April 18, 2015
Enron Is Back!
Posted on Jan 29, 2006
Finally, the guys at Enron might get their due. The much anticipated trial of Enron executives, which began Monday in Houston, will star former Chief Financial Officer Andrew Fastow as a key witness. Both former Chairman Kenneth L. Lay and former Chief Executive Jeffrey K. Skilling are expected to deny wrongdoing and allegations that the two lied to employees, investors and just about everyone else about the company’s financial condition. As Enron bosses artificially kept stock prices soaring, the company crumbled from within, eventually resulting in the loss of thousands of jobs and pensions and millions of dollars in stock options belonging to employees and investors. Below is a collection of columns by Robert Scheer about the Enron scandal.
Dec. 11, 2005 | Connect the Enron Dots to Bush
Connect the Enron Dots to Bush
Enron is Whitewater in spades. This isn’t just some rinky-dink land investment like the one dredged up by right-wing enemies to haunt the Clinton White House—but rather it has the makings of the greatest presidential scandal since the Teapot Dome.
Square, Site wide
The Bush administration has a long and intimate relationship with Enron, whose much-discredited chairman, Kenneth L. Lay, was a primary financial backer of George W. Bush’s rise to the presidency.
It was Enron that provided the model for the administration’s trickle-down attempt to revive an economy that’s been in steep decline during Bush’s tenure. That model gives the fat-cat corporate hotshots everything they want in return for bankrolling political campaigns. Not to worry about the rest of us because, hey, what’s good for Enron is good for America. That it hasn’t been is now painfully clear.
What did Enron get in return for its contributions? It got its way on deregulation, for one thing. Remember when the administration refused to assist California and other states during the energy crisis, and consumers paid the steep price?
So greedy was Enron that it locked its own workers into a pension plan based on inflated company stock values and suspect hidden partnerships, while the top leadership led by Lay made out like bandits.
Bush should be called as a witness in the congressional hearings scheduled to unravel this mess. One thing that should come up in the hearings is then-Gov. Bush’s October 1997 telephone call on behalf of Lay to then-Pennsylvania Gov. Tom Ridge to help Enron crack into the tightly regulated Pennsylvania electricity market.
“I called George W. to kind of tell him what was going on,” Lay told the New York Times about the 1997 phone call, “and I said that it would be very helpful to Enron, which is obviously a large company in the state of Texas, if he could just call the governor [of Pennsylvania] and tell him [Enron] is a serious company, this is a professional company, a good company.”
Since we now know Enron lacked those virtues, it’s clear Bush was used to sell a bill of goods to the unsuspecting Pennsylvania folks.
That Lay was instrumental in Bush’s rise to the presidency is indisputable. Since 1993, Lay and top Enron executives donated nearly $2 million to Bush. Lay also personally donated $326,000 in soft money to the Republican Party in the three years prior to Bush’s presidential bid, and he was one of the Republican “pioneers” who raised $100,000 in smaller contributions for Bush. Lay’s wife donated $100,000 for inauguration festivities.
As governor, Bush did what Enron wanted, cutting taxes and deregulating utilities. The deregulation ideology, which George W. long had adopted as gospel, allowed dubious bookkeeping and other acts of chicanery that shocked Wall Street and drove a $60-billion company, seventh on the Fortune 500 list, into bankruptcy.
This emerging scandal makes Whitewater seem puny in comparison; clearly there ought to be at least as aggressive a congressional inquiry into the connection between the Bush administration and the Enron debacle. Facts must be revealed, beginning with the content of Lay’s private meeting with Vice President Dick Cheney to create the administration’s energy policy.
What was Lay’s role in the sudden replacement of Curtis Hebert Jr. as Federal Energy Regulatory Commission chairman? As the New York Times reported, Hebert “had barely settled into his new job this year when he had an unsettling telephone conversation with Kenneth L. Lay, [in which Lay] prodded him to back ... a faster pace in opening up access to the electricity transmission grid to companies like Enron.” Lay admits making the call but in an unctuous defense of his influence peddling said, “The final decision on [Hebert’s job] was going to be the president’s, certainly not ours.” Soon after, Hebert was replaced by Texan Pat Wood, who was favored by Lay.
Other questions: Was there any conflict of interest in the roles played by key Bush aides? Political advisor Karl Rove owned as much as $250,000 in Enron stock. And economic advisor Larry Lindsay and Trade Representative Robert B. Zoellick went straight from Enron’s payroll to their federal jobs.
There are other Enron alum in the administration, including Army Secretary Thomas White Jr., who, as an Enron executive, held stock and options totaling $50 million to $100 million.
We have a right to know whether the Enron alums in the administration were tipped off in time to bail out with profit the way Lay and the other Enron top execs did, while their workers and stockholders—and eventually U.S. taxpayers—are being left holding the suddenly empty bag.
Is Bush Still an Enron Fan?
If you follow George Bush’s thinking on how to fix our broken economy, you would throw a few hundred million in tax breaks to his buddies who bankrupted Enron. Not simply because they bankrolled his ascension to the Texas governorship and the White House but, more important, because they are modern alchemists who make money out of nothing.
Nothing is what Enron is to its once-loyal employees, who lost those private savings accounts that Bush is always touting; some of them will now have to live on Social Security, which the president is seems hellbent on bankrupting.
Nothing is what Enron is to its many small stockholders, including California’s public workers, whose state pension fund was heavily invested in the now-bankrupt company. Nothing is what Enron is to consumers in California and half a dozen other states forced to seek expensive long-term electricity contracts because of Enron’s shenanigans in the energy market.
Nothing is what Enron is to the people of India and other countries, still eating the ashes of spectacular Enron promises.
But Enron’s millions found their way into the bank account of company Chairman Kenneth L. Lay—close family friend and financier of the political careers of Bushes, junior and senior.
Equally fortunate was Jeffrey K. Skilling, the former CEO who masterminded Enron’s meteoric rise and who resigned in August, cashing out tens of millions before Enron’s crash.
Bush’s Army secretary, Thomas White Jr., is another former top Enron executive who also managed to sell his $50-million to $100-million stake in the company well before shares dropped from $90 to 29 cents. Karl Rove, top White House political advisor, had a smaller $250,000 stake that, as far as I can determine, reporters have not asked him about. Neither have they asked Bush’s economic advisor, Lawrence B. Lindsey, or Trade Representative Robert B. Zoellick, both of whom went directly from Enron to the White House, if they are now in the ranks of the suddenly poor.
The most important question for America’s economic future should be directed to the president himself: Does he still believe in the miracle of Enron? Why, after Enron’s collapse, does Bush still insist on a stimulus package that rewards high-flying executives while resisting extending unemployment insurance and medical coverage to workers thrown out of their jobs because of the mismanagement and other acts of economic stupidity by companies like Enron?
“Stupidity” is used charitably, when motives that appear more mendacious will be explored, we hope, by congressional committees planning to get to the bottom of the smelly Enron mess during February hearings.
Can it be a mere intelligence deficit that led Enron’s ex-CEO to claim to the New York Times that he didn’t know how the company came to overvalue its assets to the tune of $600 million, that he didn’t know of the highly suspect investment partnerships conducted by his chief financial officer—his most trusted aide—and that he is without a clue as to the reasons behind Enron’s collapse?
“We’re all trying to figure out what happened,” Skilling said. That eerily dumb if not totally disingenuous statement haunts at a time when we’re trying to figure out what happened to a U.S. economy that has fallen into recession on Bush’s watch.
Enron was Bush’s model for economic progress, and Enron’s Lay was the one individual consulted most closely in private meetings with Vice President Dick Cheney and other top administration officials during development of their environment-busting plan to “solve” our energy problems.
Bush’s Enron advisors were the chief zealots in his kitchen cabinet pushing for unregulated markets combined with tax breaks for rich companies. Enron won handsomely on both counts.
The idea that what’s good for the super-rich is good for the economy remains Bush’s economic mantra. It’s a bankrupt philosophy, as witness the Enron debacle. For an even more ominous example, look no further than the current total collapse of the dramatically deregulated economy of Argentina. Food riots in a once prosperous society are not a pretty sight.
Enron Is a Cancer on the Presidency
By Robert Scheer
Finally, a reporter had the temerity to question Bush on Friday regarding the ignominious collapse of Enron Corp. run by Kenneth L. Lay, a Bush family intimate and top campaign contributor. Bush expressed concern “for the citizens of Houston who worked for Enron who lost life savings” and added: “It’s very important for us to fully understand the ‘whys’ of Enron.”
Sure is, but did Bush never ask “Kenny Boy”—his nickname for Enron’s chairman—what was going on?
After all, not only was Kenny Boy one of Bush’s major contributors, but it was Lay and Enron that Bush turned to for critical advice on how to further exploit U.S. natural resources. The media, which had hounded Bill Clinton on his Whitewater connections, have allowed Bush to maintain the fiction that his—and his father’s—administration had nothing to do with the debacle that is Enron.
Given the intense interest in the list of those who slept over in the Clinton White House, it’s odd that no attention has been paid to Kenny Boy’s sleepover in the early years of the senior Bush’s White House.
Those early Bush years were crucial for Enron, beginning with the passage of the 1992 Energy Policy Act, which forced the established utility companies to carry Enron’s electricity sales on their wires.
At the same time, Wendy Gramm, who served under the elder Bush as chair of the Commodity Futures Trading Commission, allowed for an exemption in the trading of energy derivatives, which, as the Washington Post reported, “later became Enron’s most lucrative business.”
Once that was accomplished, Gramm, wife of Texas GOP Sen. Phil Gramm, resigned from her government post to take a position on the Enron board. As one of the members of the board’s audit committee, she now is expected to be a key figure in the lawsuits and federal investigation revolving around Enron’s collapse. Recently, the chief executive of Arthur Andersen, Enron’s outside auditor, told a congressional committee that the accounting firm had warned the Enron audit committee of what he termed “possible illegal acts within the company.”
Wendy Gramm is also mentioned in a bank lawsuit alleging insider trading as having sold $276,912 in Enron stock in November 1998. Her response is that she sold the stock to avoid the appearance of a conflict of interest, given that her husband was chairman of the Senate Banking Committee.
Yet she was still very much on the Enron board and being rewarded with future stock options when her husband last year pushed through legislation that exempted key elements of Enron’s energy business from oversight by the federal government. Phil Gramm had obtained $97,350 in political contributions from Enron over the years, so perhaps he was acting on his own instincts and not his wife’s urgings. The exemption was passed over the objection of the Clinton administration.
Wendy Gramm also directs the regulatory studies program at George Mason University, which has received $50,000 from Enron since 1996. Her academic institute is highly influential in arguing for deregulation, conveniently joining her corporate and academic interests.
Unfortunately for true-believer deregulators, the Enron collapse shreds their panacea. Surely no one, least of all Wendy Gramm, who has said she was kept unaware of the company’s chicanery in hiding debt and conducting secret private deals to the detriment of stockholders, could argue today with a straight face that Enron was in need of less government oversight.
The fact is that there would be no Enron as we know it were it not for Republican-engineered changes in government regulation that permitted Enron its meteoric growth.
It’s true that the corporation had its allies among the Democrats; campaign finance corruption and influence peddling are generally a cover-all-your-bets bipartisan activity. But in this case, the amounts given to Democrats were puny and late, and there’s no doubt that Enron rode to power primarily on the strength of Lay’s influence with the Bush family. This fact is not mitigated by Enron now hiring Clinton’s former lawyer and various top Democratic lobbying groups, except to note that these hired guns have no shame.
The Bush family ties to Kenny Boy Lay are just too intimate and lucrative to ignore.
There also are at least four Enron consultants and executives who hold high positions within the Bush White House, and some of them may be drawn into the investigations that cannot be avoided, despite the distractions of the war on terror.
As John Dean once famously said of the Nixon administration, there is a cancer growing on the presidency, but in this case it’s name is Enron, and it won’t go away by being ignored.
Let Down His Rich Pals? Over His Dead Body
Talk about the politics of class struggle. George W. Bush now is apparently willing to give his life to make the rich richer. “Over my dead body” was his response to proposals to scale back the $1.35 trillion in tax cuts planned for the next 10 years.
Notice that he didn’t say “over my dead body” will the homeless—many of them actually employed in low-paying jobs—sleep in the snows of Minneapolis because the “faith-based” as well as government shelters are short on funds. Nor is it “over my dead body” that Enron workers will be left holding the bag emptied by the president’s good friend, Kenneth L. “Kenny Boy” Lay. Nor is it “over my dead body” that the Boeing company will be given a $22-billion Air Force contract as it fires thousands of its workers. The president cannot say that “over my dead body” will he forget his pledge to assist seniors with prescription medical costs, save Social Security and revive public education, when in fact his tax cut has made it impossible to deliver on any such promises.
Nope, his is the manifesto of a true son of the super rich who has never known a nanosecond of economic insecurity and genuinely believes that the truly burdened are those with enormous wealth. The truly needy in the Bush lexicon are the very wealthy folks who must be given tax breaks so they may more easily invest in the economy. The rest of us are told it is our patriotic duty to buy things we cannot afford, but the rich can only be expected to invest if it does not cost them anything in after-tax dollars.
With blase arrogance, the president now insists that his skewed tax cut be amplified in the years to come. This is a cheerleader who doesn’t know the game is lost: Unemployment is at a decade high, the huge Clinton budget surplus is now going into deficit, and eight years of buoyant prosperity and growth have been turned into a sour recession.
The fact that none of this gives President Bush pause is the purest indication that he does not, in the least, grasp the suffering engendered by his policies.
It does not have to be this way. The rich can indeed “get it,” as Franklin Delano Roosevelt and many other wealthy American leaders have demonstrated. However, it does take a bit of work to wedge one’s feet into the pinched shoes of the less fortunate—work that the president (like his father before him) has not been inspired to perform.
Perhaps if the media and the Democrats had challenged Bush’s nostrums more forthrightly he could have moved beyond the ingrained smugness of a rich brat.
That did not happen, however, and instead the failure of this administration’s economic policies has been ignored, particularly in the aftermath of Sept. 11. Indeed, that tragedy is turned to the most shameful of partisan political purpose to explain away a recession that began in earnest in March, half a year before the terrorist attack.
It is Bush and not Osama bin Laden who is responsible for subverting the fiscally conservative policies of the Clinton years. A true conservative would say that “over my dead body” would the government siphon the surplus created by Social Security taxes to the pockets of the rich, putting the nation further into the red.
Bush may be the hero of the moment but it won’t be so when future generations try to collect their Social Security checks. If Bush keeps it up he will be remembered as another Herbert Hoover, a president who let the unemployment lines grow while the government went broke catering to the wealthy.
Bush to Lay: What Was Your Name Again?
By Robert Scheer
If you believe President Bush, Kenneth Lay—one of his top financial backers and his “good friend”—was merely an equal-opportunity corrupter of our political system, buying off Democrats and Republicans as needed. It is a convenient claim designed to unlink Bush from the biggest bankruptcy in U.S. history.
But, as the good ol’ boys in Texas—and now Bush spokesman Ari Fleisher—like to say, “That dog won’t hunt.”
On Friday, Bush attempted to distance himself from the Enron scandal by stating that CEO Lay “was a supporter of Ann Richards in my run in 1994,” obscuring the fact that Lay gave Bush three times as much money as he did the Democratic gubernatorial incumbent whom Bush was trying to unseat. Bush added that he really did not get to “know” Lay—the man he nicknamed “Kenny Boy”—until after he won the governor’s race. I can’t speak to the varying levels of intimacy of their relationship, but Bush had considerable contact with Lay two years earlier when the Enron leader served as the chair of the host committee for the 1992 Republican convention in Houston, where Bush the senior was nominated for his second term as president.
At that time, Investor’s Daily reported that “recently, Lay has turned Enron into a corporate bastion for the GOP.” After the elder Bush’s defeat, the Bush family switched its political ambitions to George W.‘s prospects for governor, and Lay came up with the first of many contributions to that effort.
Lay’s loyal support of the Bushes may have been gratitude for the decisive role that the first Bush administration played in Enron’s meteoric rise. Building on the Republican-engineered deregulation of the electricity industry that began in the 1980s, Enron got a huge boost during the first Bush administration with passage of the 1992 Energy Act, which forced utility companies to carry Enron’s electricity on their wires.
In fact, Lay publicly thanked Bush with a column in the Dallas Morning News a week before the 1992 election. Calling Bush “the energy president,” Lay wrote that “just six months after George Bush became president, he directed Energy Secretary James Watkins to lead the development of a new energy strategy.” That resulted in the legislation making Enron’s exponential growth possible.
Lay was effusive in expressing his gratitude, writing that the Bush “strategy is the most ambitious and sweeping energy plan ever proposed.”
That gift to Enron was coupled with a major exemption granted by Wendy Gramm, then chair of the Commodities Futures Trading Commission in the Bush administration, an exemption that permitted Enron to begin lucratively trading energy derivatives. Gramm then joined the board of directors of Enron and served on its auditors committee, where much of the false reporting now being exposed seems to be centered. Her powerful role in the company did not stop her husband, Sen. Phil Gramm (R-Texas), from pushing through legislation that further weakened government oversight of Enron’s activities.
After Bush the elder’s defeat in 1992, the ties between Enron and the Bush camp grew even stronger. In March 1993, Enron hired Bush’s Commerce secretary, Robert A. Mosbacher, and his secretary of State, James A. Baker III, to line up contracts for Enron around the world. As Enron’s representative, Baker—later George W.‘s Florida election strategist—even went on a trip accompanying the ex-president to Kuwait to do big business in the nation Bush had fought the Gulf War to save.
The trip was criticized by Gen. Norman Schwarzkopf, who said that he had turned down millions in proffered deals to do business in Kuwait after the war.
“I represent 540,000 American men and women, not some private company,” said Schwarzkopf. “They were willing to die in Kuwait. Why should I profit from their sacrifice?”
A decade later, the new Bush administration turned immediately to Lay to get his bearings on an energy policy. Lay met with Vice President Dick Cheney’s energy group six times. This was no surprise, given the close ties between Lay and Bush during the latter’s days as Texas governor. Consider, for example, that as governor, Bush did not hesitate to call then-Pennsylvania Gov. Tom Ridge and assure him that Lay—then eager to deregulate Pennsylvania’s electricity market—was the finest of men, representing the most worthy of companies.
Keeping true to family traditions, the president has always aggressively supported far-reaching deregulation of utilities—it is, in fact, his political mantra—and Enron appears to be the biggest benefactor of that philosophy. Whether the contacts between them were actually illegal and not merely an egregious betrayal of Enron’s employees, shareholders and consumers, it remains for the eight investigations planned or underway to reveal what Bush and White House insiders knew, and when they knew it.
Enron Got Its Money’s Worth
By Robert Scheer
One of the major falsehoods being bandied about by apologists for the Bush administration is that while Enron may have bankrolled much of the president’s political career it got nothing for those bucks once George W. occupied the White House.
That is nonsense.
The administration’s energy program, developed by Vice President Dick Cheney in secret meetings—six of them with Enron officials—could have been written by lobbyists for the now failed company. At the behest of Rep. Henry Waxman (D-Los Angeles), the minority staff of the House Committee on Government Reform has prepared a devastating analysis of 17 major concessions made to Enron that gave Kenneth L. Lay, Bush’s intimate friend and Enron chief executive, just about everything he wanted. The report concluded that “it is unlikely that any other corporation in America stood to gain as much from the White House plan as Enron.”
Those Bush administration concessions to Enron included finishing the job of deregulating the electricity market begun by Bush’s father. The senior Bush’s actions had paved the way for the company’s meteoric growth.
George W.‘s energy plan also made it even easier for Enron to sell energy derivatives in the commodity market and pursue other financial shenanigans that had been a major source of profit. The unregulated selling of energy derivatives, an Enron specialty, was celebrated in the Bush energy plan as “sophisticated and customizable.” We now know that practice was so sophisticated that it was the major source of Enron’s paper profits.
Oddly, given that Republicans are presumed to favor leaving power with the states, the Bush energy plan emphasized increased federal power over utility pipelines that forced local utilities to carry Enron’s product. This was an expansion of the “open access” powers granted in the 1992 Energy Policy Act, passed in the first Bush administration. That law undermined the power of local authorities and regional utility companies for the benefit of Enron. In 1999, Enron had defined “open access” as the company’s “single-most important initiative.”
Two years later, George W. delivered. Fortunately this subversion of the political process had a short life because Enron went belly up before Bush could save the company from itself.
But the question remains why Bush, as governor and president, wanted to foist the example of such a despicable corporate player upon the American people as a model for business behavior.
Surely the Enron alums who occupy key positions in the administration knew that the president’s model corporation had avoided paying federal income taxes for four out of the past five years.
Enron even claimed $382 million in government refunds. How dare this president collect taxes from ordinary Americans after touting a company that created 881 offshore dodges to avoid taxes. Few taxpayers can open subsidiaries in the Cayman Islands pretending to do business, but Enron had more than 700 there.
The IRS and Treasury Department under the Clinton administration had attacked the use of such tax dodges and attempted to eliminate them. Bush, however, sought to reward a company that, far more than any of its competitors, took advantage of offshore loopholes. Dynegy, Enron’s lead competitor, had no offshore tax havens, suggesting that it is possible to do business honestly.
But how would Bush know of his pet company’s chicanery, his apologists howl—particularly the talk radio right-wingers who spent eight years skewering Bill Clinton over the most minor transgressions? Bush should have known because his top economic advisor, Lawrence B. Lindsey, who was paid $50,000 in 2000 for consulting work for Enron, went straight from that gig to being head of the White House’s National Economic Council. In the latter capacity, Lindsey wrote a rosy report on Enron’s emerging problems and presented it to the president shortly before the company’s collapse.
Were he and the other Enron alum who hold high positions in the administration lying to the president, or did Bush not want to hear any bad news about his once-favorite company? Either way it smells.
A Walk in the Valley of Greed
What would Jesus do? It’s a no-brainer; he would leave the Christian Coalition, take a consulting job with Enron and then use his divine power to make George W. Bush president.
Read that way, there’s nothing sinister in the recent revelation that it was Bush’s top political advisor, Karl Rove, who in 1997 hooked up former Christian Coalition leader Ralph Reed with Enron. After eight years of making Pat Robertson look good, Reed was exhausted and ready for a career change. The private sector is even more lucrative than televangelism, and Enron was just one of many fat consulting contracts that was Reed’s for the asking.
For the Bush people, it was also a good deal. George W. was still a few years away from announcing for the presidency. In the meantime, it wouldn’t hurt to park the former spokesman for the Christian right with the Bushies’ close friends at Enron. Think of the synergy in that relationship. Two years later, when the campaign was officially announced, Reed would be added to the Bush payroll without having to sever his ties to Enron, since there were lots of other folks in the Bush camp doing the same thing. Reed knew that Bush would win because “He (God) knew that George Bush had the ability to lead in this compelling way.”
But in the interim, a fellow has bills to pay and that Enron consulting job—which paid $10,000 to $20,000 a month and lasted until Enron’s bankruptcy—was a nice little favor.
Of course, that’s not the way White House Press Secretary Ari Fleischer sees it. He ‘fesses up that “Karl Rove gave Ralph Reed a good recommendation” for the Enron job but insists that was only because he was the most qualified. “Ralph Reed is excellent at what he does,” Fleischer opined.
Makes perfect sense. What Reed did before entering the private sector was spread the message of the Gospel, and of course that’s exactly what Enron was looking for. Particularly the commandment that says, “Thou shall not honestly report corporate profits.” Or the other one, “Thou shall not regulate electricity.”
Reed hit the corporate ground running: “I met with three executives at Enron in September of 1997. They wanted assistance in building grass-roots support for electricity deregulation in Pennsylvania, which was supported by then-Gov. Tom Ridge and which, by the way, has become a model for the nation.”
Apparently, Reed was expected to mobilize the state’s Christian right to support deregulation. Unfortunately, Reed is right about Enron’s approach to deregulation becoming a model for the nation—all the way to California and bust.
But why be so modest? It was a hard sell. Otherwise Enron wouldn’t have had to spend all those millions lobbying, not to mention bringing out the big guns, such as then-Texas Gov. George W. Bush, to make its case.
A month after Reed came on board, as Enron’s erstwhile chief executive, Kenneth Lay, tells it, “I called George W. to kind of tell him what was going on, and I said that it would be very helpful to Enron, which is obviously a huge company in the state of Texas, if he could just call the governor [of Pennsylvania] and tell him [Enron] is a serious company, this is a professional company, a good company.”
Darn right it is, or was, “serious,” “professional” and “good” up until the whole dang company mysteriously imploded.
Reed now says he didn’t witness any evidence of wrongdoing during his four years with the company and he is happy to report that Enron paid the bills owed him right up to the day of bankruptcy. Some guys have all the luck.
He’s not alone in that category among the Bush folk. There seems to be no end of Bush administration officials and former campaign consultants who made a bundle off Enron but had not a glimmer of warning that anything was ever wrong.
Even the president himself, who was exchanging chummy birthday cards with his “good friend” and patron “Kenny Boy” Lay, wasn’t clued in enough to save his mother-in-law from losing more than $8,000 on Enron stock. As in a messy divorce, sometimes those closest to the family are the last to know.
So, what would Jesus do? Heck, according to the teachings of the Rev. Pat Robertson, he’d be out there just like Ralph Reed and George Bush serving God and greed—or rather Mammon—in the same moment.
But what would he really do, faced with all those employees who lost their pensions? Jesus would cry.
Enron Flew Under the Radar
Is the Enron story one of outrageous mendacity or stupefying ignorance?
As the case unfolds, corporate whistle-blowers emerge to tell of timely but unheeded warnings of accounting chicanery while the company’s top executives, some now richly retired and others holding high positions in the Bush administration, assume the posture of the three monkeys of evil innocence. Hear no evil, see no evil, speak no evil.
Top Enron executives either were unbelievably stupid or their business practices were deliberately venal to the point of criminality. Of course, that determination will be left to the courts, but what we have learned so far provides a compelling refutation of the central ideology of modern conservatism, that huge corporations function best when freed of governmental oversight.
How opaque and out of control these enterprises must be if those who run them profess such ignorance!
Since the election of Ronald Reagan, the apostles of an unregulated market, lavishly financed by business lobbyists, have demolished barriers to corporate greed and corruption that for most of a century had served this country well.
The Enron debacle is just the most damning in a long list of evidence that the zealots of deregulation did this country, and its free-enterprise system, a terrible disservice. The financial markets are now roiled and may be permanently damaged by profound suspicion of corporate practices on the part of investors, who now realize they have good reason to fear the worst.
The deregulation ideology of modern conservatism, endorsed mightily by our current president, who cited Enron as a model, holds that big business can best police itself and that government regulation is a costly intrusion.
Yet the best case made by Enron’s top executives to explain the ignominious crash of their enterprise is that it was not possible for them to know what was going on.
Clearly, if the bosses could not get at the truth, then outside public surveillance, beyond that of complicit accounting firms, is required.
What better poster child for the failure of corporate self-policing then Enron director Wendy L. Gramm, wife of Texas Sen. Phil Gramm, who came to that $300,000-a-year position immediately upon leaving her post in the first Bush administration as chair of the Commodity Futures Trading Commission.
Commodities trading has been Enron’s most lucrative business. Its enormous profits were made possible by two decisions pushed through the commission by Gramm in the last months of the Bush administration that exempted Enron’s derivative trading from CFTC fraud oversight.
Authority for the CFTC to exempt Enron was provided by a law signed in 1992 by President George Bush, a close friend of Enron Chairman Kenneth L. Lay and a major recipient of Enron campaign contributions. Glenn English, the former Democratic representative from Oklahoma who was one of the sponsors of the original act, warned that the law’s purpose was subverted by Gramm’s rulings, which he predicted accurately “opened the door to serious fraud,” calling it “the most irresponsible decision” that he had come across in his 18 years in Congress.
While serving on the Enron board, Wendy Gramm has been a leading voice in Washington, testifying before congressional committees in favor of across-the-board deregulation of corporate business. Her directorship of the regulatory studies program at George Mason University, which received a $50,000 gift from Enron, has added academic credibility to her testimony.
Yet Wendy Gramm served as a member of the Enron board’s auditors committee that had particular responsibility for making sure that the books were not cooked. That they were cooked and that she, an experienced professional in such matters, now claims ignorance of the company’s nefarious accounting practices, makes a compelling argument for government surveillance.
Enron spells the end of the Reagan revolution, which aimed at giving corporate America a blank check.
For decades, we have been mesmerized by woeful anecdotes of government meddling in the private sector, but now as the Enron scandal unfolds, there’s a growing bipartisan consensus for Congress to do its constitutionally mandated job of regulating the flow of interstate commerce in the public interest.
Otherwise, as Enron demonstrates, corporate greed knows no limits.
Lights Out on Bush’s Excuses
Now that the Enron culprits have been caught red-handed, might not the media inquire of the president whether he takes any responsibility for nearly bankrupting California by refusing to come to the state’s aid in a timely fashion?
Forgotten in all the excitement of the damning revelations of internal Enron memos describing the energy company’s dastardly techniques for market manipulation is the apparent stupidity, if not complicity, of the Bush administration that made Enron’s chicanery possible.
Too rough, am I? Just go back a year, when rolling blackouts were helping to wreck California’s massive economy while the Bush-Cheney team stood insufferably aloof, blaming the victim. Exonerating Enron and other energy traders, President Bush refused to impose wholesale federal price caps to end the gouging. Couldn’t do that, the Bush administration said, because that would intrude on the supremely rational free market. But now we know that the Invisible Hand was actually the grasping tentacle of Enron, and probably other Texas-based energy hustlers, whose antics must have poor Adam Smith spinning in his grave.
A year ago, Dick Cheney said the Bush administration viewed wholesale price caps as “a mistake” because “there isn’t anything that can be done short-term to produce more kilowatts this summer.” Yet, at the same time, Enron was grabbing electricity from California and selling it in Oregon at an obscene profit. Federal price controls would have prevented Enron from playing one state against another. If Cheney didn’t know that, he must not have learned anything from his own enormously lucrative days in the Texas energy racket.
And could Bush himself not have guessed that his Texas buddies were gaming the market? After all, his vaunted business experience was also in Texas—and in the energy industry. But let’s assume he saw no evil when he was on the inside of the energy biz; wouldn’t it have behooved him to have done some due diligence research on his top campaign donor? Could it be that he wasn’t too eager to find out that his political career was hugely indebted to money siphoned from Enron’s apparently ill-gotten gains?
Surely Army Secretary Thomas E. White could have tipped off his commander in chief to what was brewing, since he had been recruited by the administration from his position as head of Enron Energy Services—a subsidiary of the collapsed energy giant—which was deeply involved in ripping off California consumers.
Or maybe Poppy Bush could have warned his son, since as president he had signed into law the 1992 Energy Policy Act, which opened the way for electricity to become a tradable commodity, and an appointee of his, Commodity Futures Trading Commission Chairwoman Wendy L. Gramm, had sealed the deal by exempting electricity trading from the regulatory oversight afforded other commodities. (Gramm, wife of a Texas senator, herself moved on quickly to join Enron’s board of directors, even serving as a member of the board’s ill-fated audit committee.)
In any case, during its first year, the younger Bush’s administration catered to every whim of Enron chief and Bush family sponsor Kenneth Lay. After six meetings with Lay and other Enron executives, Cheney came up with an energy plan that did nothing for California but used the state’s woes as justification for nuclear power and further deregulation, accompanied by the planned rape of pristine wilderness areas.
Out West, California officials were spending billions of taxpayer dollars to secure power to keep vital services functioning, while inside Enron a memo admitted that the company “may have contributed” to a Stage 2 power emergency, pushing the state to the brink of widespread blackout. If some wacko damages a transformer in a hospital to cause a power outage, it’s jail time. But these Enron characters deliberately denied Californians energy needed to sustain life while Bush blithely covered for them.
Another memo detailed the company’s so-called Death Star strategy: jamming transmission lines in order to collect payments for fixing problems they created.
When the mob does things like this, we call it blackmail and extortion. Now that a glossy corporate giant cozy with the president has done such things, what does the Justice Department propose we call them?
A year ago, California Gov. Gray Davis told Bush: “We are literally in a war with energy companies that are price-gouging us; many of those companies are in Texas. You didn’t create this problem, but you are the only one who can solve it. And with all due respect, Californians want to know whether you’re going to be on their side.”
The president wasn’t.
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