- © Copyright 2002, All Rights Reserved, Michael C.
Ruppert and From The Wilderness Publications, www.copvcia.com. May be
or distributed for non-profit purposes only. May not be posted on any
web site without express written consent.
- (FTW) - Even as Attorney General John Ashcroft today
recused himself from involvement in any Justice Department investigation
into the mushrooming Enron scandal, larger conflicts of interest -
more damaging to the Bush Administration -- are becoming increasingly
The conflicts involve the Chairman of the Securities and Exchange
(SEC), Harvey Pitt and the head of Congress' investigative arm, the General
Accounting Office (GAO), David Walker. Both agencies are charged with
allegedly criminal behavior by the energy trading firm, once the seventh
largest company in America, which has now become the single largest
in world history and may soon become the largest financial and political
scandal in American history.
- As new revelations of Enron s unethical and insider-based
improprieties, apparently facilitated by more than $2 million in Bush
donations, continue to flash across TV screens on a daily, sometimes
basis -- more serious allegations of criminal money-laundering activities
by a respected financial expert suggest that what is already known about
Enron s behavior is but the barest tip of a razor sharp iceberg that could
sink the Bush presidency.
- Spokespersons for Pitt and Walker both denied to FTW
in interviews on January 10 that there is any reason for the heads of these
two agencies, long regarded as the last and best protections against
government corruption, to recuse themselves from Enron investigations even
though their respective agencies have key statutory obligations to
the growing scandal.
- SEC Chairman Harvey Pitt, who took office in August of
this year, after most of the acts leading to the Enron collapse had been
committed, was, according to a Jan. 9, 2001 report by the Center for Public
Integrity, a partner in the law firm of Fried, Frank, Harris, Shriver and
Jacobson. In that capacity he represented accounting firm Arthur Andersen,
Enron s auditor, which disclosed in a press release dated yesterday, that
in recent months individuals in the firm involved with the Enron
disposed of a significant but undetermined number of electronic and paper
documents and correspondence related to the Enron engagement.
- This is significant because Andersen, one of the big
five accounting firms, had routinely signed off on falsified financial
statements concealing almost $20 billion in off-balance-sheet debt from
stock and bond holders, regulatory agencies and Enron employees. Many of
Enron s pre-bankruptcy 20,000 employees were barred by the company from
cashing in their 401(k) retirement plans, primarily consisting of Enron
stock, while key executives including Chairman Kenneth Lay, former
and CEO Jeff Skilling, and CFO Andrew Fastow reportedly personally made
more than $1 billion selling Enron shares before the collapse.
- SEC spokeswoman Christi Harlan told FTW, "The
filed an agreement that he would recuse himself from votes in any matters
where he had a conflict of interest. The investigation is being run by
the enforcement division and they keep him [Pitt] advised.
- "Once the Commission launches an investigation to
go forward they just do their thing. There's no requirement for a vote
until an action is recommended.
- Harlan stated that the enforcement division acts
from any input from the Chairman s office and that the head of the division
has management oversight for any investigations. This appears to be a
SEC practice from the long-respected partnership of SEC chairman Arthur
Levitt and enforcement director Richard Walker who were known as a team
for their single-minded and thorough non-partisan investigation of
violations in the 1980s and 90s. Walker was recruited by Deutschebank
after the attacks of September 11th, 2001.
- When asked if, in spite of his past representation of
Andersen, Pitt was confident that there would be no conflict of interest
or any resultant influence on the Enron probe, Harlan said,
Comptroller General of the United States David M. Walker, who heads the
GAO, has an even more obvious dilemma. Until November 9, 1998 he was a
partner, board member and global managing director at Andersen. As
questions bubble about Andersen's possible complicity in Enron's criminal
falsification of financial statements Walker s past relationship with
management raises a question about his own ability to investigate in an
- GAO spokesman Jeff Nelligan told FTW, There is no link,
no reason to recuse at all. When Mr. Walker was at Arthur Andersen he had
nothing to do with Enron and he left well before all of this took place.
He's been gone for three plus years now.
- The possibility that Walker had no knowledge of Enron
activities (Enron was Arthur Andersen s second largest account paying
some $52 million last year) is questionable given his position as a
and board member. And the statement that he was not at Andersen when
financial statements were being falsified is flatly contradicted by a 2001
Enron corporate filing with the SEC (form 8-K) which states that Enron
will restate its financial statements from 1997 to 2000 and the first and
second quarters of 2001 to account for the fraudulent or grossly negligent
financial statements given to the SEC by Enron executives and certified
- Walker was on the board of Andersen for almost two years
while Enron was cooking the books and Andersen was signing off on
- Many of the Andersen connections and possible
have been noted by Rep John Dingell (D), MI the ranking member of the House
Energy and Commerce Committee. On December 5, 2001 Dingell wrote to Pitt
with a series of detailed accounting questions that, when addressed in
any one of eight announced Enron investigations, cannot help but draw
deeper into the controversy.
- THE ENRON ADMINISTRATION
- A January 3 letter from Vice President Dick Cheney
CEO of oil construction giant Halliburton) to California Congressman Henry
Waxman disclosed that between January and September of 2001 Enron
including Lay, had met on six occasion with Cheney s National Energy Policy
Development Group. The letter did not disclose details of the meetings
but did reveal that the last such meeting occurred on October 10th just
six days before Enron publicly announced the hidden debt, triggering the
collapse of its share price.
- The October 10th meeting was approximately two weeks
before Enron s Chair, Ken Lay made calls, as reported by the Associated
Press on January 10, to Treasury Secretary Paul O Neil and Commerce
Don Evans to discuss the fallout from Enron s pending collapse. Lay is
a long-time personal friend of George Herbert Walker Bush and has headed
the company which has given over $2 million in hard and soft campaign
to George W. Bush and the Republican Party since 1999.
- A pending constitutional crisis loomed this summer as
the GAO and Waxman moved closer to suing the Vice President for refusing
to let Congress know what his energy task force was debating behind the
same closed doors that proved to be no barrier for Enron. Waxman s letters,
frequently copied to Dingell and Walker, established a robust paper trail
closing off avenues of escape for the Administration in its repeated
- A January 10th letter from Waxman to Attorney General
John Ashcroft inquiring about his acceptance or more than $75,000 in
contributions from Enron during his 2000 Senate campaign from Missouri
was followed, within hours, by Ashcroft s announcement that he would have
nothing to do with the Justice Department's investigation of Enron.
Ashcroft has chosen the less aggressive investigatory tactic of creating
an in-house task force to investigate Enron, rather than empanelling a
grand jury capable of bringing criminal charges.
- As of press time the Department of Justice has not
a call from FTW asking why the less aggressive approach was chosen.
- Other Bush figures connected to or having a financial
stake in Enron include Presidential advisor Karl Rove, U.S. Trade
Robert Zoellick (formerly on Enron's advisory council) and
Secretary of the Army Thomas White who is a former Enron executive.
Lindsay, the President's economic advisor, formerly served on an Enron
advisory board. The newly elected Chairman of the Republican Party (RNC),
former Montana Governor Marc Racicot, is Enron s former chief lobbyist
with the firm of Bracewell and Patterson. Racicot has indicated that he
will not sever his relationships with the firm and may continue to lobby
as he leads the Republican Party. As RNC he has unobstructed access to
all key decisions and votes made by Republican members of Congress.
- Racicot is not subject to any governmental regulation
or oversight because he is not a federal employee.
- Enron influence throughout the Bush Administration is
nearly ubiquitous. Several news stories have reported that CEO Lay, who
had supported Bush since his first run for Texas Governor has actually
cast an imperial thumbs up or thumbs down on cabinet-level appointees and
key regulatory officials including the head of the Federal Energy
Commission which controls electrical rates for providers and oil, gas and
electricity movements throughout U.S. markets.
- CUTTING TO THE CHASE AND CLUES OF GREATER
- When asked about Justice's decision to create a task
force instead of convening a grand jury, a former federal prosecutor with
experience in government corruption and energy matters told FTW, on
of anonymity, "I'm a little relieved by Ashcroft s recusal but a
task force is not a grand jury and cannot charge criminal offenses. There
is still one or more steps removed from actual criminal charges. Given
the evidence of criminal behavior a task force, then, is less than a
solution. It's not really any solution.
- The former prosecutor added that Andersen's destruction
of records, "is extraordinary." Andersen has known for many
months that documents in their possession might very well become the
of civil and criminal discovery. It was incumbent upon Andersen, at the
moment that it knew that these documents might become a part of litigation,
to suspend their records retention schedules. It was Andersen's lawyers'
duty to advise Andersen to err on the side of retention. That is considered
'best practices' for record retention in virtually every major company.
The decision makers who failed to flag the documents at the proper time
critically ill served the partnership.
- Catherine Austin Fitts, a former Assistant Secretary
of Housing and Urban Development (HUD) and a past Managing Director of
the Wall Street investment bank Dillon Read noted that Enron's trading
patterns, internet money movements and [other activities] were consistent
with a large-scale money laundering operation.
- She told FTW, "The fact that subpoenas were not
issued months ago to obtain all Enron Online off shore and onshore digital
and paper trading records and corresponding bank records defies logic,
unless one presumes that Enron's generous donations have bought them time
for a shredding party that protects all the beneficiaries of the real
that flowed through the Enron money pipeline. If my years working on the
clean up of BCCI and the S&L crisis taught me one thing that I would
communicate today to the shareholders, retirees and employees who have
been harmed, it is this: People like the people on the board of Enron
make money on insider trading, bid rigging and fraud, and they do so with
help from the highest levels. They are superb at financial fraud because
they are superb at persuading people that they are respectable and
The money they steal buys a lot of respectability.
- "Presume the worst form of fraud and criminal
is plausible. If not, then we are looking at gross negligence that,
to traditional standards of fiduciary responsibility, in fact constitutes
criminality and fraud. Either way the specifics come out -- intentional
fraud or gross negligence -- the Enron board and management are criminals.
That is a fact. The rule of law says that they should be held to the same
standards of accountability as the millions of people they and their institutions have evicted from their homes, thrown into jail, denied health c
jobs or had burnt at the proverbial stake. The rule of decency says that
any American who will continue to do business or associate with these
is part of the culture of corruption that has neatly disconnected action
- "I will bet every last dollar I have that Enron
was the largest laundromat of stolen and tax evading dollars in American
history and that the Department of Justice's primary goal is cover-up ---
to make sure that the money trail disappears forever.
- Fitts is also well qualified to speak on issues of
impropriety. She has recently successfully beaten a five-year Department
of Justice attempt to destroy her reputation after she had discovered
of government funds and other improprieties at HUD in the mid 1990s. Her
ordeal has recently resulted in statements completely exonerating her and
revealing that there was no legal basis for the government to have begun
the investigations of her company, Hamilton Securities, in the first place.
Emerging from the ordeal as a recognized innovative thinker on economics,
Fitts routinely consults with major economic-financial research groups
in the U.S. and Europe and has just participated in the New York Times
drug policy forum with Nobel Laureate, economist Milton Friedman.
- Michael Ruppert is the Publisher/Editor of From The
a monthly newsletter read in 27 countries and by two committees and 20
members of the U.S. Congress. He may be reached at
- The FTW web site is located at http://www.copvcia.com/www.copvcia