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June 10, 2005
Pension Investigating Unit Criticized Before Panel
The Labor Department unit charged with investigating pension fraud
lacks the staff and financial expertise to do its job efficiently, the
Senate Health, Education, Labor and Pensions Committee was told
yesterday, CongressDaily reported. Health, Education, Labor
and Pensions Chairman Michael Enzi (R–Wyo.) said those problems
would be considered in drafting a comprehensive pension overhaul measure
that he wants his committee to address before the August recess. During
the hearing, a federal watchdog and an official of a union whose pension
fund suffered as a result of fraud testified that the Employee Benefit
Security Administration (EBSA) was too slow in shutting down the
investment firm Capital Consultants LLC, which defrauded 300,000 pension
plan participants of more than $500 million. Alan Lebowitz, EBSA’s
deputy assistant secretary, acknowledged the investigation took a long
time but called the case “a sophisticated fraud” that was
“very difficult to detect.”
Citigroup to Pay $2 Billion in Enron Lawsuit
Citigroup Inc. today said it will pay $2 billion to Enron Corp.
investors who accused it of helping engineer a massive accounting fraud
at the energy trader, Reuters reported. The class-action settlement is
one of the largest in corporate history, though it is less than the
$2.58 billion that Citigroup agreed to pay WorldCom Inc. investors in
2004. The settlement may put pressure on a series of other major banks
to settle with Enron investors. Citigroup did not admit wrongdoing in
agreeing to settle. It said the pre-tax payment is fully covered by its
existing litigation reserves and that it does not plan to adjust its
remaining reserves, the newswire reported.
Greenspan Wary of Risky Mortgages
Federal Reserve Chairman Alan Greenspan yesterday expressed concern
that the growing use of riskier new mortgages is helping push up home
prices to “unsustainable levels” in some local markets, the
Washington Post reported. Home prices in some areas of the
country may fall when the market cools, but that probably would not
cause serious harm to the overall U.S. economy, he told Congress’s
Joint Economic Committee. Read the full article at
href='http://www.washingtonpost.com/wp-dyn/content/article/2005/06/09/AR20050…'>www.washingtonpost.com/wp-dyn/content/article/2005/06/09/AR200506090066….
UAW Is Facing Biggest Battles in Two Decades
United Auto Workers (UAW) President Ron Gettelfinger and other UAW
leaders face the union’s worst crisis since the late 1970s and
early 1980s, when oil price shocks and a surge of Japanese cars forced
thousands of layoffs at Detroit’s Big Three, and drove Chrysler
Corp. to seek a government bailout, the Wall Street Journal
reported. How Gettelfinger handles the challenge could be critical in
whether General Motors Corp. and several major U.S. auto parts makers
pull out of their recent financial crises. Read the full article at
href='http://www.wsj.com/'>www.wsj.com (subscription required).
AremisSoft Ex-CEO to Pay SEC
The former CEO of defunct software company AremisSoft Corp. has
agreed to pay $200 million to settle Securities and Exchange Commission
(SEC) charges that he unloaded millions of company shares while
misleading investors about the software company’s revenue, the
online Wall Street Journal reported. Roys Poyiadjis, the
executive, also accepted a permanent ban on serving as an officer or a
director of a public company. He settled without admitting or denying
wrongdoing in a case that regulators said marks one of the largest
recoveries of improperly earned money that the SEC has ever obtained
from a single individual.
Mittal Steel to Idle Mill Until Market Improves
Mittal Steel Co. is shutting down its only operating blast furnace in
West Virginia for eight to 10 weeks and laying off 700 workers at its
Weirton mill until business picks up, the company said yesterday, the
Associated Press reported. That is one-third of the mill’s current
workforce and the first layoffs of permanent employees since now-defunct
International Steel Group bought the former Weirton Steel Corp. in 2004,
the newswire reported.
ABB to Submit New Asbestos Plan Soon After June 13
ABB has yet to finalize a reworked asbestos settlement plan but
expects to present it to a U.S. Bankruptcy Court soon after June 13, the
Swiss-based engineering group said today, Reuters reported. “The
paperwork is almost finished and we expect to file the final plans soon
after June 13. The process is on track,” the company said in a
statement. In May ABB had said it would submit the new plan this month
but added that a June 13 deadline given by the U.S. court was final.
SEC Asks Calpine for Documents on Reserves
Struggling power producer Calpine Corp. said on Thursday that U.S.
regulators asked for documents in April relating to the downward
revision of proved oil and gas reserve estimates as of the end of last
year, Reuters reported. The request by the SEC’s Division of
Enforcement also included documents related to statements made to
various regulatory agencies by a terminated former employee regarding
the company’s determination of state sales and use taxes, as well
as the company’s upward restatement in April of its previously
disclosed net income for the third quarter and the first three quarters
of 2004, the
newswire reported.
Interstate Bakeries to Shut 2 California Bakeries
Bankrupt Interstate Bakeries Corp. yesterday said it would close two
decades-old bakeries in San Francisco, affecting about 2 percent of its
workforce, as part of its plan to cut costs amid declining revenue,
Reuters reported. The consolidation of its Northern California
operations is expected to affect about 650 workers. The company expects
to take $13.5 million in charges for the consolidation, including about
$6 million in severance, the newswire reported.
Air Canada Reaches Pact with Pilots On New Boeings
Air Canada said yesterday that it reached a tentative agreement with
its pilots on contract terms related to the airline’s $6 billion
purchase of 32 wide-body jets from Boeing Co., Reuters reported. Air
Canada, which is owned by ACE Aviation Holdings Inc., said the agreement
is subject to ratification by the Air Canada Pilots Association’s
membership. The airline said Boeing had extended a June 10 deadline to
June 19, when a positive vote by pilots would allow the aircraft order
to go forward.