"If you're a CEO and think you can fudge the books in order to make yourself look better, we're going to find you, we're going to arrest you, and we're going to hold you to account." -- President George W. Bush Next up in the convoluted saga of Enron: the tale of Schuyler Tilney, a senior Merrill Lynch investment banker who took the Fifth in front of Congress on July 30. Tilney had more than just a professional relationship with Enron. His wife, Elizabeth, was once a senior member of Enron's management team and "one of the closest confidantes" of former CEO Kenneth Lay, according to a source with detailed knowledge of Enron. And Schuyler, personally, was an investor in LJM2, one of the off-balance-sheet partnerships used to conceal Enron's losses.
More surprising, after Sherron Watkins wrote her famous whistle-blower memo, Lay sent her to talk to Elizabeth Tilney. Elizabeth had previously overseen Enron's corporate communications and marketing and had worked on an internal employee "values" campaign. At the time Lay sent Watkins to her, she was handling communications and marketing for a subsidiary, Enron Energy Services. So Watkins wrote a second, two-page memo to Elizabeth suggesting that she have Lay go public about Enron's shenanigans, including the LJM partnerships. Watkins wrote: "It's very hard to know who in the organization is giving us good answers and who's covering their prior work."
It sure was. At the time, Watkins did not know that she was taking her complaints to the wife of the investment banker who helped Merrill Lynch win the job to raise funds for the LJM2 partnership and who had his own financial stake in it, according to Watkins' lawyer, Philip Hilder. The conversation between the two women was "a one-way street," says Hilder. "They [Enron management] wanted Sherron to have limited involvement." Some of her Enron colleagues questioned Elizabeth's apparent conflict of interest at the time, the source says.
The Tilneys' lawyer, Robert Trout, says there was no conflict, that Elizabeth was assigned to a subsidiary and had disclosed her husband's role to top management: "Ms. Tilney had no authority to pick or choose among the many opinions about how to deal with the situation."
Shows how seriously Lay took Watkins' first memo, doesn't it? A spokeswoman for Lay says that he has no response. Rule no. 1 in a bankruptcy: The lawyers get paid first. And in the case of WorldCom, there seems to be a race to the trough. Six law firms, plus investment bank Lazard Fr?res, are going after the long-distance carrier's remaining nickel in a big way. Three are billing WorldCom at or above the once-unheard-of rate of $700 an hour.
Topping the list is Bill McLucas of Wilmer, Cutler & Pickering. He's getting $715 an hour from WorldCom's board to investigate the company's dubious accounting activities. That is $65 an hour more than he got for doing the same at Enron. A respected former Securities & Exchange Commission enforcement chief, he can name his price to troubled firms trying to show how they're coming clean. McLucas says it's up to his firm how much he bills.
Superlobbyist Tommy Boggs is also billing $700 an hour to contain damage from congressional inquires. Top lawyers at leading bankruptcy firm Weil, Gotshal & Manges are pulling in that amount as well. Neither Boggs nor Weil Gotshal lawyers would comment.
Hundreds of other lawyers, associates, and paralegals are billing for lesser amounts, depending on level of experience. And many firms haven't even been named yet. Add in Lazard, which wants a $15 million "success fee" if it ends up restructuring WorldCom, and the bankruptcy fees may end up being the biggest on record. Seattle coffee drinkers could soon find their lattes carrying an extra jolt--a 10 cents tax. The tax would be levied on all espresso drinks, not regular coffee, sold in Seattle. The money would fund better wages for child-care workers and subsidize day care for poor kids. Organizers say they've got more than the 17,000 signatures needed to get the proposal on November congressional ballots. It needs a majority to pass.
Taxing espresso in a city of coffee junkies might seem cause for uproar, but organizers say their polls show 74% of Seattleites favor it. That doesn't include Starbucks, however, which says it does not "fully understand" why espresso should be taxed. Or the Seattle Chamber of Commerce, which says the tax would unfairly burden small shops. The Chamber has its own follow-up research showing 70% opposition to the tax.
Supporters say the tax is too small to dent sales and would mostly hit the well-off. "For a very small tax, you can really generate a sizable sum," says Laura Paskin, spokeswoman for Seattle's Economic Opportunity Institute, a think tank that supports the tax. It predicts revenue of $7 million in the first year. (That's 70 million espressos.)
So where do Seattle residents really stand? We'll find out in November. Pro football teams kick too often on the fourth down. Says who? A 6-foot, 170-pound economist out of the University of California at Berkeley. David Romer did a statistical analysis of every play in more than 700 National Football League games from 1998 to 2000.
His findings: A team that's near midfield on the fourth down should try for a first down--rather than punt or attempt a field goal--as long as it's within five yards of making it. A team should also try for a touchdown if it's within five yards of the goal line on the fourth down.
That's far more daring than the plays you'll see on any given Sunday. In his National Bureau of Economic Research working paper--which contains more Greek letters than Fraternity Row--Romer says teams kicked on 992 of 1,100 fourth downs when they should have gone for it.
Romer guesses that coaches fear criticism for taking risks--or they simply don't know the optimal strategy. Asked for reaction, Dallas Cowboys spokesman Rich Dalrymple says: "If he knows so much, why doesn't he get a job in coaching? There's plenty of turnover." A puzzling fact has long drawn the scrutiny of economists: Married men make more money than bachelors.
In fact, they make 11% more than men who have never tied the knot, according to a recent, comprehensive study by the Federal Reserve Bank of St. Louis.
Senior research associate Abbigail Chiodo and economist Michael Owyang reviewed at least seven other studies by academic researchers going back to the early 1980s and found this to be the case, even when the data were adjusted for the men's work experience, education, and age.
Their key discovery: What women look for in a mate is the same as what companies look for in an employee. Desirable attributes include responsibility, honesty, loyalty, and the ability to resolve conflicts.
Appearance also helps. As Chiodo and Owyang write in their study: "Physical attractiveness--which is normally associated with desirability as a mate--also tends to have a positive effect on wages."
So much for that merit raise.