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Oct 10, 2002
CONTACT: Doug Heller - 310-392-0522 x309
Fire UBS Warburg, Group Tells Gov. Davis
Company Linked to Enron, Officials Hostile to California Maintains $60 Million Consulting Contract from CA Utility CommissionSanta Monica, CA -- The Foundation for Taxpayer and Consumer Rights (FTCR) today called on Governor Davis to fire UBS Warburg, a consulting and investment banking firm hired by state regulators this summer, with as much as $60 - $170 million in ratepayer money, to help it arrange a ratepayer bailout of bankrupt Pacific Gas & Electric.
In a letter raising a series of objections, including the company's purchase of Enron's energy trading operation and the fact that Senator Phil Gramm, whose hiring the company announced earlier this week, blamed Californians for the energy crisis even though it was Texas-based Enron (on whose board his wife served) that instigated and profited from the crisis, FTCR said:
"Now Phil Gramm and the remnants of the Enron arm that created such schemes as 'Death Star' and 'Ricochet' work for the state of California, and you should fire them...The State of California simply should not employ a company to consult on energy issues whose operations include an energy trading firm whose manipulation of energy prices brought fiscal chaos and blackouts to California and whose personnel include former politicians with ties to Enron who blamed Californians for the debacle."
Gramm Defended Enron, Mocked California
In the midst of the California energy crisis created by Enron and other Texas-based power companies, Texas Senator Gramm told the San Francisco Chronicle that California is suffering "the consequences of their own feckless policies" and "environmental extremism," while California leaders "blame power companies, deregulation and everyone but themselves" for the energy crisis. (February 20, 2001)
"Senator Phil Gramm excused Enron for punishing California and mocked state officials, but the CPUC has agreed to pay his company millions to tell us how to solve the problems Enron and lawmakers like Gramm created," said FTCR's senior consumer advocate Doug Heller "The CPUC should seek advice from people who want California to get out from under the shadow of Enron and deregulation, instead of turning to the ghost of Enron for the solution."
Warburg's Enron ties are not limited simply to Gramm or the purchase of Enron's energy trading operations. UBS PaineWebber, a subsidiary of UBS Warburg, administered Enron's infamous employee stock option program, which has left hundreds of former Enron employees with devastated portfolios and no resources for retirement. PaineWebber's relationship with Enron was so tight that the company reportedly fired investment adviser Chung Wu for disavowing PaineWebber's positive review of Enron and encouraging his clients to sell Enron shares just weeks before the stock plummeted.
The group also noted serious legal concerns stemming from the consulting contract with UBS Warburg.
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