Cut beef into 1-inch pieces. Heat oil in 10-inch skillet until hot. Cook and stir beef in oil over medium heat until brown on all sides, about 15 minutes.

Add water, bay leaf, 1 teaspoon salt and the red pepper. Heat to boiling; reduce heat. Cover and simmer 45 minutes.

Drain beef, reserving broth. Add enough water to reserved broth to measure 2 cups. Mix beef, broth and remaining ingredients. Pour into ungreased 2-quart casserole. Cover and bake at 350 degrees F until liquid is absorbed — 45 to 50 minutes.