Director's past connects TECO, Enron
© St. Petersburg Times
John A. Urquhart enjoyed a long and successful career with General Electric, selling turbines to electric utilities. So it was no surprise that in 1990, when he was in his early 60s, he joined the board of directors of a promising young power company.
Enron Corp. of Houston.
It was love at first sight. While on the board, Urquhart was quickly awarded a vice chairman's title and named senior adviser -- with a hefty compensation package -- to Enron chairman Ken Lay.
So much for his role as an outside, independent director.
That was in 1991. The same year, Urquhart became a director of Tampa's TECO Energy Inc, the parent of Tampa Electric. Next month, the management consultant is scheduled to attend his 12th TECO annual shareholders meeting in Tampa.
But things are not going quite as planned.
Now 74, Urquhart finds himself one of 15 current and former Enron directors embroiled in the biggest business scandal of at least the past decade. Enron, widely acclaimed as one of the nation's new, cutting-edge corporations only a few years ago, is now the biggest corporate bankruptcy in U.S. history and the target of a congressional inquisition, criminal investigations and major lawsuits.
Ken Lay and a bevy of ex-Enron executives were subpoenaed and forced to show up in person before several congressional panels. They declined to testify, choosing to take the Fifth. Former Enron chief executive Jeffrey Skilling has twice appeared before highly skeptical members of Congress to deny he knew anything was wrong just months before Enron's catastrophic collapse.
Urquhart, no longer an Enron director, has escaped the harshest spotlight. Enron says he stepped down in May 1998. That was in the middle of the 1997-2001 period of earnings that Enron would later say was "unreliable" and would be forced to restate.
However, Enron's proxy filing with the Securities and Exchange Commission listed Urquhart as a member in 2000 of the board's finance committee, as well as a director of a subsidiary called Enron Renewable Energy Corp. until February 2000. And Urquhart stayed on as a well-compensated Enron adviser -- paid a retainer of $16,538 per month for up to 45 days of consulting; after that, paid .
$4,410 per consulting day -- long after the company's board and top managers signed off on byzantine financial partnership deals that led to the company's demise.
For Urquhart, Enron was a gold mine. In 2000, Enron paid him $493,914 as a consultant on "international business" opportunities. He also received stock options as a director of Enron Renewable Energy Corp. When that subsidiary was merged into another Enron business, Urquhart had the option to receive a cash payment for his stock options. He did, and was paid $2.4-million for his shares.
That was good timing. Had Urquhart waited until late last year, his shares would have been worthless. Many Enron shareholders, and thousands of Enron employees whose 401(k) accounts were laden with company stock, were far less fortunate.
Urquhart now has his own consulting company, John A. Urquhart Associates, in Fairfield, Conn. A call to Urquhart's office Thursday seeking comment was not returned.
In Tampa, TECO Energy is well aware of Enron's woes. TECO is busy trying to build four expensive power plants in the western United States using an Enron indirect subsidiary called Nepco as its general contractor.
When Enron sought bankruptcy protection in December, TECO had $61-million sitting in Enron accounts. Rating agencies warned TECO faced more risk in completing those power plants. And TECO also had the unpleasant (and potentially risky) chore of replacing Enron as the guarantor behind Nepco for its construction projects.
TECO also is well aware that Urquhart was a longtime Enron director and consultant. Urquhart, says TECO spokeswoman Laura Plumb, played no role in TECO's involvement with Nepco, the Enron affiliate.
"Urquhart's background is significant for us. He has over 40 years' experience working for GE, including as head of the company's power sector," Plumb says.
So far, Urquhart seems to be avoiding the plight of some of Enron's high-profile directors. Many are targets of a campaign seeking to have them booted off other boards and declared unfit to serve ever again.
Already, Ken Lay has resigned from the boards at Eli Lilly, Compaq Computer and i2 Technologies, as well as Enron. Skilling stepped down from the board of the Houston branch of the Dallas Federal Reserve Bank. Director Robert K. Jaedicke, who chaired Enron's audit panel, has resigned from the board at California Water Service Group. And director Wendy Gramm has quit the board of Invesco Funds.
Investors in the wireless technology company Qualcomm last month re-elected Enron director Frank Savage over the objections of some major institutional investors.
Savage, you may recall, is the former chairman of Alliance Capital Management, the New York investment firm that lost $328-million for the Florida state pension fund by continuing to buy plummeting shares of Enron stock.
For now, in Tampa circles, Urquhart is bucking the Enron jinx. His ongoing contributions as a director of TECO remain unquestioned.
-- Robert Trigaux can be reached at email@example.com or (727) 893-8405.
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