Robert's Wrap-Up
By Robert Warne - January 25, 2002Andersen’s Ollie
Congressional hearings began Jan 24 in the ongoing Enron probe. First up for questioning was David B. Duncan, the Arthur Andersen ex-partner in charge of the Enron audit. He did as expected and took the fifth. Duncan’s testimony is important to investigators. He may have knowledge of document shredding ordered by Andersen superiors after they learned of an imminent SEC investigation of Enron last Fall.
Pennsylvania Representative Jim Greenwood, the chairman of the House Energy and Commerce’s oversight and investigations subcommittee, said, “Mr. Duncan, Enron robbed the bank, Andersen provided the getaway car, and they tell me you were at the wheel.” Duncan has made it clear that he won’t disclose any details without an immunity agreement.
Questions surrounding shredding documents are just the beginning for Andersen, as it’s reputation as the 5th largest accounting firm is run through the shredder. Andersen’s liability is expected to greatly exceed any amount of insurance it might have to settle the massive claims expected from the Enron fall out.
Bankruptcy Blues
Sorting through the nuts and bolts of bankruptcy, Enron and now Kmart have seen the price for surety bonds drastically increase. They both relied on these bonds that allow insurance companies to continue covering them when their payments are in default. In Kmart’s case these bonds are used to back its workers’ compensation program and also cover liabilities arising from its sales of guns and liquor.
Farm Felony
The employer of an immigrant farm worker who bled to death after being caught in a combine harvester is facing felony charges. The case is one of the first of its kind since California’s passage of Assembly Bill 1127 last year. The new law increased the civil and criminal penalties for willful, serious and or repeat violations of Cal-OSHA’s standards and orders.
Donald William Beeman was arraigned Dec. 10 and pleaded not guilty to Yolo County prosecutors who have charged him with one count of involuntary manslaughter and two violations of the state Labor Code.
Emilio Palomares, an employee of Beeman Farms was walking alongside a combine harvester that was stripping ears of corn Nov. 6, 2000. Beeman, who was operating the harvester according to a Cal-OSHA report, asked Palomares to unclog the machine’s chute. Beeman didn’t shut down the combine, so when Palomares reached in he got caught in the machine. The blades cut his leg, and he bled to death.
Beeman is scheduled to return to Yolo County Superior Court Jan. 29. Similar cases are pending in Alameda and Orange counties.
Quack-O-Meter
As the Democratic primary draws near, two Insurance Commissioner candidates have been in the press recently regarding their position on accepting donations from the insurance industry. Former commissioner John Garamendi has been criticizing candidate Tom Caldereon, for the funds he’s received from insurance companies. Calderon, the Chairman of the Assembly Committee on Insurance said that if you know when to stand up and say no to insurance companies then there isn’t a conflict of interest. Accepting donations from insurance companies is what led to for commissioner Chuck Quackenbush’s demise. Calderon played a key role in forcing Quackenbush’s resignation.
The watchdog group, Foundation for Taxpayer and Consumer Rights has also been tracking insurance industry donations. Their invention inspired by the Quackenbush scandal is called the Quack-O-Meter. Their mission with the Quack-O-Meter is: The more moola a candidate gets from insurance folks, the more Quackenbush’s mug is revealed. So far Calderon, his picture is filled in half way.
Courts Clean Up El Niño Mudslide
The California Supreme Court is being asked to review an earlier appellate court decision holding San Anselmo liable for a mudslide on private property. During the El Niño rains in 1998, mud and hundreds of trees slid from one piece of private property onto another. The slide was found to be a result of water draining from a public street.
The two property owners sued the city of San Anselmo for $36,000 to cover the cost of the repairs. The city argued that it didn’t own or control the pipe that carried the water from the street to the property.
The state appellate court determined the city wasn’t immune from liability. The landmark decision set a precedent in California by asserting that the responsibility of mudslides lies, not where the slide occurs, but at the source of water.
If the state Supreme Court upholds the lower court’s decision, San Anselmo will need to fix what caused the slide, which is estimated to cost $1.5 million.
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