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CNN Live At Daybreak

AFL-CIO Calls on Companies to Keep Enron Directors Off Their Boards

Aired January 29, 2002 - 06:16   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: There is more fallout from the collapse of Enron, the giant global energy company headquartered in Houston, Texas. The board of directors for the company could be facing problems outside Enron.

CNN's Steve Young explains.

(BEGIN VIDEOTAPE)

STEVE YOUNG, CNN CORRESPONDENT (voice over): Mindful of the enormous financial ruin caused by the Enron collapse to 21,000 employees, the giant AFL-CIO Union is calling on companies to refuse to renominate Enron directors to their boards.

JOHN SWEENEY, PRESIDENT AFL-CIO: We think that this is really a crisis situation far beyond Enron, and we just want to call to attention national corporation leaders about how important it is.

YOUNG: The Enron directors the AFL-CIO have in mind, include Frank Savage, who also sits on the boards of Lockheed Martin, Qualcomm, and Alliance Capital; Ronnie Chanc, whose boards include Motorola and the giant bank, Standard Chartered, headquartered in London; Norman Blake who serves on Owens Corning's board.

Wendy Gramm, wife of Senator Phil Gramm. She's on the board of several Invesco mutual funds, and Dr. John Mendelsohn who's not only on Enron's board, but also the biotech company, ImClone. It has a cancer drug put on hold by the Food and Drug Administration.

One drug analyst calls it a terrible coincidence that Mendelsohn happens to be on both boards. He discovered ImClone's cancer drug Erbitux and is among the most qualified board member to help ImCone win approval from the FDA.

Firms that recruit board members say the biotech could be hot water with the FDA now because it picked too many board members with the wrong kind of expertise, attracting investments, instead of gaining drug approval.

DANIEL SILVERSTEIN, PRESIDENT, SILVERSTEIN ASSOCIATES: I think that the process is fairly daunting. There's a great deal of clinical, scientific, and management expertise required to do it properly. YOUNG (on camera): One member of ImClone's board, Peter Peterson, Chairman of The Blackstone Group, resigned from ImClone's board last week, after being appointed only in November. Perhaps he recognized his widely acknowledged expertise is in private investment banking, not FDA regulatory affairs. A spokesman said Peterson had no comment.

Steve Young, CNN Financial News, New York.

(END VIDEOTAPE)

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