Brief by Central Staff
Enron scandal – February 2002 – Colorado Central Magazine
Although some of us like to think that the mountains are a good place to hide from Wall Street, that is at best a pleasant fantasy: railroad mergers and multinational mining companies, to give two examples, have major effects on our part of the world.
As far as we know, there will be no direct effect here from the collapse of Houston-based Enron Corp., an energy-trading company now involved in the largest bankruptcy in American history. It was involved in loans that weren’t on its books, and when the loans started to go bad last year, the stock price tumbled.
However, there could be some indirect effects. Start with La Sierra, the 77,000-acre parcel east of San Luis also known as the Taylor Ranch. It changed hands a couple of years ago — the buyer was Lou Pai, chairman of Enron Energy Services.
He said he bought it for his personal pleasure and use, but there remained some water worries. Enron had set up a subsidiary, Azurix, which planned to set up a market for trading in water.
Could Pai have bought the ranch so that he could sell its water to a Texas buyer?
Probably not, according to David Robbins, the attorney for the Rio Grande Water Conservation District in Alamosa. Robbins told the Pueblo Chieftain last year that he had not seen anything that led him to believe that Pai was contemplating a water sale.
“Not everybody who buys property does so to rape the environment,” Robbins said, and many buyers of large parcels just want “their own little kingdom.”
But that kingdom might be under legal assault. Enron officers, including Pai, have been accused of illegal insider trading — selling their company stock at high prices ($110 a share in 2000) when they knew that if certain information became public, the price would plummet (25ยข a share in 2001).
They are also accused of continuing to sell their own stock while forbidding employees from selling the stock they held in retirement accounts.
In December, a lawsuit charged that Pai had profited by $353 million from his stock sales since 1997, more than any other Enron executive. The suit was filed in Houston by Amalgamated Bank of New York, which manages retirement funds for labor unions and said it lost $10.3 million on its Enron investment — an investment it wouldn’t have made if Enron’s financial statements had been accurate.
So, La Sierra may see some new owners soon. Pai might have to sell it to pay legal bills, or to cover judgments. On the other hand, he may figure it’s a good place to hide from Wall Street …