(SmartMoney.com published the following Dow Jones article on January 24.)
WASHINGTON, D.C. — President Bush’s nominee for Treasury secretary and other directors of a gas-utility company were sued in a class-action securities-fraud case in the early 1990s, Friday’s Wall Street Journal reported.
John Snow was a director and a member of the audit committee of Columbia Gas System Inc., one of the country’s biggest gas utilities, when it reported a massive loss due to adverse movements in natural-gas prices in June 1991. It filed for bankruptcy-court protection a month later.
Shareholder suits are common when a company’s stock plunges, and there is no indication Mr. Snow — who now is chief executive of CSX Corp., and is widely expected to be confirmed — played a direct role in causing Columbia’s problems. He “was a recent board member at the time,” a White House spokeswoman said. “Many of the issues in the lawsuit preceded his directorship. The company denied all the claims and settled the matter. The Securities and Exchange Commission reviewed it and didn’t take any action.”
Still, Mr. Snow’s record as a director and executive are under scrutiny because of heightened corporate-governance standards in the wake of Enron Corp.’s collapse and because the Bush administration has championed him as a governance leader. He already faces questions over his governance record at CSX.
(Wall Street Journal Staff Reporter Greg contributed to this report.)