Sun, Jan 27, 2002 page1

• Sour times in Sugar Land as ex-Enron executive kills self

  • BLOOMBERG
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  Former Enron Corp vice chairman John Clifford Baxter, who criticized secret partnership agreements that bankrupted the energy trader and spawned federal investigations, committed suicide, police said on Friday in Sugar Land, Texas. He was 43.

  Baxter's body was found in his car at 2:23am with "an apparent self-inflicted gunshot wound to the head," according to a police statement. "Baxter was dead at the scene and the sole occupant of the vehicle. A suicide note was found at the scene."

  After a decade with Enron, during which he helped build its wholesale energy business, Baxter resigned in May.

  He had clashed with former chief executive officer Jeffrey Skilling and "complained mightily" about the "inappropriateness" of partnerships used to keep debt off Enron's books, Vice President Sherron Watkins said in a letter released by US investigators.

  "It's just another sad chapter in this whole ordeal," said Representative Jim Greenwood, whose House Energy and Commerce Committee planned to interview Baxter. "It's been in the back of my mind since this thing began, to wonder whether someone involved in this scandal would take it so hard or carry such guilt or such trepidation that this might happen."

  Baxter was one of at least 16 current and former Enron officials named as defendants in at least 40 investor lawsuits.

  The plaintiffs in those cases say the Houston-based company concealed losses that led to its bankruptcy filing Dec. 2, the largest ever.

  Baxter, whom former employee Lyndon Taylor called Enron's "deal man," was named chief strategy officer in June 2000 after being chief executive of Enron North America. Baxter negotiated the US$3.21 billion purchase of Portland General Electric in 1997.

  "I had no clue he would do this," said Taylor, a former manager of corporate development at Enron who worked for more than three years under Baxter. He last spoke with Baxter on Friday. Baxter told Taylor he planned to earn a doctoral degree in history, spend time with his family and find a job as chief executive of another company.

  "That's why he left," said Taylor, who worked with Baxter on mergers and acquisitions at Enron. "He'd thought he was going to be president and he didn't want to be Skilling's No. 2 for years."

  The expansion of Enron's trading business, which generated more than 90 percent of its US$100 billion in revenue during 2000, meant a diminished role for Baxter, analysts said. Under Skilling, Enron moved away from owning energy-producing assets and expanded trading of natural gas, electricity, access to broadband telecommunications lines and pulp and paper.

  "It was clear that there was a battle for the heart and mind of Enron, and the asset-oriented managers left the firm after Skilling won out," said Andre Meade, an energy analyst at Commerzbank Securities.

  Skilling resigned as Enron's chief executive three months after Baxter's departure. "Mr. Skilling is devastated at the loss of a very dear friend," said his spokeswoman, Judy Leon.

  Baxter's name emerged in the federal probe of Enron's collapse after investigators released a letter to former chief executive officer and chairman Ken Lay about partnerships set up by former chief financial officer Andrew Fastow that may have hidden US$550 million in losses. The partnerships were approved by the company's board and its auditor, Arthur Andersen LLP.

  Watkins, an accountant who worked for Fastow, said in her August letter that Baxter and then-Enron Treasurer Jeff McMahon had complained about the inherent conflicts of the partnerships.

  Lay and Fastow couldn't be reached for comment.

  "Sherron Watkins is deeply saddened and stunned at the news of Mr. Baxter's untimely death," her lawyer, Philip Hilder, said in a statement. "She had great respect for him. Ms. Watkins expresses her heartful sympathy and prayers to his family."

  "Nobody would ever question his integrity," Taylor said. "He did question the partnerships. His idea was, if it even looks questionable, don't do it."

  Baxter most recently sold 191,595 shares, mostly from stock options, during January last year, according to US Securities and Exchange Commission records. The sales proceeds were US$15.1 million, about US$12 million of which was profit to Baxter on the transactions.

  Baxter's body was found in a four-door, black 2002 Mercedes Benz sedan, less than 3km from his home, said Pat Whitty, public information officer with the Sugar Land Police Department.

  "The `suicide' had occurred very quickly" before officers found Baxter's body, she said. Police are still investigating
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