The Story of ENRON

HOUSTON -- Arthur Andersen may face U.S. Securities and Exchange Commission sanction and shareholder lawsuits because it certified Enron Corp. financial reports that the company disavowed last week as inaccurate, legal and accounting experts said.

Andersen, the world's fifth-largest accounting firm, served as Enron's outside auditor for more than a decade. Last week, the company reported that it overstated earnings by $586 million over 41/2 years, inflated shareholder equity by $1.2 billion because of an "accounting error," and failed to consolidate results of three affiliated partnerships into its balance sheet.

Enron restated its financial reports as the company suffered a cash crisis triggered by disclosure of the cut in shareholder equity and the start of an SEC investigation.

"I'd be very surprised if the SEC didn't go after Arthur Andersen," said Alan Bromberg, securities law professor at Southern Methodist University.

Andersen partner David Tabolt has said the firm is cooperating with a special committee of Enron's board of directors appointed to investigate the accounting problems.

Lynn Turner, who was the SEC's chief accountant for three years until he resigned in August, said Enron and Andersen ignored a basic accounting rule when they overstated shareholder equity.

Explaining the equity reduction last week, Enron said it had given common stock to companies created by Enron's former chief financial officer in exchange for notes receivable, and then improperly increased shareholder equity on its balance sheet by the value of the notes.

"What we teach in college is that you don't record equity until you get cash for it, and a note is not cash," said Turner, who is now director of the Center for Quality Financial Reporting at Colorado State University.

"It's a mystery how both the company would violate, and the auditors would miss, such a basic accounting rule, when the number is $1 billion."

Dynegy Inc. today abandoned its plans to rescue Enron Corp., leaving the once-dominant Houston energy trading company with little alternative than to file for bankruptcy, analysts said.

Enron, whose financial expertise and political clout helped it capitalize on the deregulation of electricity and gas markets, now faces more than $7 billion in debts that come due during the next year. It has no lenders in sight, its formerly lofty stock price is now below $2 a share, its credit is in tatters, its pipelines mortgaged or sold and its credibility with investors shattered.

In a statement today, Dynegy chairman Chuck Watson said his company had pulled out of negotiations because of Enron's "breaches of representations, warranties, covenants and agreements" in the initial purchase agreement. Dynegy had agreed to buy Enron on Nov. 9 for about $23 billion, but after Enron's stock price plummeted following the deal, Dynegy demanded a renegotiation of terms to lower the price.

That effort collapsed today when Standard & Poor's Corp. cut Enron's credit rating to junk status, exposing Enron to accelerated repayment of more than $3 billion in debt that it could not fully cover, according to analysts.

"It leaves Enron in desperate straits," said Andre Meade, a financial analyst with Commerzbank Securities in New York. "Bankruptcy is fairly likely at this point."

Meade and other analysts noted that Enron was the most important middleman matching buyers and sellers of electricity, natural gas and other products. Thus its failure could disrupt energy trading markets, possibly causing sharper swings in short-term energy prices.

Most analysts said any disruptions would likely be temporary because other energy companies are ready to fill Enron's shoes, but experts cautioned that the size of Enron's trading obligations aren't known outside the company.

A series of increasingly damaging disclosures by Enron in the past month about improper accounting of loans to outside investment partnerships involving some of its senior corporate executives swept away investor confidence, leading to the breakdown of the Dynegy deal.

It was an epic fall for a prideful company whose long-time chairman and chief executive Ken Lay was a close supporter and confidant of President Bush and the Bush family.

Enron, an influential lobbyist for energy deregulation in Washington and in state capitals, had led in the creation of a huge new market for energy products and related financial contracts and became the world's largest trader of these specialized transactions.

In 1999, Enron launched EnronOnline, an Internet-based trading system for electricity, natural gas, crude oil and a wide range of other products. But Enron also spent billions of dollars acquiring a power plant in India, a water system in Britain, and fiber-optic networks to carry Internet traffic, all of which backfired.

The collapse of energy prices this spring started Enron's stock on a downward slide from a high of nearly $90 a year ago. That accelerated a cash drain at the company and confronted it with the threat of growing losses and asset erosion because of largely concealed deals with its energy partnerships.

In August, its chief executive officer Jeffrey Skilling resigned. He had been the architect of its expansion and had approved the outside partnerships, and his departure started the company's final down spiral.

The stock market was jolted today by the impending collapse of Enron Corp., the biggest company in the natural gas business and the nation's seventh largest corporation based on revenue.

Dynegy Inc., another big gas company, backed out of buying Enron at mid-day, leaving the giant gas company teetering toward bankruptcy. Enron's natural gas trading desk, which dominates that business, was shut down.

After credit rating agencies downgraded Enron to the "junk bond" level, the company stopped paying its bills and others refused to do business with it.

Enron's stock, worth nearly $90 a share a year ago, plunged into penny stock territory -- closing down $3.50 to 61 cents -- and some traders speculated that it might become worthless.

Enron's collapse pulled down the stocks of Citigroup Inc. and J.P. Morgan Chase & Co., which only a few weeks ago gave Enron several hundred million dollars in unsecured loans.

Citigroup and J.P. Morgan Chase are both members of the Dow Jones industrial average, and the declines in their stocks alone knocked more than 30 points off the Dow, which fell nearly 161 points to 9711.86.

The sudden implosion of Enron is the most serious business failure since the dot.com and telecom collapse, and it triggered widespread selling on Wall Street.

The Standard & Poor's 500 stock index fell nearly 21 points to 1128.52 and the Nasdaq Stock Market composite index was down 48 to 1887.97.

Shares of other energy companies fell as did software stocks, which had been one of the strongest segments of the technology market. . . .

In its latest region by region survey of the economy, the Federal Reserve reported signs of improvement in some parts of the country but said they were outweighed by the continuing slowdowns in other places.

Enron's failure has nothing to do with economic conditions and everything to do with the way the company was run.

Only a few months ago, Enron was being touted as the model of the modern corporation. Starting out as a stodgy natural gas pipeline, Enron used the Internet to make itself the master gas trader, revolutionizing the business and generating vast profits.

Much of those profits turned out to be the product of mysterious deals with affiliated companies that never actually put any cash in Enron's coffers.

As Enron's problems began to become evident a few weeks ago, the Houston company put itself up for sale, finally accepting an $8.4 billion offer from much smaller Dynegy Inc. But the more Dynegy executives looked into Enron's business, they less they liked.

Today they pulled the plug leaving Enron little alternative but to file for bankruptcy. . . .

#1 - Alliance Capital Mgmt with 42,939,048 shares; followed closely by #2 - Janus Capital Mgmt with 41,361,200 shares; #3 - Putnam Investment Mgmt (Marsh & McLennan) with 23,122,100 shares; #4 - Barclays Global Investors (a member of the Committee of 300) with 23,047,196 shares; and #5 - Fidelity Mgmt & Research with 20,790,452 shares.

The remaining of the top 15 investors included: Smith Barney; State St. Global Advisors; Aim Mgmt; Vanguard Group; Morgan Stanley; Northern Trust; Deutsche Bankers Trust; Massachusetts Financial Service; Presdner Rcm; Cs First Boston Investment. . . .

. . . Old Mr. Powerhouse watches George W. Bush swing with his slow roundhouse right of Compassionate Conservatism, then watches Al Gore counterpunch with his feeble left jab of Practical Idealism, and he just laughs and laughs, not caring one whit whether Compassionate Practicality, Conservative Idealism, or any combination thereof wins in November -- because he owns both of these pugs.

Among the corporations already represented on the money lists of both the Bush and Gore campaigns are:

Aetna, AT&T, BellSouth, Boeing, Citigroup, Du Pont, Enron, Ernst & Young, Goldman Sachs, IBM, Intel, Lazard Freres, Lehman Brothers, Merrill Lynch, Microsoft, Monsanto, Morgan Stanley, Raytheon, Roche, Time Warner

From The Buying of the President (1996 ed), regarding contributions to Republican candidate, Phil Gramm:

The name of one company in particular might have caught Wendy Gramm's attention: Enron. ...

It's a fairly large company, based in Houston. Of all the companies that wrote to the CFTC (Commodity Futures Trading Commission) seeking the exemption (of energy derivative contracts from federal regulation), Enron was the biggest donor to Gramm campaigns, giving $34,100 over the years. . .

After taking actions that led to the exemptions from regulation, Wendy Gramm (wife of Phil Gramm and chosen by Ronald Reagan to head the CFTC in 1987) resigned on January 20, 1993, the day Clinton was inaugurated.

Five weeks later, she was named to Enron's board of directors. The part-time position pays her $22,000, plus $1,250 for each meeting she attends. In April 1993 the commodities commission voted 2 to 1 against regulating the business...

In its 1992 annual report, Enron calls itself the "manager of the largest portfolio of fixed-price and natural-gas derivative contracts in the world." The company also has roughly $4.5 billion in interest-rate swaps, another exotic transaction that Wendy Gramm helped to exempt from deregulation while she was at the CFTC...

[A Catbird Note: Kamehameha Schools'/Bishop Estate's infamous McKenzie Methane deal was done in 1989 -- during Wendy Gramm's tenure as head of the CFTC. Hmmmm.]

ENRON HAS ANOTHER DISTINCTION -- IT IS THE #1 CAREER PATRON OF GEORGE W. BUSH, JR.

From The Buying of the President 2000: . . . For three decades now, hundreds of electrical power, oil refining, and chemical plants have been pumping toxic particles into the air over Texas. These plants produce as much smog-forming nitrogen oxides as 18 million cars, making Texas the state with the largest volume of air pollution in the nation. The Texas Legislature passed the Texas Clean Air Act in 1971, but plants built before the law was passed don't have to comply with its rules.

In December 1996, staff members of the Texas Natural Resources and Conservation Commission (TNRCC), the state environmental agency, began meeting with representatives from eleven companies to talk about reducing the emissions of the plants that benefitted from the grandfather clause. But when it looked like the commission was moving toward eliminating the exemption for those plants, energy-industry executives balked and headed straight for the governor's office.

On January 14, 1997, Bush's environmental director, John Howard, told his boss in a memo: "Industry has expressed concern that the TNRCC is moving too quickly and may rashly seek legislation this session."

In early March, Bush tapped Vic Beghini, an executive with Marathon Oil Co., and Ansel Condray, an executive with Exxon Corp., to come up with a plan to let the industry comply voluntarily with the state's clean-air regulations. . . .

Beghini and Condray then presented the finished proposal at a June 19, 1997 meeting of about forty industry executives. In his notes of the meeting, James Kennedy of E.I. du Pont de Nemours and Co., the giant chemical manufacturer, wrote, "Amoco presented the paper to the group at the meeting as something that has been agreed to at high levels and was not subject to change."

On March 31, 1998, Bush appeared at a press conference flanked by executives of Exxon, Amoco, and Texas Utilities, among others, to announce that 26 companies-- representing 60 of the 831 pollution-producing companies in the state, had pledged to reduce emissions by 15,000 tons a year. "We're committed," Bush said, "to clean air in the state of Texas."

But whether companies cut back on emissions didn't really matter to the governor or to the industry. ... "The concept paper has no 'meat' with respect to actual emissions reductions," Kennedy wrote. . . .

As far as Bush was concerned, his voluntary compliance plan was already a rousing success, a model of public-private partnership good enough to take on the road to the presidential primaries. Three weeks after Bush announced that he was a candidate for President, his spokesman, Scott McClennan, boasted: "Governor Bush was the first governor in Texas to tell grandfathered industries, 'It's time to clean up.' Voluntary programs are working in Texas."

Well, not really. A study by the Environmental Defense Fund published six months after Bush's press conference found that only three of the 26 companies had actually scaled back their emissions. (In 1999, under increasing public pressure, Bush finally signed a bill that forces power plants to cut their emissions in half by 2003.) . . .

On May 17, 2000, I caught a curious Enron commercial on TV. The ad appeared to promote a unique idea that we should make BAND-WIDTHS -- those invisible waves which we use to communicate with each other -- a COMMODITY!

As a commodity -- don't you see -- these band-widths become things that can be bought and sold. And, Enron, I presume, would be one of the companies that trades in this new-fangled portfolio of derivative contracts.

Wow! A way to buy and sell something you can't see or feel, and something we always took for granted belonged to everyone!

One of the prime beneficiaries of the "crisis" is Enron Corporation and its chairman, Ken Lay, a major corporate and personal contributor to George W. Bush's presidential campaign.

Even though California Gov. Gray Davis has reached into California residents' deep pockets to bail out the utility companies through emergency legislation, Washington Gov. Gary Locke has balked.

According to KCPQ-TV's Chris Daniels' "A Disturbing New Twist in Western Power Troubles, " Governor Locke says, 'It's unjustified, it's obscene, and clearly hurting all consumers.'"

Like other western governors, Locke has had to pay for electricity at any price.

In November of 1999, for example, electricity was purchased for $29 a megawatt hour.

A year later, the price increased to $160 an hour, according to sources at Tacoma Power.

Locke expressed his indignation saying, "I've very disappointed in President Bush that the new administration will not be intervening."

One of Bush's largest campaign contributors is Enron Corporation, a Texas-based company which is part of the de facto global energy oligopoly-cartel.

Although diversifying into other business, Enron has been best known as the largest buyer and seller of natural gas in the United States. Its 1999 revenues of $40 billion had made it the 18th largest company in the United States.

Enron is also invested in energy projects around the world, including the UK, Argentina, Bolivia, Brazil, the Philippines, Indonesia, China, India and Mozambique.

One of the global energy cartel's most visible players, Enron saw its corporate profits rise 34 percent in the fourth quarter of 2000.

Enron shareholders should ask----did dividends come from price gouging US citizens?

Federal Election Commission records show that Enron Chairman Kenneth Lay donated more than $350,000 directly to Bush campaigns since 1997.

Lay also gave another $100,000 to Republican candidates and fundraising committees.

In addition, Enron Corporation, including employees, also donated $1.5 million in soft money to Bush and Republican committees.

More recently, Lay and his wife donated $10,000 to the "Florida Recount Fund," and another $100,000 to the "Presidential Inaugural Fund."

As one of his fundraising "Pioneers," Lay helped raise more than $100,000 for Bush's campaign for president.

In consideration of these numbers, is it too much to ask for a phony and contrived power "crisis" as a payback?

According to newswire reports, as a new energy advisor for President Bush, Ken Lay says that precap prices for wholesale electricity in the West "is not even a short-term solution."

Not coincidentally, Enron is the largest power marketer in the United States. A cap would limit the prices it and other wholesalers could charge to utilities. Wholesale power prices were deregulated under the landmark 1996 law but retail rates were not.

Lay said the federal government should limit itself to an "advisory" role, letting California leaders resolve a "pretty much self-inflicted problem."

California's rolling blackouts have come as the two large utilities, PG&E Corp. and Southern California Edison, have struggled under huge debts through buying electricity at higher wholesale prices than they can recoup under the retail rates they are allowed to charge.

In the short term, Lay said, the state government will have to "buy the power to fill the short positions of the utilities."

On the Enron corporate website, one of the members of the board of directors, Herbert S. "Pug" Winokur, Jr., is described as chairman and CEO of Capricorn Holdings, Inc., and former senior executive vice president of Penn Central Corporation. (For more on Penn Central go to Nests on the Rails.)

As the Insiders' Insider, "Pug" Winokur has been such a permanent fixture in the Washington Old Boy Network that he's even mentioned in a 1978 book by Daniel Guttman called "The Shadow Government."

Historically Winokur's Capricorn Holdings was used as an investment vehicle in NHP, an apartment management firm headed by Roderick Heller III.

In turn, NHP's assets included oft-purloined and defaulted HUD Section 8 subsidy housing, a notorious and well-known vehicle for fraud and money laundering.

Winokur was also on the Board of Directors of Harvard Endowment Fund, which purchased 50 percent of NHP, making the prestigious Harvard a prototypical, but very low-profile, slum landlord. (See "Bushwhacked: HUD Fraud, Spooks and the Slumlords of Harvard")

It should also be noted that George W. Bush attended Harvard Business School. Later, after Bush joined Harken Energy Corp and became a director, the largest stock position and seat on the board was acquired by Harvard Management Co.

Ironically, from 1988 to 1997, Winokur was also the chairman and CEO of DynCorp, one of the government's largest contractors in data acquisition and management.

Since DynCorp had a contract from the Department of Justice, Winokur would have profited from the DoJ Asset Seizure Program, as well as HUD's Operation Safe Home seizures which targeted low-income tenants and mortgage holders in the inner cities.

In addition DynCorp is one of the lead contractors for the new phony War on Drugs in South America called "Plan Colombia," another tax-payer supported scam to bring monies into DynCorp's coffers.

Now there's a guy who understands that the only way to do a deal is to get it rigged from the very beginning.

Enron dealmaker Frank Wisner, Jr., muscled the company into lucrative overseas contracts, most notably in India and the Philippines.

Enron's deal to manage a power plant in the Philippines was due largely to Wisner's efforts. Based in Subic Bay, a former US military outpost, the power planet was taken over by Enron in 1993, two months after the last US troops left the base.

Wisner is also credited with helping Enron win a $2.8 billion deal in India, building a power plant near Bombay. Now the project is under heavy fire for being over-priced, and the deal continues to simmer with allegations of bribery.

Wisner, Jr., must have learned his tradecraft from his father Frank Wisner. Sr., one of the CIA's prime operatives.

Wisner, Sr., who worked at the CIA from 1947 until just before his "suicide" in 1965, was involved in 1) the 1954 CIA coup in Guatemala, toppling the goverment of Jacobo Arbenz for United Fruit Company, 2) the 1953 overthrow of Iranian Prime Minister Mohammed Mossadeq, and 3) the secret operations against Indonesian President Sukarno.

Unlike his spooky father, Frank Wisner, Jr., however, was a former Pentagon official before his job at Enron.

Enron Founder and Chairman Kenneth Lay also worked in the Pentagon for the Nixon administration during the Vietnam War.

Lay is a close friend of George H. W. Bush. In fact, his Houston home in River Oaks is near the Tanglewood residence of the former president and CIA director.

Although there have been no published reports of Bush Sr. doing favors for Lay, three of the Bush Boys have used their father's name to get contracts for Enron.

According to an article by Seymour Hersh in the New Yorker, Neil and Marvin Bush tried to influence government officials for an Enron bid to rebuild Shuaiba North power plant in Kuwait.

Ironically this power plant was destroyed in George Bush's Persian Gulf War. Enron abandoned the bid a year ago.

In 1988, George W. Bush reportedly telephoned Rodolfo Terragno, Argentina's Public Works Minister, to ask him to award Enron a contract to build a pipeline from Chile to Argentina.

"He assumed that the fact he was the son of the president would exert influence. I felt pressured. It was not proper for him to make that kind of call," Terragno told The Nation.

Finally, when Carlos Menem, another Bush Sr. crony, became president of Argentina, Enron won the bid.

Neil Bush, director of the failed Denver-based Silverado Savings and Loan, created a subsidiary of his oil company to conduct business in Argentina in 1987.

Argentina finally got so fed up with the Bush Boys, they formally had a parliamentary investigation regarding their so-called "business dealings.

Even though it has strong ties to the Republican Party, Enron also did remarkably well during the Clinton years.

Most importantly, they got a ban lifted on Export-Import Bank financing of projects in China.

This allowed Enron to move forward on overseas projects guaranteed by US taxpayers. In other words, if Enron "fails," you pay.

Enron also got new rules instituted at the Ex-Im Bank that allowed the bank to finance projects on the basis of projected cash flow.

This insider track helped Enron make multi-billion dollar deals overseas with US taxpayers guaranteeing their performance.

>> March 1993, Enron made a deal to develop new European markets for Russian gas.

>> November 1993, Enron made a $1 billion deal with Turkey to develop two power plants. Ex-Im Bank provided $285 million in financing. The Overseas Private Investment Council(OPIC)covered insurance costs.

>> August 1994, Enron made a deal to build a power plant in India. ExIm provides major financing and OPIC provides an additional $100 million.

>> November 1994, Enron made a deal to build a $130 million power plant in China. Ex-Im Bank again provided the financing.

Moral of the story? When you're a monopoly capitalist, it doesn't matter who's in office. Republicans. Democrats. They all are open to inducements.

Unfazed by the bogus and contrived energy crisis, the San Francisco City Attorney is filing a lawsuit against Enron and 11 other companies.

The filing says that Enron "conspired to restrict supplies and drive up prices" costing consumers additional charges "on the order of 1 billion dollars."

Washington's Governor Locke says President Bush needs to take counter-measures or the economy will suffer on a national level.

"If the federal government doesn't act, you're going to see a lot of jobs go away, a lot of business close down . . ." says Locke. "We need help from the federal government immediately to help stabilize the situation."

Uri Dowbenko is the chairman and CEO of New Improved Entertainment. He can be reached at u.dowbenko@lycos.com

Enron: Facts and Figures Prepared by: ImpactResearch: A Program of the DataCenter Basic Business Information Publicly Traded on the New York Stock Exchange (ticker symbol ENE) Headquarters: 1400 Smith Street, Houston, TX 77002 Enron's Sales in 1999: $40,112,000,000 Net Income: $893,000,000 Cash on hand at end of 1999: $288,000,000 (Hoover's Company Profile, 2000) Top Individual Stock Holders BELFER, ROBERT A., 1.18% (PRX 03-21-2000) Common Stock BELFER, ROBERT A., 17.02% (PRX 03-21-2000) Preferred Convertible Stock Office Address: Belco Petro. Corp. 67 5th Ave., 46th Fl. New York, New York 10153-0002 Age: 64 Director since 1983 Mr. Belfer's principal occupation is Chairman and Chief Executive Officer of Belco Oil & Gas Corp., a company formed in 1992. Prior to his resignation in April, 1986 from Belco Petroleum Corporation ("BPC"), a wholly owned subsidiary of Enron, Mr. Belfer served as President and then Chairman of BPC. (Proxy Statement, March 21, 2000) RUBEN, LAWRENCE, JR., ET AL, 1.43% (PRX 03-21-2000) Common Stock RUBEN, LAWRENCE, JR., ET AL, 22.06% (PRX 03-21-2000) Preferred Convertible Stock Married to Selma Belfer (see above) Office Address: 600 Madison Ave, New York, NY, 10022-1615 Chairman and CEO KENNETH L. LAY Age: 57 Pay: $5,200,000 US Political Connections As of June 2000, Enron had contributed $10,265 to Sen. Slade Gorton 's Campaign (Center for Responsive Politics) As of January 2000, Enron had contributed $99, 750 to George W. Bush's Presidential Campaign - the 11th largest contributor to Bush's campaign (Center for Responsive Politics) Kenneth Lay contributed a total of more than $100,000 to Bush's gubernatorial campaigns of 1994 and 1998, this made Lay Bush's top 21st individual donor (Associated Press, April 7, 2000) Kenneth Lay and his wife, Linda contributed $76,000 to the Republican National State Elections Committee since 1997 (Associated Press, April 7, 2000) Enron's total lobbying expenditures for 1998 were $1,600,000. Of this, $200,000 was lobbying expenditures for Enron Wind Corp. (Center for Responsive Politics) Enron hired former members of Pres. George Bush's Cabinet, Secretary of State James Baker and Commerce Secretary Robert Mosbacher in 1993 to help develop overseas projects. Mosbacher had served on the board of Enron in the 1980's (The New York Times, February 23, 1993) New Jersey State Attorney General is accusing Enron of violating state laws that prohibit some energy providers from making donations to politicians (Megawatt Daily, March 27, 2000) Foreign Political Involvement In order to get approval from the British Government to purchase one of Britain's largest public water utilities, Enron funneled "Labour almost pounds 30,000 in the last two years" (The Independent (London), September 11, 1998) Shortly after his father won the US Presidency in 1988, George W. Bush *called the Argentine Minister of Public Works, Rodolfo Torragno to pressure him to accept Enron's "laughable" bid for a large pipeline project.* (Mother Jones, March 1, 2000; The Nation, November 21, 1994) There were accusations in Panama that Enron was using it's influence with Energy Minister Luis Carlos Valenzuela to force the state oil company to sign a "sweetheart deal" with Enron to export natural gas to Central American (Latin America Energy Alert, December 8, 1999; The Nation, May 22, 2000) "Gas giant Enron Corp.'s plan to develop Mozambique's Pande natural gas field appears to have been saved from cancellation last month by a blunt threat from the U.S. National Security Council to cut off future U.S. aid to the country." (The Oil Daily, December 1, 1995) Enron beat out South Africa's state petroleum company, Sasal to build the pipeline in 1995 and recently sold the gas and oil rights to Sasal. Enron and Native Peoples in the United States Manager of Enron's American Indian Affairs is Roger Fragua. Fragua was formerly the Jemez Tribe Administrator in New Mexico (Las Vegas Review-Journal, September 27, 1997) In 1997, Confederated Tribes of Warms Springs, Oregon, expressed their wish to gain control over the three Portland General Electric Co. hydropower dams on the Tribes' land in order to restore abandoned fish ladders. Enron owned PGE and "intended to keep the license". (Engineering News-Record, August 4, 1997) In early 2000, Enron Corp.'s Portland General Electric Co. agreed to sell stakes in its hydroelectric system over four decades to the Tribes, (Houston Chronicle, February 2, 2000) At the same time, Enron is in the process of selling it's interests in PGE to Sierra Pacific Resources. (Inside F.E.R.C.'s Gas Market Report, March 17, 2000) Activists challenging Enron's wind farm on the Columbia River Gorge *"maintain that Enron has been unresponsive to tribal and environmental concerns, refusing to reply to repeated invitations to visit the site or meet with elders."* (Indian Country Today (Lakota Times) April 12, 2000) In testimony to the US Congress in 1999, Enron's manager of American Indian Affairs stated, "We seek Tribal partners that are motivated in seeking "for-profit" energy projects that are culturally, environmentally and economically sound……Enron has a long history of responsibly working with many American Indian Tribes……". (Federal Document Clearing House Congressional Testimony, July 1, 1999) Kenneth L. Lay, CEO and Chairman of Enron, received the American Spirit Award from the Council of Energy Resource Tribes in 1988. The award is "given to a corporate executive who has supported CERT and its efforts to enhance higher education opportunities for American Indian students in the fields of science, engineering and business". (Coal, March 1988) (For more on stealing from Indians, GO TO > The Bureau of Indian Affairs) Enron and the Environment In 1996, Enron received the Corporate Conscience Award for Environmental Stewardship sponsored by the Council on Economic Priorities. (PR Newswire, June4, 1996) Patagonia, Inc, and outdoor clothing and equipment company committed to environmentally friendly business decisions, purchases all of it's electricity from Enron Wind. The first company in California to do so. (The Energy Report, July 13, 1998) Enron's pipeline project with Florida Gas Transmission Co, was found in violation 109 times regarding wetlands destruction and improper land clearing and damaging waterways in 1994. It paid $575,400 in fines. (Oregonian, August 6, 1996 and Southeast Energy Power Report, December 16, 1994) Enron and Dutch Shell's pipeline in Bolivia ruptured on January, 2000, and spilled 29,000 barrels of crude petroleum. This contaminated "hundreds of acres of organic farmland, killing fish and birds in the Andes' lake Poopo, and destroying the livelihood of a 5,000 year old native tribe, Uru Morato". Enron and it's Bolivian partner, Transredes has spent $ 10-mil so far on the oil spill, and clean-up has not yet been completed, a spokesman for Enron Corp, which owns 50% of Transredes, said late Mar 21. (Friends of the Poopo and the Uru Morato, Vermont, USA and Platt's Oilgram News, March 23, 2000) Enron, Shell and Transredes are building a 390 mile pipeline in Bolivia that has *"brought serious environmental and social problems "* to local communities living along its path. They have so far experienced, *"pollution of local water resources, degradation of local roads, soil and air pollution……". (A World Class Disaster: The Case of the Bolivia-Cuiaba Pipeline, A Report on the Failures of Enron international to Comply with Bolivian Environmental Laws and OPIC Loan Conditions in the Construction of the Lateral Ipias-Cuiaba Gas Pipeline, December 8, 1999) Activist have been pressuring the US Overseas Private Investment Corporation to pull it's support of the Cuiaba Pipeline Project, however, Enron has stated that it will proceed with the project, whether or not it gets OPIC funding. (Financial Times (London) July 15, 1999) International Violations* Enron's activities with their Dabhol Power project in India has been documented by Human Rights Watch as violating the human rights of locals protesting the project, the largest power plant in the world. "The Dabhol Power Corporation and it's parent company, Enron, are complicit in these human rights violations. Enron's local entity, the Dabhol power Corp. benefited directly from an official policy of suppressing dissent through misuse of the law, harassment of anti-Enron protest leaders and prominent environmental activists, and police practices ranging from arbitrary to brutal". (The Enron Corporation: Corporate Complicity in Human Rights Violations, Jan 1999, Human Rights Watch) Enron's water division, Azurix Corp, is the city water supply company for the community of Bahia Blanca in Buenos Aires. *In April, 2000, the water supply was laced with toxic bacteria that cause skin irritation and possible neurological damage.* (Reuters, April 25, 2000) The World Bank is objecting to the terms of a power purchase agreement between Enron and the state of Lagos (Nigeria) in December of 1999. The terms are too favorable to Enron: they acquired a long-term right to sell power to Lagos without competitive bidding; can charge a high price for the fuel used by its power plant; cannot be penalized for the poor performance of its plants; does not fully bear the completion risks for the plants under its control; benefits from generous arrangements for payment security; and would receive excessive contract termination payments. (EIU ViewsWire, May 25, 2000) Enron Wind In 1999, Enron Wind agreed to relocate a proposed wind farm away from endangered California Condor flight patterns after The National Audubon Society and Tejan Ranch began a public campaign targeting Enron Wind after the California Energy Commission approved development of the project (Global Power Report, November 12, 1999) Enron's Board of Directors (Proxy, March 23, 2000) NORMAN P. BLAKE, JR., 58 Director since 1993 Mr. Blake is the Chief Executive Officer and Secretary General of the United States Olympic Committee. Mr. Blake served as Chairman, President and Chief Executive Officer of the Promus Hotel Corporation from December, 1998 until November, 1999 when it merged with the Hilton Hotels Corporation. From November, 1990 until May, 1998, he served as Chairman, President and Chief Executive Officer of USF&G Corporation until its merger with the St. Paul Companies. He is also a director of Owens-Corning Corporation. RONNIE C. CHAN, 50 Director since 1996 For over nine years, Mr. Chan has been Chairman of Hang Lung Development Limited, a publicly traded Hong Kong company involved in property development and investment as well as hotel development and management. Mr. Chan also co-founded and is a director of various companies within Morningside/Springfield Group, which invests in private industrial companies internationally and he is also a director of Standard Chartered Bank plc and Motorola, Inc. JOHN H. DUNCAN, 72 Director since 1985 Mr. Duncan's principal occupation has been investments since 1990. Mr. Duncan is also a director of EOTT Energy Corp. (the general partner of EOTT Energy Partners, L.P.), Azurix Corp. and Group I Automotive Inc. WENDY L. GRAMM, 55 Director since 1993 Dr. Gramm is an economist and Director of the Regulatory Studies Program of the Mercatus Center at George Mason University. From February, 1988 until January, 1993, Dr. Gramm served as Chairman of the Commodity Futures Trading Commission in Washington, D.C. Dr. Gramm is also a director of IBP, inc., State Farm Insurance Co. and Invesco Funds. Dr. Gramm was also a director of the Chicago Mercantile Exchange until December 31, 1999. KEN L. HARRISON, 57 OTO Director since 1997 Mr. Harrison has served as Chairman of the Board and Chief Executive Officer of Portland General Electric Company since1988. He plans to retire on March 31, 2000. Additionally, Mr. Harrison served as Chairman of Enron Communications, Inc. from its inception in 1996 through November, 1999, and as a Vice Chairman of Enron from July, 1997 to July, 1999. ROBERT K. JAEDICKE, 71 Director since 1985 Dr. Jaedicke is Professor (Emeritus) of Accounting at the Stanford University Graduate School of Business in Stanford, California. He has been on the Stanford University faculty since 1961 and served as Dean from 1983 until 1990. Dr. Jaedicke is also a director of Boise Cascade Corporation, California Water Service Company and GenCorp, Inc. Dr. Jaedicke was also a director of State Farm Insurance Co. until June, 1999. KENNETH L. LAY, 57 Director since 1985 For over fourteen years, Mr. Lay has been Chairman of the Board and Chief Executive Officer of Enron. Mr. Lay is also a director of Eli Lilly and Company, Compaq Computer Corporation, Azurix Corp., EOTT Energy Corp. (the general partner of EOTT Energy Partners, L.P.), Questia Media, Inc. and Trust Company of the West. CHARLES A. LEMAISTRE, 76 Director since 1985 For 18 years, Dr. LeMaistre served as President of the University of Texas M. D. Anderson Cancer Center in Houston, Texas and now holds the position of President Emeritus. REBECCA MARK-JUSBASCHE, 45 Director since 1999 Since July, 1998, Ms. Mark-Jusbasche has served as Chairman and Chief Executive Officer of Azurix Corp., *a global water company formed by Enron in 1998.* From May, 1998, until July,1999, Ms. Mark-Jusbasche served as a Vice Chairman of Enron. From January, 1996, until March, 1999, Ms. Mark-Jusbasche served as Chairman of Enron International Inc. From January, 1996 until May, 1998, Ms. Mark-Jusbasche served as Chief Executive Officer of Enron International Inc. From July, 1991 until March, 1998, she served as Chairman and Chief Executive Officer of Enron Development Corp. Ms. Mark-Jusbasche is a member of the Council on Foreign Relations and The Chase Manhattan Corp. National Advisory Board. JOHN MENDELSOHN, 63 Director since 1999 Since July, 1996, Dr. Mendelsohn has served as President of the University of Texas M.D. Anderson Cancer Center. Prior to 1996, Dr. Mendelsohn was Chairman of the Department of Medicine at Memorial Sloan-Kettering Cancer Center in New York. Dr. Mendelsohn is a director of ImClone Systems, Inc. JEROME J. MEYER, 62 Director since 1997 For over eight years, Mr. Meyer served as Chairman and Chief Executive Officer of Tektronix, Inc., an electronics manufacturer located in Wilsonville, Oregon. Currently, Mr. Meyer serves as Chairman and as a director of Tektronix, Inc. He is also a director of Standard Insurance Corp. and Centerspan Communications, Inc. PAULO V. FERRAZ PEREIRA, 45 Director since 1999 For over five years, Mr. Pereira has served as President and Chief Operating Officer of Meridional Financial Group and Managing Director of Group Bozano. Mr. Pereira is the former President and Chief Executive Officer of the State Bank of Rio de Janeiro. FRANK SAVAGE, 61 Director since 1999 Since 1995, Mr. Savage has served as Chairman of Alliance Capital Management International (a division of Alliance Capital Management L.P.). Mr. Savage is also a director of Lockheed Martin Corporation, Alliance Capital Management L.P., Lyondell Chemical Corp. and Qualcomm Corp. JEFFREY K. SKILLING, 46 Director since 1997 Since January, 1997, Mr. Skilling has served as President and Chief Operating Officer of Enron. From January, 1991until December, 1996, he served as Chairman and Chief Executive Officer of Enron North America Corp. and its predecessor companies. Mr. Skilling is also a director of Azurix Corp. and the Houston Branch of the Federal Reserve Bank of Dallas. JOHN A. URQUHART, 71 Director since 1990 Mr. Urquhart serves as Senior Advisor to the Chairman of Enron. From 1991 to 1998, Mr. Urquhart was a Vice Chairman of Enron. Since August, 1991, Mr. Urquhart has also been President of John A. Urquhart Associates, a management consulting firm in Fairfield, Connecticut. He also serves as a director of TECO Energy, Inc., Hubbell, Inc., The Weir Group, plc and Catalytica Inc. JOHN WAKEHAM, 67 Director since 1994 Lord Wakeham is a retired former U.K. Secretary of State for Energy and Leader of the Houses of Commons and Lords. He served as a Member of Parliament from 1974 until his retirement from the House of Commons in April, 1992. Prior to his government service, Lord Wakeham managed a large private practice as a chartered accountant. He is currently Chairman of the Press Complaints Commission in the U.K. and chairman or director of a number of publicly traded U.K. companies. Lord Wakeham is also a director of Azurix Corp. HERBERT S. WINOKUR, JR., 56 Director since 1985 Mr. Winokur is Chairman and Chief Executive Officer of Capricorn Holdings, Inc. (a private investment company) and Managing General Partner of Capricorn Investors, L.P., Capricorn Investors II, L.P. and Capricorn Investors III, L.P., partnerships concentrating on investments in restructure situations, organized by Mr. Winokur in 1987, 1994, and 1999, respectively. Prior to his current appointment, Mr. Winokur was Senior Executive Vice President and a director of Penn Central Corporation. Mr. Winokur is also a director of Azurix Corp., The WMF Group, Ltd., Mrs. Fields' Holding Company, Inc., CCC Information Services Group, Inc. and DynCorp. Top Ten Institutional Stock Holders as of June 15, 2000 (Vicker's Stock Research)
INST CODE	INSTITUTION NAME	INCORP	SHARES	VALUE($000)	PORTFOLIO VALUE($000)	%PORT
MM	JANUS CAPITAL	US	67,127,310	4,891,903	226,957,100	2.15
MF	JANUS FUND	US	26,118,310	1,903,372	29,979,300	6.34
BA	BARCLAYS BK PLC	FN	20,533,076	1,496,348	448,821,000	.33
MM	FMR CORP	US	17,520,864	1,276,833	626,451,900	.20
MM	CITIGROUP INC.	US	16,623,620	1,211,446	191,045,900	.63
MM	AMER CENT INVT	US	13,686,800	997,426	89,791,300	1.11
MM	MSDW & CO	US	13,281,745	967,907	192,401,600	.50
MM	TAUNUS CORP	US	12,938,627	942,902	203,497,200	.46
MM	STATE STR CORP	US	12,804,149	933,102	322,063,600	.28
MM	PUTNAM INV MGT.	US	11,347,292	826,934	275,420,100	.30
Source: ImpactResearch: A Program of the DataCenter 1904 Franklin Street, Suite 900, Oakland, CA 94612 USA Tel: 1 510-835-4692 Fax: 1 510 835 3017 Email: lkleven@datacenter.org

For more on Herbert "Pug" Winokur and the Penn Central bankruptcy and fraud scandals, GO TO > > > Dirty Gold in Goldman Sachs

On 28 October 1997, Enron Corporation announced the entry of Frank G. Wisner Jr. onto its board of directors. Most of the business press did not find this untoward and it certainly did not emerge as part of the US discussions on corruption at the highest level.

Frank Wisner, as we know in India, was the US Ambassador from 1994 until this year and his entry into Enron must be seen in light of the scandal of Dabhol.

Enron, like most US corporations, uses its close association with the state (both its elected and bureaucratic arms) for its own ends. US campaigns are financed by corporations whose money not only enables politicians to win elections, but it also buys businesses the state's power both for domestic subsidies and for the use of US power in the international arena.

Frank Wisner, Jr. was a big catch for Enron Corporation. His lineage is impeccable, since his father, Frank Wisner Sr., was a senior CIA official (from 1947 until his suicide in 1965) who was involved in the overthrow of Arbenz of Guatemala (1954) and Mossadeq of Iran (1953).

Wisner Junior was well-known in the CIA and he worked as Under Secretary of Defense for Policy and Under Secretary of State for International Security Affairs; his current boss, Kenneth Lay, Chief Executive Officer of Enron Corporation, also worked for the Pentagon during the US war in Vietnam. With "economic espionage" as a task for the CIA (see PD, 12 October 1997), there is little doubt that Wisner used this instrument during his long-tenure as Ambassador in Asian nations. A Wisner staffer told InterPress Services this year that "if anybody asked the CIA to help promote US business in India, it was probably Frank".

When Wisner was US Ambassador to the Philippines (1991-92), Enron was in the midst of negotiations to manage the two Subic Bay power plants.

When Wisner left Manila in July 1992, Enron won the deal and began to manage the plant in January 1993.

During Wisner tenure in India, he fought long and hard to secure various deals for Enron. He went so far as to boycott the "India Power '96 -- Beyond Dabhol" summit, despite being scheduled to give an address (this was part of a US advisory to companies to avoid India for six-months, a pressure tactic on India during the winter of 1995-96). Wisner left India earlier this year only after it seemed like Enron's place was secure.

Enron, like most monopoly corporations in the US, uses money as a means to buy influence and power. To gain access to a lucrative contract to rebuild the Shuaiba power plant in Kuwait, Enron hired former US Secretary of State James Baker as a consultant who travelled to the oil kingdom to negotiate with his Gulf War allies for his new employer. The sons of George Bush also helped Enron win this contract despite a lower bid from Deutsche Babcock, a German firm.

The Bush brothers also helped Enron in their deal to win a contract to build a pipeline from Chile to Argentina in 1988. Finally, Wendy Gramm (wife of Senator Phil Gramm) joined Enron's Board of Directors in 1993 after she resigned from the Commodity Futures Trading Commission.

This Commission, just days after Gramm's resignation, deregulated energy futures, thereby allowing Enron to earn 10% of its profits by adventures on the financial markets.

Beside all this evidence, it appears hypocritical for Rebecca Mark, Chairperson of Enron Development Corporation, to declare that "Enron's reputation is being attacked, and we do not do business under the table".

In 1991-92, Enron donated $28,525 to the Democratic Party and in 1993-94, it gave $42,000. These monies enabled Enron to send its executives on international tours with the late Secretary of Commerce Ron Brown in January 1995 (when Kenneth Lay came to India) and in March-April 1994 (when Chief Executive Officer of Enron International, Rodney Gray came to Russia).

In the former, Enron was in negotiation for the Dabhol plant among other things (such as the $1.1 billion offshore holdings) and in the latter, Enron was interested in the marketing of Russian gas in Europe.

President Clinton noted that Brown's trips resulted in "expanded opportunities for American business in [the USA] and abroad". The "pay to play" project of US "democracy" is once again in evidence. The example of Enron and Wisner proves beyond a reasonable doubt that the US state is not a neutral actor in world affairs and that US transnational corporations are part and parcel of the corruption within the US Empire.

The hearings in Washington on "campaign finance reform" do not bother with this level of corruption, for most of those who are running the investigation are beholden to business interests. Enron, for instance, will not be a part of the investigation, since it is deemed to be a patriotic US entity out to create jobs for US workers and to accumulate wealth to defer the costs of the US's mercenary army.

- Vijay Prashad is Assistant Professor of International Studies at Trinity College in Hartford, Connecticut.

Phil Gramm has also been criticized for mixing government business and campaign politics by using his Senate office staff to work on campaigns. . . . At least two different aides to Senator Gramm have written memos about how Gramm's wife, Wendy...should be used for his reelection bid. . . .

That is particularly interesting in light of the powerful position she held in Washington as chairwoman of the Commodity Futures Trading Commission. As the nation's leading regulator of futures contracts for all agricultural commodities, Wendy Gramm was under tight ethical constraints as to the degree and nature of her personal daily interaction with agribusiness interests.

In other words, the chairwoman of the powerful federal regulatory agency overseeing agriculture commodities futures trading would be helping her U.S. senator husband raise campaign funds from the corporations and individuals she regulated. . . .

The CFTC oversees federal regulation of the nation's fourteen commodities and futures exchanges. At those exchanges, contracts to buy and sell a seemingly endless variety of commodities are traded: oil and gas, soybeans, cattle, pork belies, corn, precious metals, cocoa, lumber, cranberries, and sugar, to name but a few. The regulatory duties of the CFTC are aimed largely at ensuring fairness and stability at the nation's commodities exchanges.

One week after Bill Clinton won the presidential election it became clear that Wendy Gramm would be leaving the politically appointed CFTC post.

On November 16, 1992, nine energy companies wrote to the commission seeking to exempt energy derivative contracts, a business valued at $5 TRILLION a year, from federal regulation. . . .

In response to the energy companies' request, Wendy Gramm set in motion the process that led to those energy derivative contracts, and other exotic financial transactions, being exempted from regulation. . . .

A Center for Public Integrity investigation shows that of the nine companies that requested the exemption, seven had donated to Phil Gramm campaigns through PACs, company officers, or employees. . . .

Cumulatively, Gramm's campaigns had received $157,250 from the people who were asking his wife to exempt energy derivatives and the other transactions from regulation. ...

During Wendy Gramm's tenure with the commodities commission, Phil Gramm accepted $38,500 in commodity honoraria, according to his actual disclosure records. . . At the same time she was heading the commodities commission, he was on the Senate Banking committee. That means that Phil Gramm, too, had regulatory jurisdiction and oversight regarding commodities.

On July 24, 1990, Phil Gramm voted to kill an amendment that would have lowered the sugar price support from eighteen cents a pound to sixteen cents a pound. That was a potential conflict of interest because Gramm's disclosure show that at the time the couple owned between $15,000 and $50,000 worth of stock in a sugar company named Castle and Cooke.

The name of one company in particular might have caught Wendy Gramm's attention: Enron. ...

After taking actions that led to the exemptions from regulation, Wendy Gramm (wife of Phil Gramm and chosen by Ronald Reagan to head the CFTC in 1987) resigned on January 20, 1993, the day Clinton was inaugurated. Five weeks later, she was named to Enron's board of directors. The part-time position pays her $22,000, plus $1,250 for each meeting she attends.

In April 1993 the commodities commission voted 2 to 1 against regulating the business. . . .

[A Catbird Note: Bishop Estate's infamous McKenzie Methane deal was done in 1989 -- during Wendy Gramm's tenure as head of the CFTC. Hmmmm. For more of this story, GO TO > > > Dirty Money, Dirty Politics and Bishop Estate.]

WASHINGTON - The United States-China Business Council today announced the election of eleven senior U.S. business figures to the organization's Board of Directors.

At its Annual Membership Meeting in Washington, June 9, members of the Council approved a slate of new directors forwarded to the membership by the Council's Board of Directors at their meeting on June 8.

Council Directors on June 8 also named Michael R. Bonsignore, Chairman and CEO of Honeywell Inc., as the organization's chairman for 1999-2000.

Roger G. Ackerman, Chairman and Chief Executive Officer, Corning Incorporated

Carleton S. Fiorina, Group President, Global Service Provider Business, Lucent Technologies

L. Oakley Johnson, Senior Vice President, Corporate and International Affairs, American International Group, Inc.

Sean Maloney, Senior Vice President and Director, Sales & Marketing Group, Intel Corporation

Patrick J. Martin, Senior Vice President - Developing Markets Operations, Xerox Corporation

Terence H. Thorn, International Government Relations and Environmental Affairs, Enron International

Lawrence B. Zahner, President, GM China Operations, General Motors Overseas Corporation

In addition to Mr. Bonsignore, the Council's officers for the coming year include Ambassador Carla A. Hills (Hills & Co.) and Frederick W. Smith (FDX Corporation) as vice chairmen; Edgar Hotard (Praxair, Inc.) as Secretary-Treasurer; Larry L. Simms (Gibson, Dunn & Crutcher LLP) as Counsel, and Robert A. Kapp as president.

The US-China Business Council, headquartered in Washington, D.C. serves the business needs of more than 250 major US companies and firms. The Council maintains service offices in Beijing, Shanghai and Hong Kong. . . .

BLUE GOLD. ... Canadians have something we need, and I don't mean hockey players. "Blue Gold," it's been dubbed by a Canadian newspaper, but it's far more valuable than that implies, since the world can actually do without gold.

Water. That's what Canada has that parts of our country and much of the world might literally kill for.

Hell, you say, water's everywhere. 70 percent of the earth is covered in the stuff. Yes, but as Canada's Maude Barlow points out to anyone who'll listen, less than one-half of 1 percent of all the water on the globe is fresh water available to drink.

An author and agitator for common sense, Ms. Barlow heads the Council of Canadians and is founding chair for progressive politics and policies. "Worldwide, the consumption of water is doubling every 20 years," she writes in a stunning report entitled "Blue Gold: The Global Water Crisis." Barlow calculates that in a very short while, most of the world's people will face shortages or absolute scarcity. . . .

Canada, on the other hand, has a blessing of agua fresca. . . . Some 20% of the world's entire supply of fresh water is in the winding rivers and countless lakes splashed all across the vast land . . .

This is not a reality that has dawned on Canadians alone. Others are casting their eyes northward, thinking, "There's gold in them thar hills." But it's not countries making invasion plans -- it's corporations.

To get their hands on the gold, the corporate grubbers first have to change the way the world's supply of drinking water is managed.