Senior energy executive commits suicide

5 June 2002 – Charles Dana Rice, a senior executive at El Paso Corp., the natural gas pipeline and energy trading company, committed suicide on Monday.

The body of Charles Dana Rice, senior vice president and treasurer of El Paso, was found in his Houston home on Sunday afternoon. The office of the Medical Examiner of Harris County in Houston said Tuesday that Rice died of a self-inflicted gunshot wound to the head.

The news led to further selling of El Paso stock, which dropped below $20 for the first time since August 1996.

The news is a another blow to the troubled US energy trading market and follows suicide of former Enron Corp. Vice Chairman J. Clifford Baxter in January, who shot himself in the head while parked in his black Mercedes.

It was unclear whether the latest death was linked to the problems that have vexed El Paso and its energy industry peers.

A source close to the company said Rice, 47, had suffered serious health problems and had undergone surgery last year.

“We have no indication that Dana’s death has anything to do with the company or the results of the company or the financial condition of this company,” said El Paso spokeswoman Norma Dunn.

The Harris County Medical Examiner’s Office said a full autopsy had not yet been completed and that it could not confirm the death as a suicide.

COMPANY ‘DEEPLY SADDENED’

Houston-based El Paso, owner of the nation’s biggest interstate natural gas pipeline network, said it was “deeply saddened” by Rice’s death. The company also described the plunge in its stock price as unwarranted.

“Dana was a tireless worker, a valued contributor and will be missed both as a business associate and as a friend. Our hearts and prayers are with his wife and their family,” El Paso Chief Executive William Wise said in a statement.

El Paso said it was making good progress on a restructuring plan announced last week and that there was no new undisclosed information that investors should be concerned about.

The energy trading industry has been rocked by a widening scandal that began with last year’s collapse of Enron, the largest energy trader at the time.

Enron filed the largest bankruptcy in US history in December amid revelations it engaged in off-balance sheet transactions to hide debt and inflate profits.

Analyst John Olson, who follows El Paso for Sanders Morris Harris, said any comparisons with Baxter and Enron appeared to be misplaced. He said Rice had become depressed after his health problems persisted despite surgery last year.

“This is just a tragic case of somebody who was a very nice person, very highly regarded at El Paso… He was just feeling miserable,” Olson said.

Rice became depressed after he suffered kidney failure, and almost died from an operation last year, Olson said. He had congenital heart problems and arteriosclerosis, he said.

In recent weeks regulators have been probing “round-trip” energy trading in which companies took part in profitless electricity and gas deals to boost trading volumes and revenues.

News of the bogus trades contributed to the resignations of chief executives at Dynegy Corp. and CMS Energy Corp. El Paso said it did not do any such sham trades.

The trading scandal has further undermined investor confidence in the energy marketing and trading sector, which was already hurt by Enron’s collapse and a series of credit rating downgrades.

SLASHING TRADING JOBS

El Paso shares fell sharply last week after the company revealed its earnings for the next two years would fall short of Wall Street’s expectations, prompting it to slash its energy trading operations in half by cutting 300 jobs.

In another blow, the Federal Energy Regulatory Commission ordered El Paso to change shipping policies on its pipelines carrying natural gas to California, saying they were unjust and had aggravated that state’s power crisis.

Dunn declined to provide further details about Rice’s death.

“We’re trying to protect the privacy of his family. They need our prayers and support right now,” she said.

A security guard standing outside Rice’s Houston home said the family would not make any statements.

Rice joined El Paso in 1977, became director of the company’s planning department in 1992, director of the accounting department in 1996 and vice president and treasurer in 1998. He was appointed senior vice president in 1999.

Baxter, who resigned from Enron eight months before his suicide, left a suicide note that made no direct mention of his former employer’s problems.

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