Business Digest

BUSINESS DIGEST

November 27, 2003

In The Region

Schmidt Baking truck drivers vote to join UFCW

The Salisbury-based delivery truck drivers for Schmidt Baking Co. voted overwhelmingly yesterday to unionize as part of the United Food and Commercial Workers, a union official said.

Tim Goins, organizing director for UFCW Local 27, said the 34-6 vote came because the drivers are unhappy with the lack of respect they receive on the job. They also are concerned about job security, wages and long working hours, Goins said, noting that most of the drivers are on their delivery routes by 5 a.m. and some work as late as 8 p.m.

Health America to settle U.S. dispute for $29 million

Coventry Health Care Inc. said yesterday that its Health America Pennsylvania Inc. unit will pay $29 million to settle a dispute with the U.S. Office Of Personnel Management related to charges under the Federal Employee Health Benefits Program.

The dispute focused on audits that questioned $31.1 million of subscription charges from 1993 through 1997 paid to the unit under the program, according to Coventry's 10-K filing in late March. Bethesda-based Coventry contracts with the Office of Personnel Management to provide managed health-care services under that benefits program.

The U.S. attorney's office has received information regarding the dispute to consider a possible civil lawsuit against the company, the filing stated.

Elsewhere

Houston glass tower of Enron is going on auction block

Two years after Enron Corp. went into bankruptcy, the rented oval-shaped glass tower that the company calls home is going on the auction block.

Interested buyers whose bids are deemed acceptable will attend an auction Tuesday at the Houston headquarters - two years to the day after Enron collapsed amid a string of damaging revelations of hidden debt and inflated profits.

Enron spokesman Eric Thode said yesterday that the highest bid will be presented to U.S. Bankruptcy Judge Arthur Gonzalez in New York for approval. A sale is expected to close early next year, coinciding with the relocation of about 1,000 workers at Enron's headquarters to smaller facilities in Houston.

A partnership of banks, led by J.P. Morgan Chase & Co., one of Enron's largest creditors, owns the building, which has an appraised value of $92.5 million. Proceeds of the sale will be divided among those lenders.

Putnam says it will stop steering business

Starting next year, Putnam Investments will stop steering business to brokers as a reward for selling Putnam funds, the chairman of the company's board of trustees said in a letter to federal regulators.

Putnam, the nation's fifth-largest mutual fund company, has been at the center of the storm over market-timing trades, or quick, in-and-out trades in mutual funds that could reduce values for long-term investors. But the latest letter concerns a different area that also has attracted attention from regulators: incentives for brokers who sell mutual funds directly to consumers to push one company's products over another's.

Last week, Morgan Stanley agreed to pay $50 million to settle allegations that it had improperly failed to disclose to customers that it received higher commissions by selling certain mutual funds, including Putnam's.

Scrushy ordered to repay $25 million loan in cash

Former HealthSouth Corp. chief executive Richard M. Scrushy has been ordered to repay the company in cash for a $25 million loan that he used to buy company shares.

Scrushy borrowed the money in May 1999, paying $5.78 a share for 4.4 million shares. In July 2002, HealthSouth authorized him to repay the debt with company stock.

The price of those shares was artificially inflated by misleading financial statements issued under Scrushy's management and the former CEO was responsible for the accuracy of those statements, Leo Strine, vice chancellor of the Delaware Chancery Court, said in issuing the order Monday.

U.S. prosecutors say Scrushy directed accounting fraud at HealthSouth that inflated profit, revenue and assets by $2.7 billion since 1996. There have been 15 guilty pleas to criminal charges by former HealthSouth executives.

Qwest looks into ex-official in AOL embezzlement case

Qwest Communications International Inc. is investigating a former human resources executive accused of embezzling from America Online Inc.

AOL claims in a lawsuit that Gregory Horton, 37, who worked for Qwest for about two years before leaving last year, diverted most of a $100,000 contract to an entity in which he was a co-owner.

Any legal action by Qwest would be determined by findings of an internal investigation, said Qwest spokesman Tyler Gronbach. He said the company was cooperating with federal authorities.

The lawsuit, filed Friday in a Virginia state court, claims the contract was awarded to a company called Pinebrook Consulting. The money allegedly ended up in a shell company owned by Horton, an AOL colleague and a Frito-Lay Inc. executive.

Fired Boeing CFO denies misconduct

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