Governer Davis may win re-election only because the GOP's Simon is such
California GOP gubernatorial candidate Bill Simon Jr. has portrayed
himself as a savvy businessman who can deal successfully with the
state's financial woes. But Simon's ties to Enron, the bankrupt energy
company that has been charged with manipulating the electricity market
in California and is under federal investigation, raise questions about
his business acumen and his fitness for the state's top post.
Former business associates of Simon say that he personally persuaded
Enron to invest in Hanover Compressor, a Houston company he founded in
1990 and on whose board he sat between 1992 and 1998. Hanover makes
pumps that move natural gas and oil through pipelines and from wells.
According to several people at Enron and Hanover involved in the
transaction, the Enron investment was made in 1995 through an Enron
partnership called Joint Energy Development Investments, or JEDI, which
is now at the center of the federal investigation into Enron's collapse.
Simon held a 1.4 percent stake in Hanover, which after the JEDI
investment was worth tens of millions of dollars. His father, William
Simon, the former energy czar and Treasury Secretary under Richard
Nixon, ran a private investment firm, William E. Simon & Sons,
which owns more than 4 percent of Hanover. The younger Simon declined
requests for an interview. He has previously dodged questions about his
relationship with Enron.
JEDI was at one time Hanover's second-largest shareholder, with an $84
million stake in the company, according to a Securities and Exchange
Commission filing. Last June, JEDI shifted most of its shares to another
off-balance-sheet Enron partnership. JEDI's stake in Hanover allowed the
Enron executives who managed JEDI to attend Hanover board meetings.
Hanover executives said Simon and Enron came up with several
Simon was also involved in Hanover in matters separate from the Enron
deals that could raise legal concerns. Hanover said in February that it
would have to restate its financial results beginning in January 2000
because of improper accounting for a partnership that--as with
Enron--made the company appear more profitable than it was. Over several
years during this time, according to the Wall Street Journal,
Hanover officers sold millions of shares of stock--again much like
Enron, where officers who were allegedly aware of the company's
accounting practices were encouraging employees and others to buy shares
even as they were selling their own. Hanover is now the target of at
least four class-action lawsuits by shareholders who have alleged the
company misled investors; and it is also under investigation by the SEC.
Simon wasn't a member of Hanover's board at the time of the improper
accounting, but a week before Hanover made the announcement, the company
reported that every annual report it has issued since going public in
1997 contained errors. Simon, as a member of Hanover's audit committee,
was responsible for approving the company's annual reports. The audit
committee, according to Hanover's investor relations department, was
held responsible by Hanover for the error.
Simon helped Hanover set up a partnership in the Cayman Islands, Hanover
Cayman Limited, as a tax shelter. In addition, he assisted Hanover in
setting up a joint venture with Enron and JEDI to construct a
natural-gas compression project in Venezuela.
Jamie Fisfis, Simon's campaign spokesman, said Simon has been
forthcoming about his business dealings with Hanover and Enron. But when
asked about JEDI's investment in Hanover and what role Simon played,
Fisfis said he did not know and would only confirm that Simon was a
member of the Hanover board at the time. Moreover, he could not offer an
explanation when asked about the other joint ventures with Enron that
Simon's former business associates said he had a hand in creating. Simon
has told reporters on the campaign trail that he was barely involved in
Hanover's business activities, but Hanover executives say Simon was
intimately involved during his six years on the board. When Simon left
the board in 1998, he sold most of his 430,000 shares in the company.
However, he still has more than $1 million invested in Hanover,
according to the Associated Press.
Sherry Bebitch Jeffe, senior scholar of the University of Southern
California's School of Policy, Planning and Development, said Simon has
to start answering questions about his dealings with Enron, "whether it
be good or bad," or risk alienating voters. "The symbol that Enron has
become is negative, cheating and ruthless."
Roger Salazar, a spokesman for Governor Gray Davis, who currently trails
Simon according to the latest polls, said Simon's close ties with Enron
pose questions about his track record: "For a man who touts himself as a
business manager, these types of activities raise questions whether
Tuesday, March 5, midnight
MUNICIPAL UPHEAVALS The highest-profile fight nationally has to be the race to succeed New York City Mayor Rudy Giuliani, with labor-backed Democrat Mark Green and Republican Michael Bloomberg clashing over who will rebuild the city. Criticized for appealing to white fear to secure the Democratic nod, Green is struggling to shore up black and Latino support. Runoff foe Fernando Ferrer backs him, but Green is still mending fences with hospital union chief Dennis Rivera, a Ferrer backer whose street muscle could offset Bloomberg's bankroll.
In addition to New York, hundreds of cities from Atlanta to Seattle will elect mayors this fall. Many of them are turning to new faces. Veteran black mayors are stepping down in Detroit, Cleveland and Atlanta, inspiring spirited "next generation" contests. And Texas is witnessing a push by Latino candidates to win the mayoralties of Houston and other major cities, following the election this past spring in San Antonio of 32-year-old Democrat Ed Garza. In Cincinnati, where riots erupted in April following the shooting by a police officer of an unarmed African-American youth, former television news anchor Courtis Fuller, who is African-American, faces moderate Democratic Mayor Charlie Luken, who is white. Luken outspent Fuller by 11 to 1 in the nonpartisan primary. But Fuller's promise to make improved race relations a priority, along with a seven-point "covenant with voters"--which includes pledges to give the city's Citizens' Review Panel subpoena power to investigate police misconduct, to seek repeal of a 1993 charter amendment that prohibits specific legal protection for gays and lesbians, and to redirect the city's focus to better serve blighted neighborhoods--inspired a surge in African-American turnout. Fuller beat Luken by sixteen points in the primary that set up the November 6 runoff between the pair.
Seattle Mayor Paul Schell, who managed that city's response to the 1999 World Trade Organization protests, lost his job in a September primary. Schell was bested by City Attorney Mark Sidran and King County Council member Greg Nickels. In a liberal city that is still reeling in the aftermath of the WTO protests, an earthquake, various riots, the dot-com collapse and Boeing's exit, Sidran is running a law-and-order campaign that says the answer to a lot of what ails the city can be found in "civility laws" aimed at clearing the streets of panhandlers and the homeless. Nickels, siding with civil libertarians and antipoverty advocates, is betting that the historically liberal city will agree with his view that "we have a responsibility to do more than tell our homeless, 'You can't sit on the street or urinate on the sidewalk.'"
REJECTING ROBERTSON? Pat Robertson's favorite candidate this year is Virginia Republican gubernatorial contender Mark Earley, a fellow fundamentalist whose political rise has been shepherded by the Christian Coalition chief. Robertson has contributed $35,000 to Earley's campaign. Since September 11, however, Earley has been scrambling to explain his ties to Robertson, who concurred with fellow Virginian Jerry Falwell's view that the terrorists "give us probably what we deserve" because the country harbors abortion-rights supporters, gays and lesbians, civil libertarians and feminists. Earley has yet to part company with Robertson. Instead, he is relying on Republican National Committee money--more than $2 million so far--and a campaign that claims Democrat Mark Warner and his statewide running mates are the most extreme left-wing ticket in history. Warner, a high-tech millionaire and former US Senate candidate, doesn't live up to the billing. Though he is backed by labor and environmental groups, and supports abortion rights and protections for gays and lesbians, he also backs the death penalty, opposes new taxes and has made overtures to the National Rifle Association. Polls show Warner's well-financed campaign to be leading. If he prevails, Virginia will join one of the least-noticed trends in American politics: the return of Democratic control of governorships in the states of the Old Confederacy. A Warner win would add Virginia to a list that includes Mississippi, Alabama, Georgia, North Carolina and South Carolina.
LAY OFF LABOR Republicans have for years attacked Democrats for getting too close to organized labor, and that was precisely the tactic opted for by New Jersey Republican gubernatorial nominee Bret Schundler, whose privatization schemes as mayor of Jersey City earned cheers from the Wall Street Journal editorial page. In their first major debate after September 11, Schundler attacked Democratic foe Jim McGreevey as a slave of labor "special interests." Running in a state that adjoins New York City, and where many former World Trade Center workers reside, McGreevey said he was rather proud of his endorsement from the state's fire and police unions. In a response that could serve as a model for Democrats in 2002, McGreevey continued, "Mr. Schundler calls police and firefighters special interests. I call them special heroes. They are the guys who ran into the building. They've endorsed me. And they are not supporting Mr. Schundler." McGreevey, who almost beat former Republican Governor Christine Todd Whitman in 1997, has had the lead from the start. Though he is hardly a progressive, McGreevey is pro-choice and pro-public education as well as pro-labor, in stark contrast to conservative poster-boy Schundler.
INITIATING CHANGE In a state where initiative referendums have frequently been used to slash taxes and public services, Washington labor, church and community groups are seeking to reclaim direct democracy on November 6. The Homecare Quality Initiative, backed by Service Employees International Union locals as well as elderly, disability rights and AIDS care groups, would create a nine-member authority to set standards for publicly funded in-home care services for elderly and disabled adults. Initiative 773, supported by Healthcare for Washington's Working Families, would raise taxes on cigarettes and wholesale tobacco products, with the money earmarked for healthcare for low-income families. Framing the vote as a choice between initiative backers such as the American Cancer Society, the American Lung Association of Washington, the Washington Academy of Family Physicians and leading foes Philip Morris and RJ Reynolds, campaign spokesman Eric Jaffe says, "We know Washington voters trust the major organizations supporting I-773 when it comes to matters concerning health and kids, not Big Tobacco."