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committees in the Republican led House. Even so, with the debate over Enron at full boil, the House adopted a measure in April that rejected the toughest proposed changes.

Senate Democrats now predict that they will have the votes to get a broad measure of their own out of the Banking Committee later this month on a party line vote, but only by tempering it to win the support of moderates. Senator Tom Daschle, the majority leader, is said by lawmakers and his aides to be committed to trying to move a bill to the Senate floor before the August recess, in hopes of using the Republicans’ opposition to the measure against them in fall campaigns.

Even if that bill survives a filibuster threatened by Senate Republicans, lawmakers and lobbyists say that there is little chance of reconciling the differences between the House and the Senate this year.

All of Washington has not been paralyzed. Federal regulators — spurred in part by state prosecutors — have become more aggressive on the enforcement front. In Congress, meanwhile, legislation to modify pension laws — a response to the enormous losses in the retirement funds of employees at Enron and other troubled compa nies — might have a better chance of passage.

Still, even lawmakers who favor a tough response to the seem ing explosion in business misconduct detect little fervor among vot ers for a Washington crackdown. Absent a spate of further disclo sures, they say, the issues may remain too remote to change many voters’ minds.

“The politics will be determined by the circumstances,” said Senator Jon S. Corzine, Democrat of New Jersey and a former top executive of Goldman, Sachs & Company. “If we continue to see an erosion of the stock market and more cases like Adelphia and Tyco, then it will be significant. If we see less, then it may have less of an impact, because these can become issues that are hard for people like my mom to understand.”

Other lawmakers, particularly Republicans, say Enron’s moment as a galvanizing issue has quickly passed.

“The feeding frenzy is pretty much over,” said Senator Phil Gramm of Texas, the ranking Republican on the banking commit

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tee, who has worked closely with industry lobbyists to kill many of the Democrats’ proposals. “People started looking at making all these radical changes and decided there was a real cost involved and that it would not solve the Enron problem.”

Mr. Gramm said regulators and the marketplace are already correcting the excesses exemplified by Enron and its auditor, Arthur Andersen, relieving Congress of the need to enact comprehensive legislation.

“A lot of progress has already been made,” he said. “The presi dent has put forward a strong program, the Securities and Exchange Commission is moving forward, and the exchanges are changing their rules. No one who sits on an audit committee will be the same after Enron.” Mr. Gramm’s wife, Wendy, a onetime government regulator who served on Enron’s audit committee, resigned from the company’s board last week.

Representative Billy Tauzin, the Louisiana Republican who held hearings on Enron’s collapse, agreed with Mr. Gramm’s appraisal, but he said it was still vital for Congress to act, even though the prospects for legislation are not strong.

“It’s all very iffy,” he said. “There is a huge rift between where the Senate believes these issues ought to go and what the House has already passed. I don’t know if it gets worked out in time.”

Both Democrats and Republicans have already begun to con sider strategies to make the best political use of the issue in the November elections. The Republicans are relying heavily on the rule making and enforcement actions of the S.E.C.

On the Democratic side, one idea under discussion by advisers to Senator Daschle is to bundle disparate proposals into one pack age, making it more efficient to both confront recalcitrant Republicans in the House and make a political issue in the fall of the legislation’s defeat.

In any event, politicians and lobbyists say that any change in the accounting treatment of stock options is dead for the year — largely because of the perception that Silicon Valley, where such options are as ubiquitous as the Internet itself, is up for grabs in the 2002 and 2004 elections.

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Proposals have been made to force companies to account for options as a compensation cost — now they are not charged against corporate earnings — and to limit the ability of companies to take tax deductions for issuing options. But technology companies, financial firms and corporate trade groups — with the backing of President Bush — have lobbied lawmakers around the country to maintain the current system.

For now, lawmakers say, they have trumped the arguments of such people as Alan Greenspan, the Federal Reserve chairman, and the multibillionaire investor Warren E. Buffett that the current treat ment of options contributed to corporate overreaching in the 1990’s.

The Bush administration has not been a visible force in the leg islative battles, relying instead on likeminded allies — notably Senator Gramm — to bottle up the most ambitious legislation. He has met repeatedly with corporate lobbyists and urged them to press sympathetic Democrats or those facing tight races, like Thomas R. Carper of Delaware, Evan Bayh of Indiana and Zell Miller of Georgia, to block legislation from reaching the Senate floor.

Democrats say that effort appears to have failed and that Senator Paul S. Sarbanes, Democrat of Maryland, appears to have the support to get a bill approved by the banking committee. It would sharply curtail the consulting work performed by accounting firms, create a relatively independent oversight board for the accounting profession, require large corporations to rotate their auditors every five years, and impose tighter conflict of interest restrictions on stock analysts than the measure that was passed by the House.

Mr. Gramm has been working closely with the administration on an alternative measure that does not tighten conflict of interest regulations for analysts or auditing firms. His wife’s Enron ties seem to have produced no political pressure on Mr. Gramm — who has announced his intention to retire from the Senate after this year — to shy from the debate.

The post Enron proposals prompted scores of industry associa tions and hundreds of corporations to retain lobbyists and use their own employees to try to weaken or kill the measures. They include

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the American Institute of Certified Public Accountants, which is dominated by the largest firms. Hundreds of companies, including Oracle and Intel, have fought against changing the treatment of stock options. And many of the largest Wall Street firms have lob bied against changes in the laws governing stock analysts.

The drift in Congress largely reflects the power of the account ing profession. Accounting firms ranked as three of President Bush’s top eight campaign donors in 2000, and over all, the industry made $14.7 million in campaign donations to both Democrats and Republicans during the last election cycle, according to the Center for Responsive Politics. The profession has influential members in many congressional districts and has been known to use lawmakers’ own accountants to lobby them.

Pension legislation may stand a better chance in Congress, although its prospects remain cloudy.

The chairman of the Senate Finance Committee, Max Baucus of Montana, is crafting an alternative to a bill by Senator Edward M. Kennedy, Democrat of Massachusetts that drew strong opposition from business lobbyists and Republicans.

On some points, Mr. Baucus’s bill is likely to contain provisions similar to those in the House bill, like permitting workers to sell company stock awarded as a 401(k) match three years after they receive it. Senate aides say the bill may also place limits on certain forms of executive compensation. Mr. Daschle is warming to the provisions that are expected to form the Baucus proposal, Senate aides say.

But they say the Baucus plan is unlikely to include the Kennedy proposal’s provision prohibiting most companies from both offering their stock as a 401(k) investment option and using it to match employee contributions. This was designed to keep employees from putting too much retirement money in their own stock, as happened at Enron.

One major issue that remains unresolved is how to give employ ees better access to investment advice. Investment management companies have been lobbying to permit firms that administer retirement plans to offer advice to participants. Among other things,

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they would be permitted to recommend investments for which they could receive a fee.

Senate aides say the Baucus proposal may instead contain a pro vision encouraging employers to hire independent firms to provide advice.

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RUSSIANS STUFF 80 BILLION DOLLARS UNDER MATTRESSES:

WATCHDOG

By Dmitry Zaks

MOSCOW, Aug 6 (AFP) — Russians have nearly 80 billion dol lars “stuffed under mattresses” — more cash than in US circula tion — which is now trickling into stocks amid improved trust in corporate governance, Russia’s securities watchdog chief said Tuesday.

The figure is almost double the Russian central bank’s current gold and hard currency reserves of 43.6 billion dollars.

“Our latest estimates show that between 75 and 80 billion dol lars are, so to speak, being stuffed under mattresses,” Igor Kostikov, chairman of the Federal Commission for Securities Markets, told a group of Western reporters in Moscow.

“Some of this money has started to come (into securities) since May last year,” said Kostikov. “More and more, (Russian) individu als are starting to invest.”

Russians had long been keeping their savings in dollars, leery of their own national currency after being bitten by a string of devas tating devaluations and bank collapses in the last decade.

Yet Russia was also the star performer last year among emerging markets, in large part due to handsome profits reported by its oil and natural gas giants that came on the back of peaking energy prices.

Kostikov thinks some lessons were picked up in those glory days. Oil prices have since sagged but the Russian stock market continued to hold its own until July when it too went into a tailspin along with New York and European share markets.

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The Russian market’s capitalization has dropped off from 137 billion dollars (141 billion euros) to 110 million dollars over the past six weeks — although it still represents 70 percent of all volume trad ed in Eastern Europe, said Kostikov.

“US security fund managers have been quitting (the Moscow mar ket) — but this really has nothing to do with us,” stressed Kostikov.

“The Russian economy is hardly dependent on fluctuations in (Western) stock markets,” agreed former presidential economic adviser Vladimir Mao.

“If we pass this period without doing something stupid, there will be a powerful stimulus for an influx of foreign investment into Russia,” Mao told the government’s Rossiyskaya Gazeta.

Kostikov for his part touted Russia’s recent advances in establish ing some semblance of the rule of law to the post Soviet business world.

And he took particular pride in its new “corporate governance code” that provides a 117 page standard for proper relations between owners and managers.

The code would be adopted by companies on a voluntary basis — but investors will then be able to defend their rights through Russian courts once the code is incorporated in the company’s statute books.

Natural gas giant Gazprom was among the first major compa nies to adopt the code, said Kostikov.

But the code still fails to address many problems — including insider trading — that can only be prosecuted through criminal statutes that are not yet a part of Russian law, said Kostikov.

“Foreigners have far more experience using insider information than the locals,” said Kostikov, adding he expected parliament to examine the long delayed legislation this fall.

In part confirming Kostikov’s rosy outlook for the Russian mar ket and its ability to absorb some of the billions of loose Russian cash dollars, a poll issued this week put the local ruble as the country’s most trusted currency.

About 37 percent of respondents said they preferred to keep their savings in rubles while 35 picked dollars, according to the Public Opinion Foundation.

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However, Kostikov also agreed with the argument that Russian securities were reviving in part because the country still lacked a functioning banking sector and companies had few other options but to issue shares if they wanted to borrow fast cash.

“The share issues over the first quarter of the year have been greater than for all of last year,” he said.

International Herald Tribune

May 31, 2002

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ROLLS ROYCE WINS GAS TURBINE CONTRACT FOR SAKHALIN-2

Rolls Royce Energy has won a $24 million offshore contract to supply two RB211 gas turbine power generation units for the Sakhalin 2 project, The Sakhalin Independent reported in December. Rolls Royce will design the offshore gas turbine packages to withstand severe conditions, including winds exceeding 90 meters per hour, 19 meter high waves and temperatures as low as –35 degrees centigrade (–31 F). The equipment will be delivered to Sakhalin in the third quarter of 2004.

4

RUSSIAN COMPANY BUILDS SAKHALIN’S BIGGEST BRIDGE

The construction of an 830 meter automobile bridge, the biggest on the island, has been completed on Sakhalin, Neftegaz.ru reported in December. The bridge connects the Chayvo wellsite with the onshore processing facility. It is current ly being used to transport the heavy equipment needed to start oil and gas production. Once production begins, it will be used to transport people and supplies to the wellsite. The bridge was con structed as part of the Sakhalin 1 project by Khabarovsk based Dalmoststroy.

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NORWEGIAN COMPANY TO BUILD SUPPLY SHIP FOR SAKHALIN

Kvaerner Masa Yards Inc. will build a 65 million euro ($78 mil lion) ship for the Far Eastern Shipping Co. to ply the Sea of Okhotsk, where Exxon Mobil Corp. and Royal Dutch/Shell Group plan $25 billion in investments, Bloomberg news agency reported in December. The unit of Oslo based Aker Kvaerner, a Norwegian engineering company, will build the supply vessel. The icebreaking ship will be delivered in May 2005.

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YUKOS PROTESTS HANDOVER OF SAKHA OIL FIELD

Russia’s fourth largest oil producer, Surgutneftegaz, has won a full license for the huge Talakan oil field in Sakha, months after Talakan was taken away from Yukos, Interfax reported in December. Yukos, which saw Talakan as a key element in plans for a major pipeline to China, dismissed the ruling by the Sakha regional arbi tration court as “legal nonsense”. Yukos lost control of the field after subsidiary Sakhaneftegaz failed to pay $501 million promised in its winning bid during the original auction in 2001.

A second auction, which attracted interest from virtually all the top oil companies, was stalled after the Natural Resources Ministry proposed a $900 million starting price. Officials instead awarded a one year license to Surgut, which came second in the original auc tion with a $61 million offer.

Yukos, whose former head Mikhail Khodorkovsky was jailed recently on charges of fraud and tax evasion, also became involved in a quirky scandal in November. TV reports alleged the company had let rabbits mate without supervision and mistreated pigs at a farm belonging to a Yukos affiliated company, Sakhaneftegaz, in Sakha. Authorities found that male and female rabbits were kept together and “couplings take place unsystematically, and no zoolog ical technological monitoring records are kept,” according to

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Interfax. Nursing sows are also kept in common stalls, which is against regulations.

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WORKERS FROM AROUND RUSSIA HEAD TO SAKHALIN

A total of 3,500 people from various regions of Russia arrived on Sakhalin this year to work on the Sakhalin 1 and Sakhalin 2 proj ects, Regions.Ru reported in December. The number of people working on the Sakhalin shelf projects is now around 11,000. More than 1,000 companies are involved.

The biggest contracts have been awarded to construction com panies from continental Russia, according to the acting deputy head of the Sakhalin Oblast administration’s construction department, Aleksandr Prokhorenko. This is because Sakhalin companies are unable to take on such large projects due to their financial instabili ty and lack of experience in preparing tender documents, he said. “Among the requirements of Sakhalin Energy in the tenders for civil engineering was the following: experience working as a contractor in civil engineering in developing countries (including Russia) for a contract worth at least $50 million,” Prokhorenko said. “We don’t have any organizations in the oblast that could cope with such huge sums within a year.” Instead of putting in for tenders independently, Sakhalin companies such as Transstroy Sakhalin, Sfera, Grenada and SU 4 are forming joint ventures with large Russian and foreign companies. Other Sakhalin companies that are working as subcon tractors include Spetstransstroy, Mostootryad 2001, the Sakhalin branch of Dalmoststroy, Sakhalinstroyservis, Transgidrostroy and Dalelektromontazh.

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SAKHALIN OIL PRODUCER TAKES WINTER BREAK

A Royal Dutch/Shell led group developing oilfields on Sakhalin has imposed a regular five month halt on production from

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