--- title: "Enron’s outside directors: financial ties and independence" language: en canonical: https://dossiertwist.com/dossiers/enron/director-independence/ as_of: 2026-10-14 keywords: ["Enron Corp.","Andrew Fastow","Kenneth Lay","Jeffrey Skilling","Richard Causey","LJM2 Co-Investment","Chewco","Raptors","special purpose entities","prepay transactions","Arthur Andersen","J.P. Morgan Chase","Citigroup","Merrill Lynch","CIBC","Powers Committee","bankruptcy examiner","Enron Task Force","California energy crisis","Newby class action"] --- # Enron’s outside directors: financial ties and independence **Question.** What financial and business ties linked Enron’s outside directors to the company, and how were those ties assessed and answered? **Answer.** In July 2002 the Senate Permanent Subcommittee on Investigations found that financial ties affecting a majority of Enron’s outside directors compromised the board’s independence: consulting fees paid to Lord Wakeham and John Urquhart, National Tank Company’s sales to Enron subsidiaries, donations to M.D. Anderson Cancer Center and the Mercatus Center, and hedging with Robert Belfer’s Belco Oil & Gas. Enron’s 2001 proxy statement had described the National Tank sales and the Belco hedging as ordinary-course arrangements on terms Enron believed were no less favorable than with third parties. A February 2002 press profile reported further links, including Norman Blake’s seat on the board of Owens Corning, Frank Savage’s ties to Alliance Capital and Joe Foy’s former partnership at Bracewell & Patterson, and found no apparent ties for three directors; Alliance denied that Savage had influenced it, and Lord Wakeham stepped down temporarily as chairman of the UK Press Complaints Commission. ## The Senate finding on board independence - Analysis: In its July 8, 2002 staff report, based on subpoenaed documents, director interviews and a hearing, the Senate Permanent Subcommittee on Investigations found that the independence of Enron’s board was compromised by financial ties between the company and certain directors, ties that affected a majority of the outside board members. It listed consulting fees paid to Lord Wakeham and John Urquhart; sales by Herbert Winokur’s National Tank Company to Enron subsidiaries; donations by Enron, Kenneth Lay or his foundation to M.D. Anderson Cancer Center, led by directors Charles LeMaistre and John Mendelsohn, and to the Mercatus Center, employer of Wendy Gramm; and hedging with Robert Belfer’s Belco Oil and Gas. This is a congressional committee’s conclusion, not a judicial finding. Enron’s 2001 proxy statement, issued before the finding, had described the National Tank sales and the Belco hedging agreements as ordinary-course arrangements on terms Enron believed were no less favorable than those of similar arrangements with third parties. According to a Congressional Research Service chronology, Lay resigned from the board on February 4, 2002, Mendelsohn on May 30, 2002, and Belfer, Gramm and Winokur on June 6, 2002, when the board accepted the resignations of its four remaining long-standing directors. [src-001] [src-109] [src-108] - Analysis: The Senate report also found, as a congressional rather than judicial conclusion, that Robert Jaedicke chaired the Audit Committee for more than 10 years yet had ‘rarely’ had contact with Andersen outside official committee or board meetings, and that no other interviewed Audit Committee member had ever contacted Andersen about Enron outside such meetings. A press profile of Enron’s outside directors published in February 2002, a journalistic summary, described Jaedicke as a Stanford business school professor who joined the board in 1985 and put his audit committee chairmanship at nearly two decades. Jaedicke testified to Congress in February 2002 that the committee could not do its job properly because it did not receive accurate data from executives and accountants. [src-001] [src-079] ## Consulting fees: Lord Wakeham and John Urquhart - Analysis: Enron’s 2001 proxy statement disclosed a monthly retainer of $6,000, approved effective September 30, 1996, paid to director Lord Wakeham for advice on European business and operations in addition to his director’s remuneration; for 2000 Enron paid him $72,000 for services to Enron Europe Limited, and the Senate report listed this retainer among the directors’ financial ties to Enron. The same February 2002 press profile, a journalistic summary partly based on filings with the Securities and Exchange Commission (SEC) and not an official record, reported that Wakeham, a Conservative politician and Audit Committee member, had as UK energy secretary under Margaret Thatcher approved the large gas-fired power plant Enron built at Teesside and joined Enron’s board four years later, in 1994. It said that besides his director’s income, putting the board average at $79,000 a year for pay and expenses, he had received $6,000 a month since September 1996 for consulting with Enron’s European subsidiary. [src-001] [src-109] [src-079] - Analysis: A wire-service report from London dated January 31, 2002, a journalistic account rather than an official record, stated that Wakeham stepped down temporarily as chairman of the UK Press Complaints Commission amid controversy over his role at Enron, to keep the commission out of controversy while he faced a U.S. Senate investigation. It described him as an accountant who had been a non-executive director of Enron since 1994, earning more than $110,000 a year, a member of the Audit Committee, a recipient of additional consulting fees and an owner of thousands of Enron shares. Wakeham said he was standing down temporarily as ‘a matter of honor’, would cooperate with Senate inquiries and would make no further statements. [src-061] - Analysis: Enron’s 2001 proxy disclosed that director John A. Urquhart had a consulting agreement with Enron and Enron Power Corp. effective August 1, 1991, under which he served as Senior Advisor to the Chairman on international business for a retainer of $16,538 a month, and that he had been granted 100,000 Enron phantom stock options in 1995; Enron paid him $493,914 under the agreement in 2000, in addition to his director’s remuneration. The Senate report cited the same 2000 payment as a financial tie. The same February 2002 press profile, a journalistic summary partly based on SEC filings, reported that Urquhart joined Enron’s board in 1990 after 40 years with General Electric, worked as an Enron consultant from 1991, was a non-employee vice chairman from 1991 to 1998, sat on the Finance Committee and, according to SEC filings, earned more than $6.5 million in cash and stock options for fees and expenses related to his consulting work. [src-109] [src-079] ## Herbert Winokur and National Tank Company - Analysis: Enron’s 2001 proxy disclosed that director Herbert S. Winokur, Jr. was affiliated with National Tank Company (NATCO), a privately owned provider of oilfield wellhead equipment, through his indirect management of two funds that owned its indirect parent, in which he was also a minority limited partner. NATCO recorded $370,294 of revenue in 2000 from sales to Enron subsidiaries, on terms Enron considered no less favorable than with third parties. The Senate report, noting that Winokur sat on National Tank’s board, gave the 1997–1999 revenues as $1,035,000, $643,793 and $535,682, and dates his Enron board service from 1985 to 2002. The proxy described Winokur as chairman and chief executive of Capricorn Holdings, Inc. and managing general partner of the Capricorn Investors partnerships he organized in 1987, 1994 and 1999; non-executive chairman of Azurix Corp. from August 2000 to March 2001; formerly a senior executive of Penn Central Corporation; and a director of NATCO Group, Inc., among other companies. His SEC filer record lists Form 144 and Schedule 13G/A filings with NATCO-named documents. [src-109] [src-001] [src-093] - Analysis: The same February 2002 press profile, a journalistic summary, described Winokur as chairman and chief executive of the investment firm Capricorn Holdings, chairman of Enron’s Finance Committee, a member of the Harvard Corporation and a director since 1985, and reported that Enron’s financial statements had disclosed about $2.5 million of sales by National Tank Co. to Enron since 1997. It said he had told a House investigative panel that management hid crucial details of Enron’s bookkeeping. At the Senate Permanent Subcommittee’s May 7, 2002 hearing Winokur testified that directors could not be criticized for failing to address or remedy problems that had been concealed from them. He resigned from Enron’s board on June 6, 2002. An opinion column by student authors in a university newspaper, an advocacy piece rather than a statement by Harvard or by Winokur, stated that he had resigned from the Harvard Corporation, the university’s governing board, amid controversy over his role as chair of Enron’s Finance Committee; the column does not give the date of or reasons for the resignation. [src-079] [src-001] [src-060] ## Robert Belfer and Belco Oil & Gas - Analysis: Enron’s 2001 proxy listed Robert A. Belfer as a director since 1983 and as Chairman and Chief Executive Officer of Belco Oil & Gas Corp., a company formed in 1992; before resigning in April 1986 from Belco Petroleum Corporation, then a wholly owned subsidiary of Enron, he had served as its President and then Chairman. The proxy disclosed that since 1996 Belco Oil & Gas had entered into natural gas and crude oil swap and option agreements with Enron North America (ENA) and its predecessors; in 2000 ENA received from Belco a net amount of approximately $32,000,000 in settlements and approximately $1,000,000 in option premiums. The Senate report described the hedging as worth tens of millions of dollars and noted that Belco bought the Enron affiliate Coda Energy in 1997. [src-109] [src-001] - Analysis: A reference company history states that Belfer became president of Belco Petroleum in 1965, that Belco merged with InterNorth, Inc. in 1983, Belfer becoming chief operating officer of the resulting BelNorth Petroleum Corp., and that after the 1985 combination with Houston Natural Gas (HNG) that produced Enron he left his executive post a year later while remaining a major Enron stockholder and director; a 2023 press report likewise describes Belco Petroleum’s mid-1980s merger with InterNorth. Both are secondary accounts, not primary records: the reference history compresses the 1985 InterNorth-HNG combination into a BelNorth merger, and Enron’s proxy dates his Belco Petroleum resignation to April 1986. [src-094] [src-078] - Analysis: The same February 2002 press profile, a journalistic summary, reported that Belfer, a director since Enron’s infancy in the mid-1980s and a Finance Committee member, was believed to have held his Enron stake as the stock collapsed and that his family lost nearly $2 billion in stock value; it also noted Belco’s multimillion-dollar hedging agreements with an Enron subsidiary. A reference biography, a secondary compilation, estimates his holding at more than 16 million shares, says he was not involved in operations and dates his resignation from the board to June 2002. A Congressional Research Service chronology records that Enron’s board accepted Belfer’s resignation, with those of three other long-standing directors, effective June 6, 2002. [src-079] [src-102] [src-108] - Analysis: SEC EDGAR records show that the registrant named Belco Oil & Gas Corp. from August 9, 1996 to June 14, 2001 was then Westport Resources Corp. (August 31, 2001 to July 1, 2004) and is now Kerr-McGee (Nevada) LLC. Belco’s filing index lists submissions described as ‘Enron Corp. for Belco Oil & Gas Corp.’, which also appear in Enron’s own index, and ‘JEDI L.P. for Belco Oil & Gas Corp.’, alongside Robert A. Belfer’s Schedule 13D amendments for Belco. The index entries show that Enron and JEDI made filings concerning Belco securities, but not the size of any holding. [src-074] [src-012] [src-097] ## Donations to M.D. Anderson and the Mercatus Center - Analysis: The Senate report, in a congressional finding rather than a judicial one, listed as a financial tie that Enron and Kenneth Lay had donated nearly $600,000 to the M.D. Anderson Cancer Center in the preceding five years and that the Enron Foundation pledged $1.5 million to it in 1993, while two directors, Charles LeMaistre and John Mendelsohn, had served as its president. Enron’s 2001 proxy described LeMaistre as its president for 18 years, now president emeritus, and Mendelsohn as president since July 1996. The same February 2002 press profile, a journalistic summary, reported that LeMaistre became the center’s president in 1978, led it for nearly 20 years and joined Enron’s board in 1985, and that Enron had given the center around $600,000; Mendelsohn succeeded him as president in 1996, joined the Enron board in 1999, sat on the Audit Committee and was also a director of ImClone Systems. [src-001] [src-109] [src-079] - Analysis: The Senate report likewise listed as a financial tie, in another congressional rather than judicial finding, that Enron and the Lay Foundation had donated more than $50,000 since 1996 to George Mason University and its Mercatus Center, which employed director Wendy Gramm; Enron’s 2001 proxy described her as an economist and Director of the Mercatus Center’s Regulatory Studies Program who had chaired the Commodity Futures Trading Commission from February 1988 to January 1993. The same February 2002 press profile, a journalistic summary, reported that Gramm joined Enron’s board in 1993, five weeks after leaving the commission, where as chairwoman she had led a regulatory exemption for trading in energy products that benefited Enron and other energy traders; it noted that she sat on the Audit Committee and that the Mercatus Center had received at least $50,000 from Enron since 1996. The profile also reported that her husband, U.S. Senator Phil Gramm, had collected nearly $100,000 in campaign contributions from Enron officers and the company’s employee political action committee over the previous 12 years. [src-001] [src-109] [src-079] ## Other ties reported in the press - Analysis: The same February 2002 press profile, a journalistic summary, reported that Norman P. Blake, an Enron director since 1993 and Finance Committee member who had been chosen to lead Comdisco out of Chapter 11, also sat on the board of Owens Corning, which signed a $1 billion energy-management deal with an Enron affiliate in 1999. Enron’s 2001 proxy likewise dated his directorship from 1993 and listed him as an Owens-Corning director, while the Senate report dates his Enron board service from 1994 and describes him as Owens Corning’s audit committee chairman. Blake, by then interim chairman, resigned from Enron’s board on June 6, 2002, when the board accepted the resignations of its four remaining long-standing directors. [src-079] [src-109] [src-001] [src-108] - Analysis: The same profile, a journalistic summary, reported that Frank Savage, an Enron director since 1999 and Finance Committee member, had left his post as chairman of a division of Alliance Capital Management the previous August to start his own fund, saying he would keep working closely with Alliance, and that this had led to charges that his presence influenced Alliance to become Enron’s largest institutional shareholder and to keep buying as the stock fell. Alliance denied that Savage had influenced it. Enron’s 2001 proxy had described him as chairman of Alliance Capital Management International, a division of Alliance Capital Management L.P., since 1995 and listed him as a director of Lockheed Martin Corporation, Alliance Capital Management L.P. and Qualcomm; SEC insider-ownership records list him as a director of Alliance Capital Management Holding L.P. (now AllianceBernstein Holding L.P.), with a reported transaction dated February 25, 2004, and of Lockheed Martin and Qualcomm. Savage resigned from Enron’s board on May 30, 2002, according to a Congressional Research Service chronology. [src-079] [src-109] [src-108] [src-103] - Analysis: The profile, a journalistic summary, reported two further links. Joe H. Foy, a former president of Houston Natural Gas who served on Enron’s board and Audit Committee until retiring in 2000, had been a partner of the Houston law firm Bracewell & Patterson, which Enron’s SEC filings said it sometimes retained; according to the profile, the firm had stated the previous month that it had stopped working for Enron. John H. Duncan, an Enron director since 1985 and a co-founder of Gulf & Western, was closely associated with the Rise Schools of Texas, a charity for young children with special needs that Enron promoted and that included a Houston school bearing his name; Kenneth Lay sat on the schools’ board of governors and Richard Causey on the board of directors. [src-079] - Analysis: The same profile counted 15 outside directors on Enron’s board from mid-1999 until the company’s slide toward bankruptcy. It reported no apparent major outside ties to Enron for Ronnie C. Chan, chairman of Hang Lung Group and a director since 1996 on the Finance and Audit Committees, and no apparent outside ties for Paulo V. Ferraz Pereira, executive vice president of Group Bozano, elected in 1999 and also on both committees, or for Jerome J. Meyer, former Tektronix chairman and Finance Committee member, who had left the board the previous year after four years. The profile is a journalistic summary, partly based on SEC filings, not an official record. [src-079] ## Sources - [src-001] The Role of the Board of Directors in Enron’s Collapse (S. Prt. 107-70), U.S. Senate Permanent Subcommittee on Investigations, 2002-07-08 - [src-109] Company statement source · src-109 - [src-108] Research source · src-108 - [src-079] Media source · src-079 - [src-061] Media source · src-061 - [src-093] SEC EDGAR submissions record of an individual filer (Herbert S. Winokur, Jr.), U.S. Securities and Exchange Commission, 2026-10-14 - [src-060] Media source · src-060 - [src-094] Other source · src-094 - [src-078] Media source · src-078 - [src-102] Other source · src-102 - [src-074] SEC EDGAR submissions record, CIK 0000889005 (Belco Oil & Gas / Kerr-McGee (Nevada)), U.S. Securities and Exchange Commission, 2026-10-14 - [src-012] SEC EDGAR submissions record, CIK 0001024401 (Enron Corp.), U.S. Securities and Exchange Commission, 2026-10-14 - [src-097] SEC EDGAR submissions record of an individual filer (Robert A. Belfer), U.S. Securities and Exchange Commission, 2026-10-14 - [src-103] SEC EDGAR insider ownership page (Frank Savage), U.S. Securities and Exchange Commission, 2026-10-14