VideoFor the first time, a former Enron executive implicated in the scandal that toppled the energy-trading company is facing prison.
Former treasurer Ben Glisan on Wednesday pled guilty to a single count of criminal conspiracy and was immediately sentenced to five years in a federal minimum-security prison, according to published reports.
He also forfeited $938,000 in profits from an illegal transaction involving one of Enron's off-balance-sheet partnerships and agreed not to seek $412,000 in income taxes he paid on that sum.
Although he is not cooperating with prosecutors, Glisan was contrite in court. "I take full responsibility for my actions at Enron," Glisan reportedly told the judge. "I would sincerely ask the court to accept my plea."
As part of his plea arrangement, prosecutors agreed to drop 23 other counts against Glisan. The dismissed charges included money laundering, fraud, and conspiracy.
Glisan is the second former Enron executive to plead guilty to charges stemming from the scandal. Michael Kopper, an erstwhile lieutenant of former CFO Andrew Fastow, last year pled guilty to money laundering and conspiracy. (See "For Kopper, a Different Kind of Roll-Over.")
Fastow, you might recall, was named in the same 109-count indictment that included Glisan and former Enron finance executive Dan Boyle. Both Fastow and Boyle have pleaded not guilty. Glisan's guilty plea stemmed a charge that he, along with Fastow, created Talon, a special-purpose entity engaged in improper hedging transactions with Enron, according to the Houston Chronicle. The deals enabled Enron to report substantially better financial results.
In a separate deal, Glisan reportedly earned more than $1 million for an investment of less than $6,000 in Southampton, one of the secret partnerships Fastow is alleged to have set up to inflate Enron's earnings. In December 2002, Glisan agreed to pay back the $916,137 he netted after taxes but at the time said he didn't believe there was anything improper about the transaction at the time, according to the Chronicle.
Credit Market Sends Out Sunny Signals
The number of debt issuers enjoying credit upgrades seems poised to rise compared with the number from four months ago, according to a new report from Standard & Poor's Ratings Services. That suggests that the current credit cycle is set to emerge from its trough, the credit rating agency noted.
Things, in short, are looking up. "Expectations of an economic recovery have fueled higher earnings forecasts, and consequently, of higher profitability — with beneficial implications for corporate creditworthiness," S&P analysts reported.
As of September 5, 312 issuers that came from various countries and ranged from AA-plus to B-minus ratings seemed likely to benefit from potential upgrades, according to the report. Forty-nine percent of the issuers are investment-grade (BBB-minus and above), and the remaining 51 percent are speculative-grade (BB-plus and below).
S&P analysts had either placed those issuers on "CreditWatch with positive implications" or had given them positive outlooks. (S&P's CreditWatch indicates the potential direction of a credit-rating change and is typically resolved within 90 days. A rating outlook indicates the potential direction of a credit rating change within six months to two years.)
The list of potential upgrades represents a net increase of 48 issuers in comparison to the 264 potential upgrades S&P recorded on May 1.
One caveat: S& P's Global Fixed Income Research has changed the way it counts potential bond-rating upgrades. That methodology now includes parents as well as subsidiaries when the rating or the outlook or CreditWatch status of the subsidiary is different from the parent, it warns. For that reason, is not directly comparable with the last report published on May 12.
"Entities that either bear a positive outlook or are on CreditWatch positive listing are a good leading indicator of actual upgrades: for example, of the entities that came off the May list, a relatively high percentage — two-thirds — experienced upgrades," said Diane Vazza, head of S&P's Global Fixed Income Research group.
The sectors most likely to experience upgrades include banking, insurance, utilities, health care, and consumer products. The largest increases in the number of potential upgrades since May were in health care, banks, and utilities.
Which credit ratings are most likely to be upgraded? The B-plus rating designation showed the most potential, accounting for 15 percent of the total pool of potential upgrades, according to S&P. By rating category, the largest number appeared in the BBB rating category — including the BBB-plus, BBB, and BBB-minus rating designations. The BBB category accounted for 32 percent of the total pool of potential upgrades.
In terms of geography, the United States saw the biggest increase in the number of entities listed as potential upgrade. S&P attributes part of this, however, to the larger number of U.S. issuers studied.
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