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Enron Directors Reach $168M Settlement, Friday January 7, 11:56 pm ET, By Michael Liedtke, AP Business Writer, fair useEnron Directors Reach $168M Deal in Shareholder Lawsuit, Including $18M Out of Own Pockets

SAN FRANCISCO (AP) -- Eighteen former directors of scandalized Enron Corp. have reached a $168 million settlement, including a $13 million payout out of some of their own pockets, with shareholders burned by the financial shenanigans that culminated in the company's stunning collapse.

The agreement announced late Friday requires 10 of the former Enron directors to contribute a combined $13 million from the profits that they reaped from selling company stock before Enron revealed it had been grossly exaggerating its sales and profits. The debacle foreshadowed a wave of accounting scandals that sparked an overhaul of the country's corporate governance practices.

The directors paying an unspecified amount of money are: Robert Belfer, Norman Blake, Ronnie Chan, John Duncan, Joe Foy, Wendy Gramm, Robert Jaedicke, Charles LeMaistre, Rebecca Mark-Jubasche and Ken Harrison, according to attorneys involved in the case.

Other directors who aren't personally paying money but are nevertheless covered by the settlement are: Paulo Ferraz-Pererira, John Mendelsohn, Jerome Meyer, Frank Savage, John Urquhart, John Wakeham, Charls Walker and Herbert Winokur.

None of the directors are admitting any wrongdoing as part of the settlement, which still requires final court approval.

It represents the fourth major settlement negotiated by attorneys who filed a class action lawsuit on behalf of Enron's shareholders nearly three years ago. Including the latest settlement, the lawsuit so far has retrieved just under $500 million for shareholders in a debacle that helped spark a wave of new laws designed to improve corporate America's accounting practices.

Enron's financial meltdown wiped out tens of billions in shareholder wealth.

The latest settlement doesn't include two of Enron's former chief executives, Ken Lay and Jeff Skilling, both of whom face criminal charges for their alleged misconduct leading up to the company's late 2001 collapse. Andrew Fastow, who has pleaded guilty to engaging in illegal conspiracy while he was Enron's chief financial officer, also isn't a part of the settlement.

Enron's shareholders are still seeking damages from a long list of other prominent defendants, including major banks and brokerages such as J.P. Morgan Chase & Co., Citigroup Inc., Merrill Lynch & Co., and Credit Suisse First Boston for playing an alleged role in Enron's skullduggery.

Forcing 10 of Enron directors to dig into their own pockets to part of the settlement was especially important, said William Lerach, an attorney representing University of California, the lead plaintiff in the shareholder suit.

"Hopefully, this will send a message to corporate boardrooms of the importance of directors performing their legal duties," Lerach said.

The University of California announced the settlement with the Enron directors on the same day that New York state Comptroller disclosed that 10 directors who presided over the fraudulent practices at Worldcom will personally contribute $18 million toward a settlement in that case.

Enron's directors last year agreed to pay a combined $1.5 million of their money to resolve a U.S. Department of Labor lawsuit alleging the company had mismanaged its employees' retirement funds.

Insurance companies will contribute $155 million toward the latest Enron settlement, exhausting the coverage for the company's directors and officers.



Litigation Release No. 19023 / January 6, 2005

Accounting and Auditing Enforcement

Release No. 2159 / January 6, 2005

SECURITIES AND EXCHANGE COMMISSION v. MONSANTO COMPANY, Case No. 1:05CV00014 (U.S.D.C., D.D.C) (filed January 6, 2005)




On January 6, 2005, the Commission filed two settled enforcement proceedings charging Monsanto Company, a global producer of technology-based solutions and agricultural products headquartered in St. Louis, Missouri, with making illicit payments in violation of the Foreign Corrupt Practices Act ("FCPA"). First, the Commission filed a lawsuit in the United States District Court for the District of Columbia charging Monsanto with violating the FCPA and seeking a civil penalty. Second, the Commission issued an administrative order finding that Monsanto violated the anti-bribery, books-and-records, and internal-controls provisions of the FCPA, ordering Monsanto to cease and desist from such violations, and requiring Monsanto to retain an independent consultant to review and make recommendations concerning the company's FCPA compliance policies and procedures. Without admitting or denying the Commission's charges, Monsanto consented to the entry of a final judgment in the federal lawsuit requiring it to pay a $500,000 civil penalty and consented to the Commission's issuance of its administrative order.

In both its federal court complaint and its administrative order, the Commission charged that, in 2002, a senior Monsanto manager, based in the United States, authorized and directed an Indonesian consulting firm to make an illegal payment totaling $50,000 to a senior Indonesian Ministry of Environment official ("the senior Environment Official"). The bribe was made to influence the senior Environment Official to repeal an unfavorable decree that was likely to have an adverse effect on Monsanto's business. Although the payment was made, the unfavorable decree was not repealed. The Commission further charged that the senior Monsanto manager devised a scheme whereby false invoices were submitted to Monsanto and the senior Monsanto manager approved the invoices for payment.

In addition, the Commission charged that, from 1997 to 2002, Monsanto inaccurately recorded, or failed to record, in its books and records approximately $700,000 of illegal or questionable payments made to at least 140 current and former Indonesian government officials and their family members. The approximate $700,000 was derived from a bogus product registration scheme undertaken by two Indonesian entities owned or controlled by Monsanto. The largest single set of payments was for the purchase of land and the design and construction of a house in the name of the wife of a senior Ministry of Agriculture official. The Commission further charged that, in certain instances, entries were made in the books and records of the two Indonesian entities that concealed the source, use and true nature of these payments.

As a result of the conduct described above, the Commission charged that Monsanto violated the anti-bribery provisions of the FCPA (Section 30A of the Securities Exchange Act of 1934). The Commission further charged that Monsanto violated Section 13(b)(2)(A) of the Exchange Act, which requires reporting companies to make and keep books, records, and accounts, which accurately and fairly reflect their transactions and disposition of their assets. The Commission further charged that Monsanto violated Section 13(b)(2)(B) of the Exchange Act, which requires all reporting companies to devise and maintain a system of internal accounting controls sufficient to, among other things, provide reasonable assurances that transactions are properly recorded. The Commission further charged that Monsanto violated Section 13(b)(5) of the Exchange Act, which prohibits any person or company from knowingly circumventing or knowingly failing to implement a system of internal accounting controls as described in Section 13(b)(2)(B), or knowingly falsifying any book, record, or account as described in Section 13(b)(2)(A). Finally, the Commission charged that Monsanto violated Rule 13b2-1 of the Exchange Act, which prohibits any person or company from, directly or indirectly, falsifying or causing to be falsified, any book, record or account subject to Section 13(b)(2)(A).

In determining to accept Monsanto's settlement offer, the Commission considered the cooperation that Monsanto provided the Commission staff during its investigation.

In a related proceeding, the United States Department of Justice has entered into an agreement with Monsanto Company to defer prosecution on charges of violating the anti-bribery and books and records provisions of the FCPA. Under the Agreement, the Justice Department has filed a criminal information charging the company; Monsanto will pay a $1 million monetary penalty; and Monsanto will retain for a period of three years an independent compliance expert to audit the company's compliance program and monitor its implementation of and compliance with new internal policies and procedures.

The Commission acknowledges the assistance of the Department of Justice in its investigation, which is continuing.

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