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Enron For Dummies -
Types Screwed Millions Out of Billions
By Michael I. Niman
HighTimes.com
2-15-2
| During the last year, Enron played a pivotal role in writing
the Bush administrationís new energy policyña policy that
deregulated energy industries while removing government oversight. They
were also the largest corporate player responsible for Californiaís
recent "energy crisis." Ostensibly in the business of buying
and selling energy on the new open market, they also regularly purchased
political clout on the electoral auction block by bankrolling political
campaigns on both the local and national levels, buying the affection of
politicians like drunken sailors at a bordello. All the while, however,
they enjoyed relative obscurity, flying below the radar of the national
consciousness and its media sculptors. Like all good parties, Enronís soirÈe ran its course, crashing and burning with the fury of the Hindenburg, channeling the flames of hell directly into the Bush White House, where theyíre now burning out of control, threatening to consume the dogma of free-market economics while exposing a level of influence-peddling and corruption shocking even to seasoned White House observers. Suddenly a bleary-eyed America is waking from its stupor, mumbling, "En-what?" What or Who Is Enron? Enron emerged from the high-flying ë90s as a star among "New Economy" corporations. Like Nike and Tommy Hilfiger, factory- less companies that contract out for products they subsequently brand, Enron essentially produces nothing. Nike buys and sells sneakers. Enron trades energy. Originally an oil-pipeline company, they shed most of their bulky physical assets during the ë90s, transforming themselves into the ultimate weightless corporation, buying and selling anything and everything from energy futures to Internet bandwidth. On paper they were worth more than General Motors, but in reality, the company held few assets other than a handful of generating plants. Enron was a paper tiger. Their product was also nonexistent. They didnít invest, for example, in building a new energy grid or significant new generating stations. To the contrary, they invested in the concept of an energy shortage. They bought energy, eventually taking control of approximately 25% of the nationís wholesale electricity supply. They then reaped astronomical profits last summer selling this electricity to brownout-plagued Californians, with prices shooting up into the stratosphere. The irony is that Californiaís electricity continued to flow from the same generating plants it always came from, into the same homes where it was always consumed. Enron didnít build new generators or power lines. No. They simply inserted themselves, on paper, between the generators and the consumers, in what historians will no doubt record as a brilliant and sinister paper shuffle. Electric flow stayed the same. All that changed was the concept of what electricity was and who could own and trade it. In the end Enron became the central player in a gargantuan rip-offñdwarfed only by the S&L crisis of the 1980s. Californiaís soaring electric rates sent its economy, the fifth largest in the world, into a tailspin. Power-starved manufacturers laid off thousands of workers. Scores of small businesses, unable to keep up with their electric bills, filed for bankruptcy. And working Californians were forced to choose between food and electricity. Many chose food and conservation, in effect boycotting overpriced powerña move that added to Enronís financial woes, as electricity demand and prices dropped. Despite the personal pain and economic mayhem, Enronís California fiasco violated no laws. Years earlier, the state government, seduced by false promises of cheap electricity, adopted a Republican energy-deregulation plan that opened the door for Enron and its imitators to seize control of Californiaís power supply. When the good ship Enron came crashing down, they were in the process of trying to do to the nation what they did to California. Key to their plan was an accrual of corporate political power unprecedented in American history. A quick look at George W. Bushís White House illuminates both Enronís power and their plans. Enronís Boys in DC Enron and Enron CEO Ken Lay together donated $113,800 to Bushís 2000 presidential campaign, and another $888,265 to the Republican National Committee, while hedging their bets by showering the Democratic Party with spare change. In all, according to Rep. Bernie Sanders (I-VT), they donated nearly $6 million to both the Republicans and Democrats during the past year. Enronís accounting company, Arthur Andersen, showered another $5 million on the two parties, while looking the other way as Enron overstated its profits and defrauded its investors. Enronís political investments paid off in spades. Enron advisor Lawrence Lindsey became Bushís economic advisor, taking an Enron energy-policy proposal and incorporating it into Bushís campaign platform along the way. Another former Enron advisor, Robert Zoellick, became Bushís federal trade representative. Bush's secretary of the Army, Thomas White Jr., is a former vice-chair of Enron, who in recent months cashed out his $50 million-plus worth of Enron stock before the share price dropped from $90 to 29 cents. At the Pentagon, White argued for privatizing energy systems at military bases. Then thereís Bushís wacko Treasury Secretary, Paul OíNeill, the former CEO of Alcoa Aluminum. His lobbying company, Vinson and Elkins, was the third-largest contributor to Bushís presidential campaign, hence the honcho position at the Treasury Department. Enron was one of Vinson and Elkinsí largest clients. The list goes on. Bushís chief advisor, Karl Rove, owned a quarter-million dollars of Enron stock, with nobody knowing for sure when he cashed out. Bushís campaign advisor, Edward Gillespie, took a half-million dollars from Enron as a lobbyist after Bush was elected. Texas Republican Senator Phil Grammís wife, Wendy, was on Enronís board of directors, compensated to the tune of about $1 million for her service to the corporation. Immediately before joining Enronís board in 1993, she worked as chair of President Bush Seniorís Commodity Futures Trading Commission, where she fought to eliminate energy-futures contracts from governmental oversight. Other Republican homies on the Enron payroll include pundit William Kristol, public opinion pollster Frank Luntz and speechwriter/talking head Peggy Noonan. Even Harvey Pitt, the head of the Securities and Exchange Commissionñthe federal agency in charge of policing stock transactions such as the Enron insidersí sell-offñturns out to be part of the Enron family. Before taking of the SEC, he worked for Arthur Andersen. Thatís the same company responsible for Enronís "aggressive accounting practices," and for shredding documents associated with these practices. Enronís Boy in the White House It gets thicker. Even the president himself seems to have the Enron mark branded on his butt. According to Rodolfo Terragno, an Argentine Cabinet minister during the Reagan years, then Vice President and former CIA director George Bushís son, George W., contacted him on behalf of, yep, you guessed itñ Enron. It seems young Dubya was aggressively using his familyís clout and his position as the Vice Presidential son to close a pipeline-construction deal for Enron. Today Enron executives deny ever having employed George W. Bush in any capacity, either as an employee or as a consultant. With your average crackhead now having more credibility than Enronís top brass, however, such denials must be taken with a grain of salt. President Bush is also, by all accounts including his own, quite cozy with Enronís former CEO, Ken Lay, the corporate captain who cashed out and bailed just as the ship was going down. Though Bush had previously identified Lay as a close friend, referring to him as "Kenny Boy," after the Enron crash he claimed to only be a passing acquaintance, arguing that Lay supported his opponent, Ann Richards, during his 1994 gubernatorial race. In reality, Lay and Enronís political PAC donated $12,500 to Richardsí campaign, while showering the Bush campaign with $146,500. So much for presidential credibility. Bush is Enronís boy. So what did Enron get for all their investments? Well for starters, the Bush "economic stimulus" plan, if passed, would have the Feds cut a check to Enron for $254 millionñdespite the fact that they used over 600 offshore subsidiaries in a successful scheme to avoid paying any federal taxes for four out of the last five years, a period when their profits soared. But Enron wasnít content to simply raid the public till. More importantly, they used their influence to shape federal energy policy, opening the door for Enron to take their Californian scam to a national level. Vice President Dick Cheney, an oilman himself, met with Enron officials at least six times while drafting the Bush administrationís national energy policy. The Bush administration also sat out last summerís California energy debacle while Enron savaged the nationís most populous state, costing Californiaís ratepayers billionís of dollars while Enronís stocks soared. Good Riddance! Now Enron is down for the count in bankruptcy court. The lies piled higher and higher, eventually smothering the paper giant as execs looted the palaceñand the whole house of cards came tumbling down. Itís the largest bankruptcy in American history. Enron is dead. But make no mistakes about itñthis is a good thing. Enron was the ultimate parasite. They were in the process of doing to the nation what they did to California. For America to live and prosper, they had to die. No one should lament this loss. Especially not Californians, who just saw their wholesale electric rates drop by well over 20% in the wake of the Enron collapse. As for the so-called "poor" Enron employees who lost their retirement savings as Enronís Potemkin empire came crashing downñI have no sympathy for them either. Enron was not a widget makerñthey were the ultimate racketeers. Enronís employees, more than anyone else, knew what Enron was about. They saw their pension funds magically shoot up like bottle rockets as countless Californians lost their jobs, their businesses, and, in some cases, their life savings. Yet they happily stayed vested during these golden days. Ultimately they were victims of their own greed. It might sound cold, but to hell with them. Not only did they choose to work for Enron, possibly an unavoidable decision in some cases, but they chose to invest in Enron as well. Their investments were hurting people. Their work for Enron was hurting people. Their company tried to suck the wealth from society while producing nothing. In the end theyíre left with nothing. No money, no sympathy. Unfortunately, institutional investors such as pension plans and mutual funds owned 64% of Enronís stocks. Again, however, the issue of personal responsibility arises. Investors need to research their mutual funds to make sure their own money isnít undermining their interests and moral beliefs. People also need to get more involved with their own pension-plan management and loudly voice their beliefs and concerns. Itís 11 oíclockñdo you know where your money is? As much as those in power would like us to forget about Enron, the energy giantís collapse will go down as a watershed in American history. There is no magic in an unregulated free marketñitís just a muggerís paradise. Corporations might be running the government, but their own investors have lost both their confidence and their trust in them. Most importantly, with Enron crashing down with an apocalyptic thud, corporate misbehavior and greed is finally on the national radar. Hopefully not even a war can distract us from this debacle. http://www.hightimes.com/News/2002_02/enron.html |
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