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UBS and Enron: Letter to UBS  (17.03.03)
Marcel Ospel
UBS
Bahnhofstrasse 45
CH-8001 Zurich, Switzerland


Dear Mr Ospel,

We are troubled by the recent appointment of former U.S. senator Phil Gramm as a Vice Chairman of UBS. Mr. Gramm’s professional and personal connections to Enron have disgraced his reputation. We believe that UBS’s association with Gramm seriously undermines your company’s professed commitment to corporate responsibility. At a time when investors and the general public need reassurance that our financial institutions are scrupulous, we ask UBS to place Mr. Gramm on leave until all criminal and civil investigations into Enron’s wrongdoing are complete.

During his tenure in Congress and as a member of the Senate Banking Committee, Senator Gramm was the most vocal advocate for Enron, pushing legislation that removed government regulatory authority over the company and exposing it to negligence and fraud:

  Enron gave over $100,000 to Gramm’s campaigns from 1989 to 2001, making the senator the second-largest recipient of Enron campaign contributions in all of Congress.

  Disregarding the recommendations of the President’s Working Group on Financial Markets, Gramm forced a bill through Congress in December 2000 that deregulated energy commodity trading. The legislation, the Commodity Futures Modernization Act, was lobbied primarily by Enron. We have a copy of a letter from Enron CEO Ken Lay to Gramm on this subject.

  This law played an integral part in allowing Enron to wield enormous market power in California, enabling the company to withhold supply to intentionally drive up wholesale energy prices. These actions helped cause dozens of severe power outages and cost ratepayers tens of billions of dollars.

  Senator Gramm’s wife, Dr. Wendy Gramm, served on Enron’s Audit Committee from 1993 to June 6, 2002. In that capacity, Dr. Gramm had knowledge of and agreed to many of the off-the-books partnerships that hid debt from shareholders. The Gramms had financial incentives which compromised Dr. Gramm’s ability to be an independent board member. In addition to Enron’s financial support of Senator Gramm’s elections, Dr. Gramm recieved between $915,000 and $1.8 million in salary, director’s fees and Enron stock during her nine-year tenure on the board of directors. Furthermore, Dr. Gramm has been cited by business ethicists for accepting a $50,000 grant from Enron to Dr. Gramm’s Mercatus Center while she served on the board of directors.

  After acquiring Enron’s trading operations in January 2002, UBS paid $120,000 to the Washington, D.C. firm Sullivan & Cromwell to lobby Congress (and presumably Gramm) and federal regulators on the “regulation of energy derivative contracts” and “oversight of the Gramm-Leach-Bliley Act.” Gramm was the principal author of the law, which repealed the Depression-era Glass Steagall Act separating investment banking from commercial banks. Passage in 1999 paved the way for UBS to acquire the brokerage PaineWebber shortly thereafter.

Together, the Gramms facilitated Enron’s misdeeds, which victimized thousands of U.S. consumers. Ethical leadership was clearly lacking as well in that company. Especially in these economically beleaguered times, UBS has a duty to both promote and demonstrate corporate ethics—to truly make, as Mr. Ospel says on the UBS website, “corporate responsibility part of our culture and part of our identity.” As consumer advocates, civil society groups, and unions, we urge UBS to disassociate itself with the corporate deceit which Phil Gramm represented in Congress. We urge you, Mr. Ospel and Mr. Wuffli, to renew your company’s commitment to corporate integrity by removing Mr. Gramm from his position as Vice Chairman until he is cleared of any involvement in Enron’s transgressions.

Sincerely,
Andreas Missbach, Erklärung von Bern
Public Citizen, Citizen Works, Transparency Switzerland, Greenpeace Schweiz, Stiftung für Konsumentenschutz, Schweizerisches Arbeiterhilfswerk SAH, Aktion Finanzplatz Schweiz, Solifonds

CC: Peter A. Wuffli



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