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News :: Miscellaneous |
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Strange Solutions from Ashcroft and Dynegy |
Current rating: 0 |
by Christopher Brauchli
(No verified email address) |
08 Jun 2002
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Dynegy is the parent company of Illinois Power |
An example from the monkey: the higher it climbs, the more you see of its behind. Saint Bonaventure, Conferences on the Gospel of John
The world is upside down.
With each passing day it is becoming increasingly clear that the FBI was institutionally incapable of assimilating information that it had before Sept. 11 that might have permitted it to take action that would have prevented the attacks. It needed reform. The attorney general's solution was to encroach on the civil rights of the citizenry.
Charles L. Watson, CEO and chairman of Dynegy, is deemed incompetent by his board of directors which, being as incompetent as he, terminates his contract eight months early and pays him millions more than he would have been paid had they said they were firing him for cause, which they were, or permitted his contract to end as scheduled on Feb. 1, 2003.
Look first at the FBI. Robert Mueller, director of the FBI, has acknowledged that the agency missed warning signals on terrorism. Reports suggest that the reason for the missed signals were institutional. According to many reports, one of the agency's biggest failings is its inability to analyze the information it collects and share it among field offices. That helps explain why the assorted memoranda that have been made public in recent days were ignored by those who should have acted on them.
Attorney General John Ashcroft was blissfully unaware of any threat of terrorism. On Sept. 10, 2001, he let the Bush administration's budget office know that he did not endorse an FBI request for $58 million for 149 new counterterrrorism field agents, 200 additional analysts and 54 additional translators. He also proposed a $65 million cut for a program that would have made grants to states and local governments for counterterrorism equipment and training. After Sept. 11, Mr. Ashcroft proposed $2 billion for counterterrorism measures. He apparently had a change of heart.
The one thing that recent disclosures demonstrate is that the FBI could have done more had it been differently structured. The solution would appear to be a massive overhaul of the FBI. That may happen in the future. What is happening right now is a massive overhaul of what the FBI can do vis-a-vis the citizenry. With choir-boy serenity intact, Mr. Ashcroft announced at the end of May that the FBI would be unleashed to do many of the things that for years were prohibited by the domestic security guidelines put in place after abuses by the FBI were disclosed in the 1960s and 1970s. Although recent disclosures demonstrate that the agency ignored information it had available about terrorist attacks, Mr. Ashcroft blames internal restrictions for hampering its agents, suggesting that without the restrictions the agency would have done a better job in pre 9-11 days. There is, of course, nothing to suggest that that is the case. Nonetheless, the FBI is being given broad new powers to poke into the affairs of citizens even when the agency has no reason to suspect criminal activity.
During the same week that Mr. Ashcroft concluded that the solution to the internal failings of the FBI lay in impinging on the rights of citizens, another strange event was taking place at a company called Dynegy. Charles L. Watson was the chairman and chief executive officer of the energy company. Dynegy was the company that came close to acquiring Enron in late 2001 before disclosures of Enron's problems caused it to back out of the deal. Now it turns out that Dynegy has some of the same problems that plagued Enron. The SEC is conducting an investigation of the firm's accounting practices. Its trading practices have also been drawn into question.
The board of directors has lost confidence in Mr. Watson. It decided to fire him, believing he had not done a good job for the company. By firing him eight months before the end of his contract, the company was contractually obligated to pay him close to $33 million more than it would have had to pay him had it permitted him to finish out his contract which expired by its own terms on Feb. 1, 2003. By firing him without saying there were reasons for firing him (which presumably there were else they'd not have done it) the company would have saved $33 million since it had no obligation to pay him if it fired him for cause. It is a certainty that all the people on the board were gentlemen and women who don't like to embarrass one another. That is why his resignation cost him no embarrassment and cost the company a mere $33 million more than it would have been required had his departure been delayed by eight months.
The severance package includes full pay for the balance of his contract term, three times his annual salary and something called the "projected value" of his stock options based on what they would have been worth had he served his full three years and had the stock price gone up. The "projected value" does not take into account the possibility that the stock price might decline so far as to render the options worthless.
Mr. Ashcroft's solution to the internal problems of the FBI is to unleash it to spy on private citizens thus increasing its work load without addressing its problems. Dynegy's solution to dealing with an out-of-favor CEO is to pay him millions of dollars that they needn't have paid had they had the intestinal fortitude to let it be known that they were firing him for cause. They didn't. Some people have funny ideas about solutions. Mr. Aschcroft and Dynegy are members in good standing of that group.
Christopher R. Brauchli is a Boulder, Colorado lawyer and writes a weekly column for the Knight Ridder news service.
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