Enron
for Dummies
by Michael I. Niman, ArtVoice,
2/7/02, HighTimes OnLine, 2/13/02
During the last year Enron played a pivotal role in writing the Bush
administration’s new energy policy – a policy that deregulated energy
industries while removing government oversight. They were also the largest
corporate player responsible for California’s 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, Enron’s soirée ran its course,
crashing and burning with the fury of the Hindenburg, channeling the flames of
hell directly into the Bush White House where they’re 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 Whitehouse 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 ‘90s as a star among new economy
corporations. Like Nike and Tommy
Hillfiger, 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 high flying 90s, transforming themselves into the
ultimate weightless corporation, buying and selling anything and everything
ranging from energy futures to internet bandwidth, while essentially producing
almost nothing. On paper they were
worth more than GM, 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 didn’t 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
nation’s 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 California’s electricity continued to flow from the
same generating plants it always came from, into the same homes where it was
always consumed. Enron didn’t
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-off –
dwarfed only by the S&L crisis of the 1980s.
California’s 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 power – a move that added to
Enron’s financial woes as electric demand and prices dropped.
Despite the personal pain and economic mayhem, Enron’s
California fiasco violated no laws. Years
earlier, California, 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 California’s power.
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 a corporate accrual of political power
unprecedented in American history. A
quick look at George W. Bush’s White House illuminates both Enron’s power
and their plans.
Enron’s Boyz
in DC
Enron and Enron CEO Ken Lay together donated $113,800 to the recent Bush
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
Vermont Congressperson Bernie Sanders, they donated nearly $6 million to both
the Republicans and Democrats during the past year. Enron’s accounting company, Arthur Anderson, showered
another $5 million on the two parties while at the same time looking the other
way as Enron overstated its profits and defrauded its investors.
Enron’s political investments paid off in spades.
Enron advisor Lawrence Lindsey became George W. Bush’s economic
advisor, taking an Enron energy policy proposal and incorporating it into
Bush’s election platform along the way. Another
former Enron Advisor, Robert Zoellick, became Bush’s 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 there’s Bush’s
Wacko Treasury Secretary Paul O’Neill, the former CEO of Alcoa Aluminum.
His lobbying company, Vinson and Elkins, was the third largest
contributor to Bush’s presidential campaign, hence the honcho position at the
Treasury Department. Enron was one
of Vinson and Elkins’ largest clients.
The list goes on. Bush’s
chief advisor, Karl Rove, owned a quarter million dollars of Enron stock, with
nobody knowing for sure when he cashed out.
Bush’s campaign advisor, Edward Gillespie, took a half-million dollars
from Enron as a lobbyist after Bush was elected.
Texas Republican Senator Phil Gramm’s wife Wendy was on Enron’s board
of Directors, compensated to the tune of about $1 million for her service to the
corporation. Immediately before joining Enron’s board in 1993, she
worked as chair of President Bush Senior’s (the Bush who was elected)
Commodity Futures Trading Commission, where she fought to eliminate energy
futures contracts from governmental oversight.
Other Republican homies on the Enron payroll include pundit Wiliam
Kristol, public opinion pollster Frank Luntz and speechwriter/talking head Peggy
Noonan. Even Harvey Pitt, the head
of the Securities and Exchange Commission, the federal agency in charge of
policing stock transactions such as the Enron insiders’ sell-off, turns out to
be part of the Enron family. Before
taking of the SEC, he worked for Enron’s accounting firm, the Arthur Anderson
company. That’s the same company
responsible both for Enron’s “aggressive accounting practices,” and for
shredding documents associated with these practices.
Enron’s 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 Bush’s son,
George Junior, contacted him on behalf of, yep, you guessed it - Enron.
It seems young George was aggressively using his family’s 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 Enron’s top brass, however, such
denials must be taken with a grain of salt.
President Bush is also, by all accounts but his own, quite cozy with Enron’s
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 Enron’s political PAC donated $12,500 to Richards’ campaign, while
showering the Bush campaign with $146,500.
So much for presidential credibility.
Bush is Enron’s 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 million dollars – this
despite 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 wasn’t 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 oil man himself, met with Enron officials at least six times while drafting
the Bush administration’s national energy policy.
The Bush administration also sat out last summer’s California energy
debacle while Enron savaged the
nation’s most populous state, costing California’s ratepayers billion’s of
dollars while Enron’s stocks soared.
Good Riddance!
Now Enron is down for the count in bankruptcy court.
The lies piled higher and higher upon each other, eventually smothering
the paper giant as execs looted the palace – and the whole house of cards came
tumbling down. It’s the largest
bankruptcy in American history. Enron
is dead. But make no mistakes about it – this is a good thing.
I spit on their proverbial grave and wish good riddance to them.
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 Enron’s Potemkin empire came crashing down – I have no sympathy
for them either. Enron was not a
widget maker – they were the ultimate racketeers. Enron’s 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 they’re left
with nothing. No money, and from
me, no sympathy.
Unfortunately, institutional investors such as pension plans and mutual funds
owned 64% of Enron’s stocks. Again,
however, the issue of personal responsibility arises.
Investors need to research their mutual funds to make sure their own
money isn’t 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. It’s Eleven
o’clock – do you know where your money is?
As much as those in power would like us to forget about Enron, the energy
giant’s collapse will go down as a watershed in American history.
There is no magic in an unregulated free market – it’s just a
mugger’s 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, possibly louder
than that of the World Trade Center, corporate misbehavior and greed is finally
on the national radar. Hopefully
not even a war can distract us from this debacle.
Dr. Michael I. Niman’s articles are archived at http://mediastudy.com/articles
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