownership of LME-registered metal stored in warehouses. 
The group also failed to input trades into the LME's system, the exchange said. 
Enron stated that the charges related to its recently-acquired MG metals trading division before and immediately after the purchase. The group has since "tightened up existing procedures", it said.


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


Exxon Mobil, U.A.E. Min Discuss Dolphin Gas Proj - Report

07/18/2001
Dow Jones Energy Service
(Copyright (c) 2001, Dow Jones & Company, Inc.)

DUBAI -(Dow Jones)- Exxon Mobil Corp. (XOM) is interested in participating in the $4 billion Dolphin Gas project, a plan between the UAE Offsets Group and Qatar Petroleum to transport natural gas from Qatar to Abu Dhabi and Dubai, the official Emirates News Agency, or WAM, reported Wednesday. 
An Exxon Mobil official and the U.A.E.'s Foreign Minister, Sheikh Hamdan bin Zayed al-Nahyan, discussed the issue Wednesday, WAM said.
The Dolphin project aims to transport two billion cubic feet a day of natural gas from Qatar's offshore North Field to the U.A.E. 
In May, Enron Corp. (ENE) sold its 24.5% stake in Dolphin back to Offsets, freeing up its share for another potential strategic partner. Enron's role would have been to focus on the midstream part of the project, or gas transportation, which requires building a 350-kilometer pipeline from a processing plant in Ras Laffan, Qatar, to the Taweelah terminal in Abu Dhabi and Jebel Ali terminal in Dubai. 
TotalFinaElf SA (TOT) is Offsets' other strategic partner, holding a 24.5% stake in the project. The company will operate the upstream phase of the project, which includes developing natural gas reserves in two blocks of the North Field. 
The first wells are scheduled to be drilled in the second half of 2001 and come onstream in 2004. 
Since Enron's withdrawal, Offsets has said it is talking to a handful of international oil companies about potential participation. 
Qatar Petroleum and Dolphin signed an initial agreement for the upstream section of the project in March. A full production sharing agreement is due to be signed in September. 
In the short term, it is expected the gas will be supplied to Dolphin by Mobil Oil Qatar's Enhanced Gas Utilization Project at the North Field. 
-By Dyala Sabbagh; Dow Jones Newswires; 97150 6251228; dyala.sabbagh@dowjones.com


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



Business
Bush switch on conservation saves credibility
David Greising

07/18/2001
Chicago Tribune
North Sports Final ; N
1
(Copyright 2001 by the Chicago Tribune)

Too bad we can't all be vice president. If we could, this whole "energy crisis" thing would be no big deal. 
We could send our heating bill to the Navy as Dick Cheney has. Who knows, maybe we could fuel up our cars and let the Energy Department pay the bill.
Cheney is making quite a shift from the advice he offered to consumers just a few weeks ago. "If you want to leave all the lights on in your house, you can," he counseled. "There's no law against it. But you will pay for it." 
Or, in Cheney's case, the Navy may pay for it. After all, it owns his house. 
The Vice President decided to dun the Navy on the very day administration officials spread out to promote conservation as a key part of President Bush's energy plan. 
My, how the scene has changed. In mid-May President Bush unveiled a Cheney-authored energy plan that promoted drilling and nuking and mining but overlooked conserving. That's when the vice president dismissed conservation as a "personal virtue" but no energy policy. 
The 170-page Bush policy did speak ominously of a growing "energy crisis." 
At the time, gasoline seemed headed to $3 a gallon. Rolling blackouts interrupted California's power. Winter natural gas prices had spiked. 
Bush seemed confident he could push his energy policy through a House and Senate dominated by Republicans. 
Today, with gasoline prices down around $1.35 a gallon and the Senate under Democratic control, Bush will have to give up on pet dreams like drilling for liquid gold in Alaska's Arctic National Wildlife Refuge. 
Conservation is all the talk--even from administration officials who can't talk. 
A laryngitis-stricken Cheney on Monday turned to wife Lynne to declare, "Conservation is a must." 
On Monday, the Energy Department declared that federal agencies since 1980 have cut their energy consumption in buildings by 30 percent. 
So the world has completely changed, right? 
Conservation now will become a centerpiece of the Bush energy policy. The caribou and moose and grizzlies in Alaska can sleep easy knowing their pristine habitat will be forever free and clear. 
Isn't it obvious that President Bush's supporters at Enron and Texaco and other oil giants should get into a more promising line of business? 
And maybe the alternative-energy researchers at Argonne National Laboratory can stop studying super-conductivity and new-age fuel cells. Energy Secretary Spencer Abraham told them Monday that consumer conservation can cut the energy deficit by 60 percent over the next 20 years. 
Perhaps it's time to turn that big super-conducting super collider into the world's largest Roller Derby track. 
Well, maybe not. 
The easing of the trumped up "energy crisis" is good news. And not just because it won't cost nearly as much to drive to the Dells for summer vacation. 
It's good because it seems likely to bring some balance into whatever energy policy ultimately emerges from Congress sometime later this year. 
The Bush plan hasn't changed. There still are only a tiny $10 billion of conservation measures--half of them already in place--in the gargantuan energy program. 
But the political and market realities have changed. Energy costs are down. And conservation suddenly seems likely to get a fair hearing in Congress and at the White House. 
Perhaps most important, the free market has shown an ability to respond to a so-called "crisis" in energy. This reduces the political pressure for a quick and ill-advised political fix. 
A sudden jump in electric-plant construction means supply should grow twice as fast as demand over the next several years, according to the North American Electric Reliability Council. More than 1,000 natural gas wells are in production, double the number during early 2000. 
Gas prices are lower than had been expected because OPEC has stopped cutting production and oil giants jumped at the first sight of high prices, and production is jumping. 
We can't all turn to the Navy to bail us out of high energy prices. But in a fix, the free market does nearly as well. 
---------- 
Contact dgreising@tribune.com.


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



COMPANIES & FINANCE INTERNATIONAL - Energy trading unit fuels 27% leap in Duke earnings.
By JULIE EARLE.

07/18/2001
Financial Times
(c) 2001 Financial Times Limited . All Rights Reserved

Duke Energy, the US energy company, yesterday posted a 27 per cent leap in second quarter earnings, underpinned by strong growth at its North American natural gas and electricity trading business. 
Duke, a large utility owner in the US, said after the market closed that it earned $419m, or 53 cents a share, compared with $329m, or 44 cents a share, in the year-ago quarter.
Revenues for the quarter increased 43 per cent to $15.6bn, from $10.9bn a year earlier. 
The result met Wall Street estimates of 49 to 58 cents a share. The Charlotte-based company is one of several in the US accused of manipulating electricity prices in California, along with its competitors Reliant Energy, Dynergy, Williams and Enron. 
California's grid managers have accused wholesalers of overcharging the state by more than $6bn since last May - allegations the companies have denied. 
Last night, a Duke Energy spokesman said that California remained a small piece of the company's whole. 
He said the result was driven by strong growth in its North American energy trading segment, which reported earnings before interest and tax of $251m, a 128 per cent increase on the year-ago quarter. 
The unit's growth was fuelled by big expansion in its wholesale energy asset portfolio, which now has more than 12,600MW of merchant power generation in operation or under construction, compared with about 8,400MW net a year ago. 
Duke also has a large electric utilities operation in California. 
The company's shares closed 38 cents higher at $42.03 in New York. 
(c) Copyright Financial Times Ltd. All rights reserved. 
http://www.ft.com.


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



Letters to the Editor: India, Pakistan and the U.S.

07/18/2001
The Wall Street Journal
A19
(Copyright (c) 2001, Dow Jones & Company, Inc.)

Mr. Varadarajan basically asks America to abandon its traditional link to Pakistan in favor of India. He overlooks some critical facts. First, it is unclear whether India even wants to be closer to the U.S. Throughout the Cold War, India was uncomfortably close to the Soviet Union in diplomatic circles, whereas Pakistan was a reliable U.S. ally; it was vitally important in espionage efforts against the Soviets (Francis Gary Powers departed from Pakistan in his ill-fated U-2 and the U.S. conducted major operations there in the 1980s) and in offsetting pro-Soviet influence in the region. 
Smearing Pakistan and it current military president with Islamic fundamentalism is disingenuous, since the nation is practically secular when compared to its neighbors in Iran and Afghanistan. Indeed the deposed president's paeans to fundamentalism in response to domestic problems were one impetus for the military takeover in the first place. 
Despite talk of reform, India's economy is still generally hostile to foreign investment. The most notable business project of the 1990s, Enron's massive power facility in Dhabol, has been mired in bureaucracy and contract reneging. 
The question of Kashmir is a difficult one, but it is important to keep in mind that India has imposed undemocratic rule on a heavily Islamic region. Pakistan is still strategically important and is perhaps America's best friend in central Asia. It would be laudable for America to have good ties with India, but not at the expense of having to turn our back on an ally. 
Christian Whiton 
Graduate School of Management 
University of California 
Los Angeles 


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


Business Briefs
Houston Chronicle
London exchange fines Enron $264,000
The London Metal Exchange said it fined Enron Corp. $264,000 for "seriously inadequate" compliance with trading rules that threatened to undermine confidence in the largest metals market. 
Houston-based Enron violated exchange rules over an 18-month period through late delivery of warrants, documents that confirm the completion of a metals sale, the exchange said in a statement. Enron failed to rectify its procedures despite repeated warnings, the exchange said. 
Enron's failures to comply "were repeatedly brought to the attention" of the company between last May and February of this year, exchange officials said. 
Enron admitted rules breaches in a statement, but said the violations stemmed from its acquisition last May of MG, the world's largest copper-trading company, for $445 million, which expanded the natural gas and electricity trader's metals business.