Fortune 500: The Story of American Business
Fortune, April 2001

Broadband's Chicken-and-Egg Bind --- What's Delaying Web's Promise? Media 
World Cites Networks, Networks Cite Lack of Media
The Wall Street Journal, 04/02/01

CAPITOL JOURNAL
California and the West Lockyer Prefers Action Over Talk in Power Crisis
Los Angeles Times, 04/02/01

Energy Prices Power Firms Higher on Fortune 500 Revenue: After 15 years, 
General Motors was driven from the top spot by oil giant Exxon Mobil.
Los Angeles Times, 04/02/01

General Motors driven from top spot of Fortune 500 by Exxon
Associated Press Newswires, 04/02/01

Exxon Mobil overtakes GM on Fortune list Oil giant rides higher energy prices 
to top of annual ranking based on revenue
The Globe and Mail, 04/02/01

UK: ANALYSIS-Rain in Spain averts California-style crisis.
Reuters English News Service, 04/02/01

Saudi Arabia Seen Signing Gas MOUs In May -Sources
Dow Jones International News, 04/02/01

Current Yield
Rate cuts tied to this week's data: If NAPM falls today, Fed may drop rates 
before next meeting
National Post, 04/02/01

ENRON DELAYS WITHDRAWAL FROM INDIA'S PANNA MUKTA OIL FIELD
Asia Pulse, 04/02/01

India: Law Ministry hedges on Enron issue
Business Line (The Hindu), 04/02/01

Second thoughts on the Tehelka tapes
Business Standard, 04/02/01

Texas companies on the Fortune 500 list 
Houston Chronicle, 04/02/01

Campaign funds are a regularly milked cash cow 
Houston Chronicle, 04/02/01



Fortune 500: The Story of American Business
Fortune, April 2001

www.fortune.com


Broadband's Chicken-and-Egg Bind --- What's Delaying Web's Promise? Media 
World Cites Networks, Networks Cite Lack of Media
By Jared Sandberg
Staff Reporter of The Wall Street Journal

04/02/2001
The Wall Street Journal
B1
(Copyright (c) 2001, Dow Jones & Company, Inc.)

IT WAS HAILED as the ultimate bricks, clicks and flicks strategy. 
Last year, video-rental giant Blockbuster Inc. and Enron Corp. joined forces 
on a plan to give consumers whatever entertainment they want, whenever they 
want it, right in their living rooms. Using Enron's high-speed "broadband" 
connections, Blockbuster would serve up a menu of movies and eventually games 
and music to TV sets. The companies were so confident in each other that they 
entered into an unusual 20-year exclusive agreement.
It lasted just eight months. A few weeks ago the companies decided to part 
ways, each dissatisfied with the other. Enron, a Houston energy company, 
complained that Blockbuster's online catalog of movies, which totaled only 
100, was too thin. Blockbuster, a unit of Viacom Inc., complained that Enron
's technology was glitchy. Though it was supposed to be an accelerated 
rollout to millions of people, the service, tested in four cities, had just 
800 users. 
Those aren't the only fingers being pointed in the broadband marketplace 
these days. In many ways the promising technology is stuck in a 
chicken-and-egg dilemma: Media companies, which have closed many of their 
costly Internet efforts, are waiting for a much bigger audience; the six 
million or so residential broadband customers don't yet justify major 
investments in services that take advantage of the faster lines, they say. 
But without new broadband services along the lines of video-on-demand and 
Napster, cable and phone companies say they may have a hard time selling the 
high-speed lines beyond the early technology adopters. It's a quandary that 
has faced other technologies in their infancy such as radio and TV: Which 
comes first, the audience or the programming? 
Even when the economy was booming, the high cost of upgrading cable and phone 
lines to broadband speeds made it challenging for the infrastructure 
operators to make money. Now, many fear the languid economy and rampant 
belt-tightening among corporations will decelerate the already-delayed 
deployment of broadband lines and hamper development of new programming and 
applications. 
Last week's collapse of the broadband service of NorthPoint Communications 
Inc., which left more than 100,000 users scrambling for a new service 
provider, is emblematic of the industry's troubles. "It's going to be more of 
a sinkhole for many companies," says Blockbuster Chairman John Antioco, who 
in a recent speech to high-tech executives said: "There's tens of billions of 
dollars here. It's just on the wrong side of the ledger." 
Yet no one thinks the long-promised broadband market is doomed. Cable and 
phone companies still are struggling to meet heavy demand from consumers for 
speedy connections, which include digital subscriber lines (DSL) and cable 
modems. 
But the limping rollout of broadband connections, due in part to technical 
glitches, is holding up many corners of the high-tech industry. Higher 
bandwidth was supposed to make online shopping, entertainment and advertising 
more compelling. Wall Street analysts, research firms and high-tech 
executives predicted a cyclonic roll-out of zippy residential links a few 
years ago, forecasting as many as "tens of millions" of users in short order. 
Commercials continue to perpetuate the myth of ubiquitous broadband; Qwest 
Communications International Inc., for example, runs an ad that promises to 
deliver "every movie ever made" to a motel room. Though the company's network 
can assist in such a service, a spokeswoman concedes that it isn't available 
yet. 
As broadband access companies struggle to roll out fast pipes, some content 
and technology companies have scrambled to survive. Numerous start-ups that 
hoped to make money through advertising, such as online show producer Pseudo, 
have gone under. Others, such as Cidera Inc., Laurel, Md., which specializes 
in delivering broadband content such as video, had to take a step backward by 
acquiring a news and information business that serves the much larger 
audience of dial-up Internet users. 
The same waning patience of investors has affected established media 
companies. George Bell, chairman and chief executive of cable modem service 
Excite@Home Corp., says it is "an open question" whether even big companies 
will invest in largely experimental broadband services while the economy 
falters. 
His doubt is well-founded. At only 5% household penetration in the U.S., the 
broadband market doesn't exactly impress a corporation such as Walt Disney 
Co. that has 70 million daily customers -- especially since it recently 
closed its disappointing Go.com Web portal after spending about $150 million 
on it. "We're prepared to get out in front with some investment," says Steve 
Wadsworth, president of the Disney Internet Group. "But we're not prepared to 
invest the world." He says the company will spend perhaps $10 million for 
broadband applications, "but not hundreds of millions." 
What are other content providers waiting for? About 20 million more 
customers, says Shawn Hardin, an executive vice president at NBC Internet 
Inc., a General Electric Co. online unit that showcases NBC's various news 
and entertainment properties. "If you talk about investment, return and 
value, you've got to have a significant enough audience," he says. 
Like many media executives, Mr. Hardin views the small broadband audience 
more as a result of stumbling by high-speed access providers than the lack of 
broadband applications. "There are still a lot of folks who want this service 
who can't get it or have to wait a long time to get it," he says. 
Providers of the high-speed lines say that many of the problems that plagued 
residential broadband service -- spotty availability, installation and 
service -- are fading. The absence of broadband applications, they say, will 
make it difficult to justify the service for a mass market. Without services 
like Napster that show the necessity of high-speed lines, broadband access 
providers are like jetliners with nowhere to land, they say. "If there are 
better airports," says Jeffrey King, president of AOL Time Warner Inc.'s 
high-speed Road Runner service, "I'll sell more jets." 
Still, there are some toe-in-the-water efforts under way at big media outfits 
to develop content tailored for high-speed connections, either to the PC or 
TV. Disney is working on broadband entertainment features such as "Toon 
Town," a 3-D world for kids to explore, as well as "My Sportscenter," a show 
for sports nuts who can dictate what ESPN clips they'd like to see. And Sony 
Corp. is developing a service to distribute movies over the Web. 
A handful of other services such as Into Networks allow broadband customers 
to "stream" software (so users can run it without having to wait for the 
whole file to download) that is created by companies such as the Lotus unit 
of International Business Machines Corp. and Hasbro Inc. Similarly, Media 
Station Inc. allows users to play software-based games such as Scrabble and 
Big Game Hunter II. Other services, such as Intertainer Inc., deliver a 
selection of movies on demand. 
But most of these services are using a new business model that has largely 
failed on the Internet so far: subscriptions. "If I had to build a broadband 
business based on advertising and mass numbers," says Intertainer's chief 
executive, Jonathan Taplin, "I'd probably be slitting my wrists right now." 
Today, most of these services have only a few thousand subscribers. 
For AOL's online service, which didn't get tripped up in the broadband hype, 
topping the list of "killer applications" for broadband is home networking: 
the ability to wire devices such as PCs and TVs so that they share resources 
and a single Internet connection. That means, for example, that movies 
retrieved through the Internet ultimately could be shunted off to the TV, 
rather than a PC. Until then, the finger pointing between industries may 
continue, says Barry Schuler, CEO of the America Online division of AOL Time 
Warner, "but everybody's got more work to do."

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





Metro Desk
CAPITOL JOURNAL
California and the West Lockyer Prefers Action Over Talk in Power Crisis
GEORGE SKELTON

04/02/2001
Los Angeles Times
Home Edition
A-3
Copyright 2001 / The Times Mirror Company

ANAHEIM -- Remember Bill Lockyer? Former state Senate leader, elected 
attorney general in 1998 by a hefty 10-point cushion? 
Age 59. A liberal Democrat and civil libertarian who, regardless, supports 
the death penalty. Alameda County legislator for 25 years. Skilled in the 
political arts of finesse, nuance and timing, but also a policy wonk.
He has slipped under the radar with all the focus on energy, generating low 
wattage in the media spotlight. About the time Lockyer was getting elected, 
crime ceased being the No. 1 concern of voters. Education rose to the top. 
Now electricity. 
Attorney general is the second most powerful job in Sacramento, but you'd 
never know it. Other officeholders have been attracting much more attention: 
The secretary of state is running for governor. The treasurer is pushing 
public power and peddling energy bonds. The controller is trying to become 
L.A.'s mayor. 
Lockyer was on stage briefly Saturday at the Democratic State Convention in 
Anaheim, saying little about energy. By contrast, that was the main topic of 
other state politicians. 
Gov. Gray Davis blamed Republicans and vowed "to clean up their mess." 
Treasurer Phil Angelides offered "this warning to the out-of-state 
generators: If you do not take your foot off our throats . . . you may leave 
us no option but to [seize] your power plants." (Standing applause.) 
Superintendent of Public Instruction Delaine Eastin lamented that for the 
money the Davis administration spends in one week buying electricity, 
California could hire enough school counselors to match the national average. 
Now, California is dead last in counselors--a fact that becomes more obvious 
each time some troubled kid shoots up a school. 
Controller Kathleen Connell, an outspoken Davis critic, declared: "I will not 
stand by and allow the California consumer and taxpayer to pick up the bill 
for this state's energy crisis. It won't happen." She didn't say how she'd 
stop it. 
When it came Lockyer's turn, he merely commented: "I don't intend to offer a 
new or startling policy thought. 
"But I will say this: Our office is the arm of the people in California. When 
we conclude . . . the energy generators and other businesses have been 
ripping off and gouging Californians, it will be my office that files the 
criminal and civil charges."(Standing applause and cheers.) 
* 
Afterward, I asked Lockyer why he hadn't said more about the issue on 
everyone's mind. 
"I'm doing it, not just talking about it," the attorney general replied. 
"We're the ones doing the investigations, sorting through hundreds of boxes 
of documents and deposing [power] executives. We're doing the heavy lifting. 
"Others seek to define themselves. I don't need to define myself. I'm doing 
the work." 
Lockyer is involved in dozens of energy lawsuits. He's investigating 
wholesale pricing of both electricity and natural gas--looking into 
"manipulative behaviors." 
"The problem is greed is not illegal," he notes. "The question is whether 
they've done illegal things to gouge us the way they are. 
"But clearly," he adds, his voice rising, "we're getting robbed. . . . We're 
getting fleeced by these out-of-state generators." 
Most of his targets are not cooperating, he says. They're demanding 
"confidentiality agreements" that would keep their deeds secret from the 
public. "I'm not going to agree to that. We're going to court with a legal 
crowbar to pry this information out of them." 
* 
Lockyer was the Senate leader in 1996 when the Legislature unanimously passed 
the now-infamous electricity deregulation bill. Prodded by Republican Gov. 
Pete Wilson, lawmakers were trying to improve on a plan proposed by the 
Public Utilities Commission. The relearned lesson, he says: "Don't try to fix 
a bad bill--a bad idea." 
"In retrospect," he adds, "we may well have unintentionally left the keys in 
the car. But it's still a crime to steal it." 
Lockyer isn't critical of Davis--"I have a duty of loyalty to my client." He 
does think, however, we'd have been better off three months ago if the 
utilities had gone bankrupt. A judge might have found that the power 
producers had been unjustly profiteering and cut back their claims. But that 
move, he says, no longer made sense once the state also became a creditor. 
Like all politicians running for reelection next year, Lockyer worries about 
the voters' reaction to blackouts and price hikes. "They don't get to vote on 
the practices of Enron or Duke," he says. "They only get to vote on people 
running for office." 
If Lockyer survives in 2002, as expected, his name probably will be easy to 
remember four years from now. Like most AGs, he'll be running for 
governor--maybe as one who caught some robbers.

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



Business; Financial Desk
Energy Prices Power Firms Higher on Fortune 500 Revenue: After 15 years, 
General Motors was driven from the top spot by oil giant Exxon Mobil.
From Associated Press

04/02/2001
Los Angeles Times
Home Edition
C-3
Copyright 2001 / The Times Mirror Company

NEW YORK -- Surging energy prices in the United States gave oil, gas and 
power companies new fuel in their ascension of the annual Fortune 500. 
Exxon Mobil surpassed General Motors, rising to No. 1 from No. 3 thanks to 
the oil giant's record-high $210 billion in revenue for 2000.
GM, which had revenue of $184.6 billion, fell to No. 3. 
Other energy companies fared well in 2000, with Enron, at No. 7, rising from 
No. 18. Duke Energy shot up to No. 17 from 69 and Reliant Energy made it up 
to No. 55 from 114. 
The list of the largest publicly held companies, ranked by fiscal year 2000 
revenues, has been compiled annually since 1955 by the editors of Fortune. 
GM, which had held the top spot on the list for 15 years, now trails No. 2 
Wal-Mart Stores in addition to Exxon Mobil. Wal-Mart's sales hit $193.3 
billion last year. 
Rounding out positions No. 4 through 10, in order: Ford Motor; General 
Electric; Citigroup; Enron; IBM; AT&T; and Verizon Communications. 
Energy companies benefited from a surge in revenue brought about by falling 
supplies, utility deregulation, soaring natural gas prices and maneuvering to 
keep oil prices high by the Organization of Petroleum Exporting Countries. 
The shortage of electricity in the West also helped drive prices higher, 
boosting sales at companies such as Enron and Duke Energy. 
Other energy firms advancing included Texaco, which went from No. 28 to 16; 
Chevron, which was ranked No. 20, up from 35; and Dynegy, which rose to No. 
54 from 112. 
San Francisco-based Chevron agreed to buy Texaco in October for $35 billion 
in stock. The deal is expected to close this summer pending review by 
regulators. 
The Internet slowdown and uncertainty about the economy hurt a number of 
companies, particularly tech and telecom firms that slid in the rankings. 
AT&T dropped one notch in the top ten; Intel fell to No. 41 from 39. 
But Verizon Communications, formed when Bell Atlantic and GTE combined in 
May, leapfrogged from No. 33 to No. 10, past rivals WorldCom, No. 32, and SBC 
Communications (parent of Pacific Bell), No. 14. 
America Online, which became the first purely Internet company to break into 
the 1999 list, at No. 337, rose to No. 271. 
Since then, it has become AOL Time Warner. The combined company's revenue of 
$36.2 billion would have made it No. 39 on the new list, but it wasn't 
counted because the deal didn't close until early this year. 
Among tech giants, Microsoft rose to No. 79 from 84, and Cisco Systems, the 
leading computer networker, advanced to No. 107 from 146, despite the dot-com 
crash. 
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC) 
California Companies in the Fortune 500 
A total of 55 of the Fortune 500 companies for 2000 are headquartered in 
California, and 28 of the 55 are based in Southern California. But two of the 
Southland-based firms on the list--Bergen Brunswig and Litton Industries-- 
are in the process of being acquired. Fortune ranks companies by annual 
sales. Here are the California companies on the 2000 list, with Southland 
companies shown in bold. 
* 
2000 1999
rank rank Company Headquarters Sales*
19 13 Hewlett-Packard Palo Alto $48.8
20 35 Chevron San Francisco 48.1
35 38 McKesson HBOC San Francisco 37.1
41 39 Intel Santa Clara 33.7
46 40 Safeway Pleasanton 32.0
49 41 Ingram Micro Santa Ana 30.7
62 68 Wells Fargo San Francisco 27.6
67 66 Walt Disney Burbank 25.4
82 73 PG&E Corp. San Francisco 22.5
103 100 Bergen Brunswig Orange 19.6
107 146 Cisco Systems San Jose 18.9
125 150 Sun Microsystems Palo Alto 15.7
133 235 Occidental Pet. Los Angeles 14.5
139 214 Solectron Milpitas 14.1
147 152 Gap San Francisco 13.7
164 178 Edison Intl. Rosemead 11.6
169 171 PacifiCare Health Santa Ana 11.5
171 158 Tenet Healthcare Santa Barbara 11.4
175 144 Fluor Aliso Viejo 11.1
184 195 Oracle Redwood City 10.1
194 203 Gateway San Diego 9.6
196 331 Applied Materials Santa Clara 9.6
200 231 Computer Sciences El Segundo 9.4
204 239 WellPoint Health Thousand Oaks 9.2
207 282 Unocal El Segundo 9.2
209 201 Health Net Woodland Hills 9.1
232 190 Northrop Grumman Los Angeles 8.3
236 285 Apple Computer Cupertino 8.0
259 307 Sempra Energy San Diego 7.1
260 343 Charles Schwab San Francisco 7.1
285 256 Seagate Tech. Scotts Valley 6.4
289 296 CNF Transport. Palo Alto 6.1
296 313 Science Applicat. San Diego 6.1
303 394 Providian Finl. San Francisco 5.9
319 305 Mattel El Segundo 5.6
320 333 Litton Indus. Woodland Hills 5.6
329 294 3Com Santa Clara 5.4
354 353 Pacific Life Newport Beach 4.9
362 322 Dole Food Westlake Village 4.8
364 330 Quantum Milpitas 4.7
369 522 Advanced Micro Sunnyvale 4.6
376 392 Golden State Banc. San Francisco 4.5
412 399 Clorox Oakland 4.1
415 435 Longs Drug Stores Walnut Creek 4.0
419 317 Merisel El Segundo 4.0
421 507 Golden West Finl. Oakland 3.9
424 421 KB Home Los Angeles 3.9
426 982 Sanmina San Jose 3.9
428 429 Avery Dennison Pasadena 3.9
447 442 Fleetwood Enter. Riverside 3.7
455 463 Amgen Thousand Oaks 3.6
472 644 Hilton Hotels Beverly Hills 3.5
476 519 Jacobs Engineering Pasadena 3.4
499 474 Knight-Ridder San Jose 3.2
500 409 Qualcomm San Diego 3.2 

* 
*In billions 
Sources: Fortune magazine, Associated Press

GRAPHIC-TABLE: California Companies in the Fortune 500, Los Angeles Times; 

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


General Motors driven from top spot of Fortune 500 by Exxon
By MATT MOORE
AP Business Writer

04/02/2001
Associated Press Newswires
Copyright 2001. The Associated Press. All Rights Reserved.

NEW YORK (AP) - Surging U.S. energy prices gave oil, gas and power companies 
new fuel in their climb through the ranks of the annual Fortune 500. 
Irving, Texas-based oil giant Exxon Mobil Corp. posted its highest-ever 
revenue of $210 billion in 2000, boosting it to No. 1 on the list from its 
1999 ranking as No. 3. Automaker General Motors Corp. had revenue of $184.6 
billion and fell from No. 1 to No. 3.
Other energy companies also fared well in 2000, with Enron Corp. rising to 
No. 7 from No. 18. Duke Energy Corp. shot up to No. 17 from 69 and Reliant 
Energy Inc. made it up to No. 55 from 114. 
The list of the largest publicly held companies, ranked by fiscal year 
revenues, has been compiled annually since 1955 by the editors of Fortune. 
GM, which had held the top spot on the list for 15 years, now trails No. 2 
Wal-Mart Stores Inc. 
Energy companies benefited from a surge in revenue brought about by falling 
supplies, utility deregulation, soaring natural gas prices and OPEC's 
maneuvering to keep oil prices high. In the past year, crude oil has sold for 
as much as $30 a barrel, and gasoline cost more than $2 a gallon last summer 
in some parts of the United States. 
Other energy firms advancing included Texaco Inc., which went from No. 28 to 
No. 16; Chevron Corp., which was ranked No. 20, up from No. 35; and Dynegy 
Inc., which rose to No. 54 from No. 112. 
San Francisco-based Chevron agreed to buy Texaco last October for $35.1 
billion in stock, plus assumed debt of $7.5 billion. The deal is expected to 
close this summer pending review by the U.S. Federal Trade Commission. 
The Internet slowdown and uncertainty about the economy hurt a number of 
companies, particularly telecommunications firms. AT&T Corp. fell from No. 8 
to No. 9. 
But a merger helped Verizon Communications Inc., formed when Bell Atlantic 
and GTE combined in May, leapfrog to the No. 10 spot from No. 33, climbing 
past rivals WorldCom Inc., No. 32, and SBC Communications, No. 14. 
America Online Inc., which became the first purely Internet company to break 
into the list last year at No. 337, rose to No. 271. Since then, it has 
become AOL Time Warner Inc. with its acquisition of Time Warner. The combined 
company's revenue of $36.2 billion would have made it No. 39 on the year 2000 
list, but the deal didn't close until early this year. 
Computer companies were led by International Business Machines Corp., which 
stayed in the top 10 but fell from sixth last year to No. 8. 
Microsoft Corp. rose to 79 from 84, and Cisco Systems Inc., which makes 
equipment for the Internet, advanced to 107 from 146, despite the dot-com 
crash. 
Wal-Mart, which remained in the No. 2 spot, had revenues of $193.2 billion. 
It also has the most employees of any company on the list, with more than 1.2 
million worldwide. 
The top 10 also included Ford Motor Co. at No. 4, a position it held last 
year. General Electric stayed at No. 5 and Citigroup Inc., the nation's 
largest financial services company, rose from seventh place to No. 6. 
Total profits for the 500 corporations grew 8.4 percent for the year, down 
from 1999's level of 28.7 percent, to $444 billion. Revenue grew by more than 
13 percent to a combined $7.2 trillion for 2000. They employed more than 24 
million workers. 
--- 
On the Net: 
Fortune: http://www.fortune.com

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



Report on Business: International
Exxon Mobil overtakes GM on Fortune list Oil giant rides higher energy prices 
to top of annual ranking based on revenue
MATT MOORE
Associated Press

04/02/2001
The Globe and Mail
Metro
B7
"All material Copyright (c) Bell Globemedia Publishing Inc. and its 
licensors. All rights reserved."

NEW YORK -- Surging energy prices in the United States gave oil, gas and 
power companies new fuel in their ascension of the annual Fortune 500. 
Oil giant Exxon Mobil Corp. surpassed auto maker General Motors Corp., rising 
to No. 1 from No. 3 with the company's highest-ever $210.3-billion (U.S.) in 
revenue for 2000. GM, which had revenue of $184.6-billion, fell to No. 3.
Other energy companies fared well in 2000, with Enron Corp., at No. 7, rising 
from No. 18. Duke Energy Corp. shot up to No. 17 from 69 and Reliant Energy 
Inc. made it up to No. 55 from 114. 
The list of the largest publicly held companies, ranked by fiscal year 2000 
revenues, has been compiled annually since 1955 by the editors of Fortune. 
GM, which had held the top spot on the list for 15 years, now trails No. 2 
Wal-Mart Stores Inc. -- with $193.2-billion in revnue -- in addition to Exxon 
Mobil. 
Energy companies benefited from a surge in revenue brought about by falling 
supplies, utility deregulation, soaring natural gas prices and manoeuvring by 
the Organization of Petroleum Exporting Countries to keep oil prices high. In 
the past year, crude oil has sold for as much as $30 a barrel, while in some 
parts of the United States last summer, gasoline cost more than $2 a gallon. 
Other energy firms advancing included Texaco Inc., which went from No. 28 to 
No. 16; Chevron Corp., which was ranked No. 20, up from No. 35; and Dynegy 
Inc., which rose to No. 54 from No. 112. 
San Francisco-based Chevron agreed to buy Texaco last October for 
$35.1-billion in stock, plus assumed debt of $7.5-billion. The deal is 
expected to close this summer pending review by the U.S. Federal Trade 
Commission. 
The Internet slowdown and economic uncertainty hurt a number of firms, 
particularly telecom firms that slid in the rankings. AT&T Corp. fell from 
No. 8 to No. 9. 
But a merger helped Verizon Communications Inc., formed when Bell Atlantic 
and GTE combined in May, leapfrog from No. 33 past rivals WorldCom Inc., No. 
32, and SBC Communications, No. 14, to the No. 10 spot. 
America Online Inc., which became the first purely Internet company to break 
into the list last year at No. 337, rose to No. 271. Since then, it has 
become AOL Time Warner Inc. by dint of its acquisition of Time Warner. The 
combined company's revenue of $36.2-billion would have made it No. 39 on the 
new list, though was not counted there because the deal didn't close until 
early this year. 
Computer companies were led by International Business Machines Corp., which 
stayed in the top 10, but fell from sixth last year to No. 8. 
Microsoft Corp. -- with revenue of $22.9-billion -- rose to 79 from 84, and 
Cisco Systems Inc., which makes equipment for the Internet, advanced to 107 
from 146, despite the dot-com crash. 
Personal computer maker Dell Computer Corp. rose to 48 from 56 and Apple 
Computer Inc. rose from 285 to 236. Compaq Computer Corp., meanwhile fell 
from 20 to 27. 
Wal-Mart, which remained in the No. 2 spot, draws the distinction as being 
the company with the most employees on the list, more than 1.2 million 
worldwide. 
The top 10 also included Ford Motor Co. at No. 4, a position it held last 
year. General Electric stayed at the No. 5 position while Citigroup Inc., the 
largest U.S. financial services company, rose from seventh place to No. 6. 
The highest ranked new company on the list is No. 57 Delphi Automotive 
Systems Corp., which was spun off by General Motors in May, 1999. 
Top 10 
The Fortune 500 ranking of the largest U.S. companies compiled by Fortune 
magazine on the basis of 2000 revenue. Each entry includes rank, name of 
company, headquarters, last year's rank and 2000 revenue in billions of U.S. 
dollars. 1. Exxon Mobil, Irving, Tex., 3, $210.392 2. Wal-Mart Stores, 
Bentonville, Ark., 2, $193.295 3. General Motors, Detroit, 1, $184.632 4. 
Ford Motor, Dearborn, Mich., 4, $180.632 5. General Electric, Fairfield, 
Conn., 5, $129.853 6. Citigroup, New York, 7, $111.826 7. Enron, Houston, 18, 
$100.789 8. International Business Machines, Armonk, N.Y., 6, $88.896 9. 
AT&T, New York, 8, $65.981 10. Verizon Communications, New York, 33, $64.707

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




UK: ANALYSIS-Rain in Spain averts California-style crisis.
By Dominique Magada

04/02/2001
Reuters English News Service
(C) Reuters Limited 2001.

LONDON, April 2 (Reuters) - Spain is alone in Europe with the ingredients for 
a California-style power crisis, but recent heavy rains gushing through 
hydroelectric plants have made that risk more remote. 
"If there is one candidate in Europe, it is Spain, but it would take a few 
years before a major crisis could happen," said Stewart Gray, European 
analyst with consultants Wood Mackenzie in Edinburgh.
Like California, Spain has high demand growth, a lack of investment in new 
power stations and emerging environmental constraints. However, the country 
still benefits from a small capacity margin, which can just about cover the 
growing demand. 
"If it had not rained, we'd be facing a different situation," said Mariano 
Cabellos, deputy director of Spanish Electricity Industry Association, UNESA. 
Between 15 and 25 percent of Spain's electricity comes from hydroelectric 
plants. 
In contrast other European countries have stable demand and overcapacity in 
power generation, which for some has led to a drop in prices since 
liberalisation of the markets under a European Union directive in February 
1999. 
"As an example, the level of demand in the UK is the same today as it was in 
1990," said Harold Hutchinson, an energy analyst with Credit Lyonnais 
Securities in Madrid. 
Other European nations also benefit from good interconnections with their 
neighbours, giving them the chance to rely on imports if necessary. 
"That is not the case in the Iberian Peninsula which is an island in terms of 
electricity," said Hutchinson. 
INVESTMENTS PLANS HELD BACK 
The Spanish industry is well aware of the problem and a total of 20,000 
megawatts (MW) is currently awaiting planning permission or is at a late 
stage of development. 
But so far a number of political and economical constraints have prevented 
many projects from going ahead. 
"The problem in Spain is that authorisation is needed at national level as 
well as regional level. Some projects which got a national go-ahead are held 
back in the local political process," said Wood Mackenzie's Gray. 
An example is the 1,600 MW combined-cycle gas fired plant (CCGT) U.S Enron 
Corp is looking to build at Moro la Nova in Catalonia. 
The plant received planning permission at national level but local go-ahead 
is being held back by environmental opposition. 
Spain also suffers from limited electricity links with France and Portugal. 
Both Spain and France are seeking ways to increase capacity in the existing 
1,000 MW cable, as previous projects to build a new cable across the Pyrenees 
were abandoned due to strong environmental opposition. 
"This has been an ongoing problem. The Spanish government is dragging its 
feet because of the issue of reciprocity," said Hutchinson. 
French Electricite de France is exporting 7.1 terrawatt hours a year to 
Spain, while Spanish presence in the French market is limited to Endesa's 
recently acquired 30 percent stake in generator, Societe Nationale 
d'Electricite Thermique (SNET). 
Analysts agree that ultimately new lines will have to be built to 
significantly increase capacity. 
Substantially higher gas prices, which have followed the drastic rise in oil 
prices in the past year, are a further factor affecting investment in new 
plants. 
"At current gas prices, it is just about possible to make a profit from 
electricity generation. So companies are looking again at the profitability 
of their investment in new plants," said Hutchinson. 
The industry now agrees that it will be critical to increase investment in 
the next three years to avoid a major crisis. 
"If we don't start investing now in new capacity and lines of transportation, 
as well as eliminating the bureaucratic environmental barriers, within one 
year, we'll have a higher risk to run into serious problems," said UNESA's 
Cabellos.

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



Saudi Arabia Seen Signing Gas MOUs In May -Sources
By Dyala Sabbagh
Of DOW JONES NEWSWIRES

04/02/2001
Dow Jones International News
(Copyright (c) 2001, Dow Jones & Company, Inc.)

DUBAI -(Dow Jones)- Saudi Arabia is likely to sign memoranda of understanding 
with international oil companies on at least one of its proposed three core 
gas projects in May and not this month as previously thought, sources 
familiar with the negotiating process have told Dow Jones Newswires. 
Consortium leaders for each of the three core ventures on offer should also 
be selected by then, the sources said.
Consortium leaders will be responsible for directing further negotiations on 
projects such as pricing and finance. Each core project has on average six to 
ten individual components. 
Consortium leaders are also likely to get the largest stake in any project as 
well as possible operatorship, according to one source, who requested 
anonymity. 
Saudi Arabia invited international oil companies in October 1998 to 
participate in proposals for downstream gas projects and upstream gas 
enhancement. 
A comprehensive framework for the initiative still hasn't been set but some 
deals are expected to be sealed by year end, according to local analysts. 
The most recent round of talks took place in February between the Saudi 
negotiating committee and shortlisted international oil companies. 
More meetings are expected to take place throughout April, sources said. 
Royal Dutch/Shell Group (RD), BP Amoco PLC (BP), Exxon Mobil (XOM), Chevron 
(CHV), TotalFinaElf (TOT) and ENI SpA (E) have been shortlisted for core 
venture number one, the $15 billion South Ghawar Area Development. 
For core venture two, the Red Sea Development, Enron Corp. (ENE) and 
Occidental Petroleum Corp. (OXY) are bidding jointly and Exxon Mobil, 
TotalfinaElf, Marathon Oil Canada Inc. (T.M), Shell and Conoco Inc. (COCA) 
have also been listed. 
For core venture three, the Shaybah area, TotalFinaElf, Conoco, Phillips 
Petroleum (P), Enron & Occidental, Exxon Mobil, Shell and Marathon Oil have 
been listed. 
The shortlists are still subject to change. 
The three ventures have a combined value of about $25 billion. 
Saudi Arabia has about 2.5 billion cubic feet of gas a day in its system 
currently and will have about 4 bcf/day by 2003. By 2025, it will need an 
estimated 14 bcf/day to meet its own consumption requirements and for 
possible export. 
-By Dyala Sabbagh, Dow Jones Newswires; 9714 3314260; 
dyala.sabbagh@dowjones.com

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



Financial Post Investing
Current Yield
Rate cuts tied to this week's data: If NAPM falls today, Fed may drop rates 
before next meeting
Jennifer Ablan
Barron's

04/02/2001
National Post
National
C11
(c) National Post 2001. All Rights Reserved.

This week may bring some heavy April showers to the U.S. economic environment 
in the form of fresh readings from National Association of Purchasing 
Management index and the nation's employment situation for March. 
Friday's news of a sharp plunge in the Chicago Purchasing Managers' regional 
report to its lowest levels since 1982 raises the risk for the NAPM report 
due today to be much weaker than expected.
"If March NAPM falls below 40, look for markets to reprice for an 
intermeeting rate cut from the Fed," states a Credit Suisse First Boston 
report. (A reading below 50 indicates contracting manufacturing activity; 
February's index was 42.5%.) 
A "weak" NAPM report alone won't spur another cut in the federal-funds target 
of 5% before the Federal Open Market Committee meets on May 15, the firm 
emphasizes. It's the magnitude of a possible drop in NAPM, combined with the 
crucial March employment figures due out Friday, that could influence the 
Fed. 
"The question is still the same," says William Dudley, chief U.S. economist 
at Goldman Sachs. "Does the weakness in manufacturing lead to a sufficient 
rise in unemployment that will affect the consumers? How far and how fast 
will the unemployment rate be, putting stress on the household sector?" 
But the March employment report may be "inconclusive and not sufficient for 
the Fed to pull the trigger," he adds, given the number of layoffs announced 
but not reflected in the government data. The consensus forecast calls for a 
70,000 increase in nonfarm payrolls in March, down from 135,000 in February, 
and a 0.1 percentage point uptick in the jobless rate to 4.3%. 
Notwithstanding upticks in the latest readings on consumer sentiment last 
week, "the real test will therefore come over the next couple of months, as 
the February and March declines in stock prices filter through," observes Ian 
Shepherdson, chief U.S. economist at High Frequency Economics. 
"We fully expect sentiment to drop sharply, putting in place the conditions 
for much softer consumer spending numbers." 
The question for monetary policy is less the timing of future rates cuts than 
"how far will the central bank go," Dudley adds. Goldman expects the funds 
target to reach 3.5% by the third quarter. 
On the fiscal front, Michael Gregory, senior economist at Lehman Brothers, 
observes support for a US$60-billion temporary tax cut is building in U.S. 
Congress as the economy weakens. But "the transitory nature of this measure 
will probably crimp its overall effectiveness." 
In 1975, about three-fourths of a similar rebate was saved rather than spent, 
he notes. "Although temporary tax cuts can stimulate the economy, permanent 
measures, on both the tax and spending side, provide much more bang per 
buck." 
The tech-stock debacle has turned many convertible bonds into lemons. But 
high-quality investment-grade convertibles still offer a lot of juice. 
A crush of aggressively priced new issues have pushed prices of many 
investment-grade convertibles to their steepest discounts in a decade -- even 
lower than during the emerging-market crisis in 1998, according to Merrill 
Lynch research. 
By contrast, speculative-grade securities, both straight and convertible, 
have done far better this year, as investors scooped oversold securities 
offering historically high credit spreads over benchmark treasuries. 
That's made credit quality paramount. But while many quality convertibles 
trade at a large premium to their conversion value -- what the bonds would be 
worth if they were exchanged for stock -- they are "abnormally cheap," 
according to Merrill first vice president Anne Cox. 
For example, AOL Time Warner zero-coupon convertibles, which traded as high 
as US$85, traded late last week at US$52.375, according to ConvertBond.com, a 
Morgan Stanley-owned online research firm. While the bonds mature in 2019, 
they have a put option that gives investors the right to redeem them in 
December 2004 at US$63.976. 
That results in a yield to the put date of 5.90% while providing the 
potential appreciation from the equity. 
Even if the stock market "crashes and burns," Bear Stearns' associate 
director Joseph Montemayor notes, investment-grade convertible issuers such 
as Analog Devices, AOL Time Warner, Enron, Royal Caribbean Cruises, Solectron 
and Tyco International, have the best chance of survival and "bounce" 
potential.

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



ENRON DELAYS WITHDRAWAL FROM INDIA'S PANNA MUKTA OIL FIELD

04/02/2001
Asia Pulse
(c) Copyright 2001 Asia Pulse PTE Ltd.

NEW DELHI, April 2 Asia Pulse - Plans be United States-based energy company 
Enron to withdraw from India's Panna Mukta and Tapti oil fields have been 
delayed due to a lack of suitable bidders among the six aspirants, which 
include Reliance and ONGC. 
Enron is believed to have rejected all the six bids and informed the federal 
government that progress on the divestment front was much slower than desired.
Besides Reliance and ONGC, who are the joint venture (JV) partners in the oil 
fields, Indian Oil Corporation, Hindustan Petroleum (HPCL), Marathan and 
Unacal (Both US) had bid for the Enron stake in the venture. 
When contacted, Enron spokesperson told PTI from Mumbai over phone that "it 
is not the company's policy to comment on divestiture proceedings". 
Meanwhile, Enron Oil and Gas (India) officials met the federal petroleum 
minister, Ram Naik, to appraise him of the position on sale of its 30 per 
cent stake in the oil fields, handed over to the consortium after these were 
developed by Oil and Natural Gas Corporation. 
"Enron officials came and met me. They informed me that not much progress has 
been made on their proposed exit from the Panna-Mukta fields," Naik told PTI. 
(PTI) 02-04 2027

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


India: Law Ministry hedges on Enron issue

04/02/2001
Business Line (The Hindu)
Copyright (C) 2001 Kasturi & Sons Ltd (KSL); Source: World Reporter (TM) - 
Asia Intelligence Wire

NEW DELHI, April 1. THE Union Law Ministry has decided to hedge on the issue 
of settlement of Dabhol Power Company's outstanding power bills. Sidestepping 
the key issue of validity of the claims put forth by the Maharashtra State 
Electricity Board (MSEB) and Dabhol Power Company (DPC), the Law Ministry has 
mainly visited the billing cycle for settlement of dues. 
In its recent opinion to the Finance Ministry, the Ministry has said that 
MSEB's claim that a rebate amount of Rs 400 crore during January should be 
adjusted against DPC's Rs 102- crore bill during December is "debatable." In 
other words, the Law Ministry has not clarified whether such a rebate bill, 
if valid, should be settled during the October-January cycle or the next one.
Under the settlement schedule between DPC and MSEB, the bills are paid once 
in four months with the last cycle being between October 2000 to January, 
2001. The Law Ministry has decided against deliberating on the validity of 
MSEB's claim even as DPC is set to drag MSEB for reconciliation and 
arbitration on this issue. 
The issue relates to a technical matter enshrined in the power purchase 
agreement between MSEB and DPC. MSEB has claimed that the PPA makes it 
mandatory for DPC plants to be ready for despatch at 90 per cent load factor 
in a period of three hours from issuance of despatch instructions. 
The company, however, does not agree on the mandatory nature of this clause. 
The problem is that the plants require around five-six hours of 'ramp up' 
time for being ready to generate power at 90 per cent load factor. MSEB's 
rebate claim emanates from this issue. The Law Ministry's opinion is 
reflective of the Centre's stand on the DPC-MSEB stand-off - one of being a 
ring- side spectator except when the sovereign guarantees are invoked. 
- Our Bureau

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


Second thoughts on the Tehelka tapes
A V Rajwade

04/02/2001
Business Standard
10
Copyright (c) Business Standard

"The inevitable never happens, it is the unexpected always," said Keynes. 
Harold Wilson, another illustrious Britisher (if far less so), once said 
something in a slightly different vein a week is a long time in politics, he 
said. 
Perhaps both the quotations are applicable to what has been happening in 
India over the last month. For, who could have imagined that after presenting 
a widely acclaimed Budget on February 28, over the next four weeks, the 
stockmarket would be in a crisis, the government would lose a lot of its 
credibility and some of its allies, and the central bank would confront a 
first class banking crisis in the co-operative sector? Yes, it is often the 
unexpected which happens, and four weeks is an even longer time than one week 
in the political economy of a country! Indeed, the developments have been so 
fast and headline-attracting that the Balco privatisation controversy, as 
indeed the MSEB-Enron payment crisis, are hardly finding space even in the 
pink newspapers.
But first the Tehelka tapes. At the outset, I must confess my naivete where 
corruption is concerned. When a large industrial house offered me a bribe 
under the garb of a consultancy contract, I failed to even recognise it as 
such, and refused it for entirely different reasons! (It took a few years for 
light to dawn). On the other side of the coin, I do not have the courage to 
offer a bribe to a ticket inspector to get a train berth, while travelling 
without a reservation. 
Clearly, what I say as regards the Tehelka tapes and bribery/corruption has 
enormous limitations. 
The Tehelka episode reminded me of a story about admissions in one of the top 
management schools. There was this gentleman who offered to help candidates 
on the last lap, ie when they had come to the final interview. He would 
charge Rs x to get the candidate admitted, and promised full refund if he 
failed. Each year the parents of dozens of candidates approached him; some of 
them would in any case get admissions on their own, whose money was pocketed 
by him; and he refunded the money to the rest. 
Clearly, the state of affairs exposed by the Tehelka tapes is not so 
innocent. But only four per cent of the tapes are out, and Tejpal says that 
there is nothing much in the remaining. Does it mean that 96 per cent of the 
content is of the "dog bites man" kind? It is worth recalling that Tejpal 
himself contradicted his correspondent about the home minister. Again, R K 
Jain, the erstwhile treasurer of Samata Party, in response to a legal 
notice, has tendered an apology to Sinha saying that "all the 
statements made by me to Tahelka.com are false and 
incorrect". 
There is confusion about whether and, if so, to whom in the Samata Party Rs 2 
lakh were paid, as also various instances of sloppy research. 
Overall, are we reading too much in the released tapes, at least in terms of 
political corruption? Indeed, to me, the bombast, swagger and vulgarity of 
the military and civil officials were far more odious than the politicians' 
actions. Talking of "reading too much" in published reports, I am reminded of 
a 30-year old incident in SBI. Remember the Nagarwala case? A sum of Rs 60 
lakh was removed from the currency chest by the chief cashier in New Delhi on 
the telephonic instructions of somebody posing to 
be from the PMO, and handed over to him. 99.99 per cent 
believe that the money was part of Indira Gandhi's unaccounted assets with 
SBI. The truth, as I can testify from personal knowledge having investigated 
the case from the union, was far more prosaic it was simply the stupidity and 
gullibility of one employee, and Gandhi had nothing to do with it. 
Be that as it may, the RSS and the Hindutva adherents should be happy with 
the aftermath of the Tehelka tapes. 
For one thing, there are obviously no followers of Jesus Christ amongst our 
politicians. For, nobody followed his advice that the first to throw a stone 
should be the one who has never sinned. Is there any elected Member of 
Parliament of any political party who has not used unaccounted money, at 
least for his elections? Even H V Kamath, the Hoshangabad MP of unimpeachable 
integrity, did so. The second reason is the reappearance of Rama Rajya at 
least to the extent where, on a completely unsubstantiated statement of a 
washerman, Sita had to prove her innocence by performing the Agnidivya. 
The mere mention of some names has been enough to find them guilty. In a 
democracy, 
a citizen is supposed to be innocent until proved guilty (Sukhram, formerly 
of the Congress and now a valued ally 
of the BJP, is innocent even when crores of unaccounted currency notes were 
found at his 
residence). 
To my mind, the key issues are two: financing of elections and the completely 
unrealistic ban on agents in defense contracts. One wonders whether the 
latter is a manifestation of the Brahminic contempt for the middle-man, the 
dalal, the adatya, the trader, all of whom perform a very useful function in 
real life. 
But, all this should not take away the credit for investigative journalism 
due to the Tehelka team. They were audacious, took a lot of personal risk and 
their feat probably has no parallel in Indian journalism. 
Let me end with a story about elephants. There was a man in New York who 
carried a whistle claiming that it keeps elephants away from Manhattan. 
Somebody said "but there are no elephants in Manhattan". His response was: 
"How can there be? I blow the whistle every morning". 
The lesson is that, once you start with a firm belief, there is always the 
temptation to use all following evidence to support it, a temptation one 
needs to avoid.

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






April 2, 2001
Houston Chronicle
Texas companies on the Fortune 500 list 
Texas 
1. Exxon Mobil, Irving, 3, $210.392 
7. Enron, Houston, 18, $100.789 
14. SBC Communications, San Antonio, 12, $51.476 
27. Compaq Computer, Houston, 20, $42.383 
43. J.C. Penney, Plano, 36, $32.965 
44. Conoco, Houston, 74, $32.513 
48. Dell Computer, Round Rock, 56, $31.888 
54. Dynegy, Houston, 112, $29.444 
55. Reliant Energy, Houston, 114, $29.339 
85. TXU, Dallas, 101, $22.009 
86. El Paso, Houston, 163, $21.950 
98. AMR, Fort Worth, 77, $20.245 
105. Sysco, Houston, 98, $19.303 
106. Electronic Data Systems, Plano, 91, $19.226 
131. Valero Energy, San Antonio, 229, $14.671 
135. Fleming, Lewisville, 117, $14.443 
137. Ultramar Diamond Shamrock, San Antonio, 157, $14.292 
142. Kimberly-Clark, Irving, 138, $13.982 
148. Halliburton, Dallas, 115, $13.344 
157. Waste Management, Houston, 133, $12.492 
163. Texas Instruments, Dallas, 180, $11.875 
174. American General, Houston, 162, $11.063 
191. Continental Airlines, Houston, 206, $9.899 
206. Burlington Northern Santa Fe, Fort Worth, 188, $9.205 
224. United Services Automobile Assn., San Antonio, 217, $8.551 
267. Adams Resources & Energy, Houston, 400, $7.022 
281. Plains Resources, Houston, 483, $6.630 
302. Centex, Dallas, 318, $5.956 
308. Suiza Foods, Dallas, 359, $5.756 
314. Anadarko Petroleum, Houston, -, $5.686 
316. Southwest Airlines, Dallas, 339, $5.649 
331. Clear Channel Communications, San Antonio, 550, $5.345 
335. Baker Hughes, Houston, 329, $5.233 
343. Tesoro Petroleum, San Antonio, 498, $5.102 
360. RadioShack, Fort Worth, 382, $4.794 
383. Cooper Industries, Houston, 418, $4.459 
390. Temple-Inland, Austin, 393, $4.286 
409. Encompass Services, Houston, 835, $4.099 
414. Lyondell Chemical, Houston, 434, $4.036 
445. Kinder Morgan, Houston, 290, $3.730 
448. Administaff, Kingwood, 615, $3.708 
454. D.R. Horton, Arlington, 491, $3.653 
458. Group 1 Automotive, Houston, 569, $3.586 
493. Lennox International, Richardson, 591, $3.247 
498. Pennzoil-Quaker State, Houston, 505, $3.216 







April 2, 2001, 7:44AM
Houston Chronicle
Campaign funds are a regularly milked cash cow 
Texas legislators dip into coffers for a multitude of reasons, and though it 
might not be ethical, it's legal for now 
By ERIC BERGER 
Copyright 2001 Houston Chronicle 
AUSTIN -- When an aide accused state Sen. J.E. "Buster" Brown, R-Lake 
Jackson, of sexual harassment 18 months ago, the legislator spent $1,150 from 
his campaign coffers on an attorney. It was perfectly legal. 
On Christmas Eve last year, Sen. Mike Jackson, R-La Porte, used campaign 
money to pay his mother, Elinor Jackson, $9,000 for a used Lexus ES 300. 
Kelley Blue Book values a 1994 model in excellent condition at $7,700. 
Jackson said he uses the car only for campaigning. 
Another local senator, Rodney Ellis, D-Houston, walked into River Oaks Jeep 
in 1999 and used campaign funds to buy a $37,400 Jeep Cherokee. Although the 
vehicle will be more than three years old when he faces re-election, the 
purchase was legal, too. Ellis, whose personal car is a Chrysler Sebring, 
said the Jeep is used for campaigning. 
Texas legislators, who are paid just $600 a month, seem unlikely to change 
the laws governing their use of campaign contributions any time soon. 
In what probably will be the centerpiece of campaign-finance reform this 
session, state lawmakers say they will consider legislation this week that 
tightens contribution reporting requirements. Yet none of this session's 
proposed reforms would affect the broad discretion legislators have with the 
thousands -- and in some cases, millions -- of campaign dollars they collect. 
"Current law covers expenses," said Pete Gallego, D-Alpine, who is the 
architect of the proposed reforms. 
But a Houston Chronicle analysis shows that these laws aren't being enforced. 
Officeholders may not spend their contributions on personal expenses, such as 
clothing. To ensure this, legislators are required by law to itemize each 
campaign expense on their reports. But many don't. 
A Chronicle review of campaign-finance records from 1998, 1999 and 2000 found 
that at least four of seven senators and 10 of 25 representatives who 
represent parts of Harris County broke these itemizing laws. 
A typical case is that of Rep. Debra Danburg, D-Houston, who in March 1999 
used campaign contributions to write a $4,000 check for "various small 
expenses on credit card." 
Earlier this year, Rep. Joe Crabb, R-Kingwood, reimbursed himself $10,000 for 
"political expenditures made from personal funds during prior campaigns for 
state representative." 
The problem, say advocates of campaign-finance reform, is that it is 
impossible to know whether such reimbursements were for legitimate expenses 
or personal use. Even more troubling, they say, public officials are not 
likely to be questioned about their spending habits. 
Adding more laws to regulate contributions is probably not the answer, 
reformers say. Existing laws need to be enforced first. 
The state agency charged with enforcing the rules, and with keeping 
campaign-finance reports, is the Texas Ethics Commission. But the commission 
does not review the records it collects to ensure that the politicians comply 
with the law. It has never used its full powers of investigation to look into 
questionable contributions and expenditures. 
Critics contend that it was designed that way by lawmakers in 1991. 
"I think the Ethics Commission has excellent personnel," said Fred Lewis, 
president of the Austin-based reform group Campaigns for People. "But I think 
it was structured to fail." 
A citizen must file a formal complaint before the Ethics Commission will 
review a record. This occurs most commonly with late filings. 
No complaints were filed last year for any candidate's failure to itemize, 
for submitting an incomplete report or for using contributions for personal 
expenses, according to the agency. 
Even when there is a fine, no matter how stiff, an officeholder can simply 
pay it out of campaign funds. 
There's more still to the story, Lewis and other critics say. If a complaint 
cannot be settled initially, as most are, a complex process ensues that 
includes a preliminary hearing, an informal hearing and a formal hearing. 
It is only at the last stage, the formal hearing, that the eight appointed 
commissioners can subpoena a witness, said the agency's general counsel, 
Karen Lundquist. 
The Ethics Commission has held only one informal and one formal hearing since 
its creation, and it has never issued a subpoena. 
That the state's agency to monitor money and politics in Texas has conducted 
virtually no in-depth probes shocked Houston attorney Mickey Jo Lawrence, who 
was appointed a commissioner last October by then-Gov. George W. Bush. 
Lawrence said that when she inquired during meetings why the agency wasn't 
more aggressively pursuing possible wrongdoing, she was told it was frowned 
upon by legislators. 
To do otherwise, Lawrence said she was told, would threaten funding for the 
commission. 
Another legislative vise on the agency is a code that provides stiff criminal 
and civil penalties for releasing confidential information about a complaint. 
Such a violation is a Class A misdemeanor, punishable by a $4,000 fine and 
one year in jail. Additionally, a violator faces a $10,000 fine or damages, 
whichever is higher, including court costs and attorneys' fees. 
Most state agencies have disclosure laws, but none has such stiff penalties, 
Lawrence said. 
With these penalties, she and others said, Ethics Commission staffers are 
afraid that if they interview a witness about a complaint, they will have to 
explain the complaint during the interview, thereby violating the disclosure 
law. Thus, few if any witnesses have ever been interviewed. 
"It creates a very chilling effect on our investigations," Lawrence said. 
Harris County Democratic Party Chairwoman Sue Schechter, a House member when 
the legislation passed in 1991, agreed, saying the penalties effectively shut 
down the Ethics Commission. The legislation was passed in the waning hours of 
the session, and numerous amendments were slipped in, Schechter recalled. 
"But I haven't talked to anyone from that time period who remembers putting 
that in the law," she said. 
A remedy to these stiff penalties has been offered this session by Sen. Jon 
Lindsay, R-Houston, in the form of Senate Bill 1452, which would remove the 
penalties and clarify the law to allow Ethics Commission staff members to 
interview witnesses. 
The bill has not yet been scheduled for a hearing in the State Affairs 
Committee. 
(Lindsay, incidentally, had the largest expense of the Harris County 
delegation. He gave $122,000 to the Greater Houston Community Foundation. The 
foundation -- with a luminous board of directors including retired banker Ben 
Love, the Rev. Kirbyjon Caldwell and Enron Corp. Chief Executive Officer 
Jeffrey Skilling -- manages donations from numerous givers. So far, Lindsay 
said, he has designated about one-fifth of the money for his church, Klein 
United Methodist, and a charity, Northwest Assistance Ministries. He also has 
donated money to his alma mater's scholarship fund. Lindsay said he is doing 
good works with his excess campaign money.) 
Two critics of the original bill that created the commission, U.S. District 
Judge John Hannah, who was then secretary of state, and Travis County 
District Attorney Ronnie Earle, said the Ethics Commission has at least 
proved to be an effective clearinghouse of information. 
Neither said he was aware of how little investigative work the agency has 
done. 
Hannah and Earle said that in 1991 they thought lawmakers should have given 
district attorneys the power to investigate and charge officeholders for 
misconduct with campaign funds. 
By leaving the power to a commission, for which lawmakers had control of 
funding, they retained a means of control, say critics of the commission. 
"It can act as a cover as well as a help," Hannah said. "But I think the 
commission tries to do their jobs well." 
Reformers such as Lewis believe the best bet for strengthening the Ethics 
Commission, beyond Lindsay's legislation, is its upcoming Sunset Review. 
Under this review process, state agencies undergo extensive studies of their 
performance. Recommendations are made to either improve the agency or close 
it down. A bill must be passed during the subsequent legislative session, in 
this case 2003, to keep the agency running.