TOP STORIES--SEPT. 15-20

PacBell, PUC at Odds Over Long-Distance Vote

SBC Pacific Bell and state regulators were at odds over whether the phone company won approval to offer long-distance phone service in California.

The California Public Utilities Commission voted 4 to 1 to approve a petition by SBC PacBell, the state’s biggest local phone company, to add long-distance service to its offerings. That paves the way for the company to seek the blessing of the federal government and begin offering long-distance service by Christmas.

The PUC also voted to bar SBC PacBell from carrying long-distance traffic within the state until it can show that to do so would not hinder competition.

But SBC PacBell executives believe the vote allows them to move forward. The confusion could trigger a messy showdown involving SBC PacBell, regulators and long-distance companies.

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Lockout Averted at West Coast Ports

A dispute between shipping lines and the dockworkers union came perilously close to paralyzing the ports of Los Angeles and Long Beach.

The Pacific Maritime Assn., which represents West Coast shipping lines and terminal operators, had announced that it would lock out workers in response to a series of alleged worker slowdowns at a Long Beach terminal.

The lockout was called off when the International Longshore and Warehouse Union dispatched full work crews to the Stevedoring Services of America terminal for the evening shift.

The drama capped a week of escalating tensions between the management group and the union, now in their fourth month of difficult contract negotiations.

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E-Mails Confirm Ruse by Global Crossing

Executives at Global Crossing Ltd. knew the company was masking its sales figures at least nine months before top officers such as Chairman Gary Winnick cashed in stock for hundreds of millions of dollars, according to company e-mails released by a congressional committee.

The e-mails decry the way the company rushed at the end of each quarter to boost revenue with “junk” deals, which involved trading capacity on fiber-optic networks with other telecommunications firms.

Global Crossing said the committee released “selected” parts of more than 60,000 pages of documents and 40,000 e-mails that the company had turned over to the committee and the Securities and Exchange Commission. The company said it would continue to cooperate with the committee.

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Judge Puts Bail Offer on Hold for Ex-Tyco CEO

The ex-wife of former Tyco International Ltd. Chief Executive Dennis Kozlowski agreed to put up the $10 million in cash to secure his $100-million bail, but a judge put her gesture on hold after prosecutors said they would investigate whether the money is tied to his alleged looting of the company.

New York State Supreme Court Justice Michael Obus scheduled a hearing for Friday to decide the issue, and Kozlowski will be permitted to remain free until then.

Kozlowski and Tyco’s former chief financial officer, Mark Swartz, were indicted by a New York grand jury on charges of enterprise corruption and grand larceny in connection with an alleged theft of $600 million from Tyco.

Meanwhile, the company disclosed more details about Kozlowski’s spending. A $2,200 wastebasket and $15,000 umbrella stand were among the purchases he allegedly made with company funds.

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Proposed Bill to Force Deadline for Digital TV

Hoping to speed the nation’s transition to digital television, key lawmakers are circulating a draft of a bill that would render most TVs obsolete by 2007 and require millions of Americans to spend hundreds of dollars on new sets or special equipment.

The proposal, which would force broadcasters to stop sending conventional analog television signals by Dec. 31, 2006, immediately sparked a firestorm of criticism from broadcasters and consumer groups, who predicted that such a requirement would face substantial opposition in Congress.

The draft, circulated by Reps. W.J. “Billy” Tauzin (R-La.) and John D. Dingell (D-Mich.), is intended to light a fire under broadcasters, cable operators and equipment manufacturers to accelerate the rollout of digital TV.

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Holiday Shopping May Be Slowest in Years

The upcoming holiday shopping season could be the slowest in five years, with sales increasing a scant 4% as consumers worry about war with Iraq and the slow pace of economic recovery at home.

The National Retail Federation predicted the November-December sales period would post the smallest increase since 1997. Sales grew 4% that year as the nation emerged from an economic slowdown. Sales last year grew 5.6% in November and December, even after the terrorist attacks.

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Rosie O’Donnell Leaving Magazine

After feuding for months with the publisher of Rosie magazine, former talk show host Rosie O’Donnell walked away from her namesake magazine.

She said her editorial control was being diminished by executives, whom she accused of smearing her reputation.

What started as a blissful 50-50 venture between O’Donnell and the Gruner & Jahr USA Publishing unit of Bertelsmann turned nasty in recent months.

The December issue of Rosie will be the last one. No decision has been made concerning the magazine’s 200 employees.

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Grand Jury to Probe Enron Role in Crisis

A federal grand jury has been convened in San Francisco to investigate whether Enron Corp. and other electricity sellers manipulated prices during the state’s energy crisis, causing blackouts and huge electricity debts for the state and its biggest power utilities.

The new grand jury represents a widening of the Justice Department’s investigations of Enron and the costly California electricity debacle of 2000 and 2001.

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Citigroup to Pay Record Penalty in Settlement

Citigroup Inc. will pay a record penalty as part of a $240-million settlement of predatory lending charges, the Federal Trade Commission said, ending a battle with the nation’s biggest bank.

Citigroup agreed to pay the FTC $215 million in consumer redress. It also will hand over $25 million in connection with a class-action settlement, resolving allegations that its Associates First Capital Corp. subsidiary gouged the poor and those with spotty credit records.

The FTC said the $215 million was the largest consumer protection settlement in its history. Citigroup admitted no wrongdoing.

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Minimum Wage Doesn’t Cover Southland Rents

For the fourth consecutive year, the minimum wage was insufficient to cover the rent for adequate housing anywhere in the U.S., and Southern California has one of the widest affordability gaps, according to a study of 2001 statistics by the National Low Income Housing Coalition.

The Washington-based advocacy group for the poor found that U.S. workers must earn at least $14.66 an hour to pay rent on a standard two-bedroom apartment.

California’s hourly minimum wage was increased this year by 50 cents to $6.75, but that still is less than half of what renters need to earn to afford a standard apartment in the Los Angeles region.

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Merrill Lynch Fires Two Top Executives

Merrill Lynch & Co. fired two senior executives for what the company said was their refusal to cooperate with government investigations of the downfall of Enron Corp.

The men are two of the highest-profile brokerage executives to lose their jobs in what has become a series of interlocking corporate scandals on Wall Street.

Merrill fired Thomas W. Davis, chief of global stock research and one of two executives who held the title of vice chairman. The brokerage firm also let go Schuyler Tilney, who headed Merrill’s energy industry investment banking.

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For a preview of this week’s business and economic news, please see Monday’s Business section.