The Enron Collapse And The Bush/Republican Connections !
This is The Story Republicans Dont Want You to See
01-17-2002 - The familiar paraphernalia of political scandal is being assembled in Washington. At the last count, two criminal inquiries and six congressional hearings were scheduled on the Enron scandal. In the legislature, reduced by the war on terrorism to the role of cheerleader, everyone wants to be a part of it. Both parties know how the rituals of scandal can define a presidency. Reagan managed to shrug off most of the damage caused by the Iran-contra affair, while Clinton was overwhelmed by the Monica Lewinsky saga and is unlikely to have an airport named after him.
Now it is George W. Bush's turn. Enron, a gigantic Texan energy trading firm and the biggest single sponsor of his political career, collapsed dramatically amid allegations of fraud and insider trading. The inquiries will ask familiar questions: what did the administration know and when did it know it? Was there a cover-up and did the Bush team help ?
These are the staples of Washington scandal, but this time they may be the wrong questions. They focus on whether anyone in the administration broke the rules. The whole point of the Enron affair is that it discredits the rules of the game. It exposes the institutionalized corruption at the heart of US politics - a casual exchange of money and power that Bush has made his trademark.
The real scandal is not what was done illegally but what was done under cover of law. Enron conservatives don't violate the rules; they change the rules to suit themselves.
The seamy subject of campaign finance briefly captured the attention of the US electorate in the early months of the Bush presidency when it was apparent that big campaign contributors were being paid back one presidential decree at a time. Enron will bring it back into focus. It is the ultimate nightmare for the corporate welfare state, for which Bush has made himself flag-carrier in chief. The executives in this case have shown themselves to be anything but patriotic. They were revealed instead as rapacious asset-strippers.
Blind Faith: How Deregulation and Enron's Influence Over Government Looted Billions from Americans
The message was a familiar one. What's good for Enron ( insert your corporate name here in return for the appropriate campaign donation) is good for America. The Enron debacle is potentially so dangerous for Bush because it makes it painfully clear that the old equation does not hold. The Enron executives got rich even as their company was plunging into the abyss, taking its employees with it.
Bush "was in bed with Enron before he ever held a political office," reports Craig McDonald, director of Texans for Public Justice.
George W. Bush has good reasons for trying to minimize his relationship with Lay and Enron in the dying days of his father's presidency. After Clinton's 1992 victory, Enron pushed hard to exempt its energy futures contracts from regulatory oversight before the new Clinton Administration took office.
01-18-02 - A System Corrupted by Paul Krugman
01-18-02 - Politicians Trade Shots Over Enron (Waxman vs Cheney)
The Phil And Wendy Gramm Factor -
The legislation reducing government oversight of energy trading was muscled through Congress without a Senate committee hearing with the aid of Republican Sen. Phil Gramm of Texas. Gramm was chairman of the Senate Banking Committee, which had jurisdiction over the legislation he co-sponsored, but he chose to bypass his committee, and the bill was quietly tacked onto a "must-pass" appropriations bill late in the session.
Wendy Gramm, wife of Texas Republican Senator Phil Gramm also aided Enrons rise to power. As the lame-duck chairwoman of the Commodity Futures Trading Commission, she pushed through a key regulatory exemption on Jan. 14, 1993, six days before Clinton took office. Five weeks later, she joined Enrons board of directors. Enron, a leading contributor to Phil Gramm's campaign coffers, then named Wendy Gramm to its board of directors, where she served on the boards audit committee and pocketed millions in payments and stock benefits over the next nine years. She also had access to key financial information about the company.
01-18-02 - Bill Clinton Was Against That Regulatory Exemption For Enron
He Also Did Many Things to Try to Prevent Enron
She also headed the presidential Task Force on Regulatory Relief in the Reagan administration. And she was chairwoman of the U.S. Commodity Futures Trading Commission from 1988 until 1993. According to a report by Public Citizen, a watchdog group in Washington, "Enron paid her between $915,000 and $1.85 million in salary, attendance fees, stock options and dividends from 1993 to 2001."
As a board member, Ms. Gramm has served on Enron's audit committee, but her eyesight wasn't any better than that of the folks at Arthur Andersen. The one thing Enron did not pay big bucks for was vigilance. Wendy Gramm is also mentioned in a bank lawsuit alleging insider trading as having sold $276,912 in Enron stock in November 1998. Her response is that she sold the stock to avoid the appearance of a conflict of interest, given that her husband was chairman of the Senate Banking Committee. She turned a blind eye to the shady private partnerships Enron set up off the books to hide debt and mislead investors. In 2000, as the Supreme Court was naming Bush President, Senator Phil Gramm slipped a bill exempting energy trading from regulation into Clinton's omnibus appropriations act, avoiding hearings, floor debate and notice. Enron was all set to operate in the dark.
Enron Is a Cancer on the Presidency
Yet she was still very much on the Enron board and being rewarded with future stock options when her husband pushed through legislation that exempted key elements of Enron's energy business from oversight by the federal government. Phil Gramm had obtained $97,350 in political contributions from Enron over the years, so perhaps he was acting on his own instincts and not his wife's urgings.
There's a lot more you can say about the Gramms and Enron, and not much of it good. But Phil and Wendy Gramm are just convenient symptoms of the problem that has contributed so mightily to the Enron debacle and other major scandals of our time, from the savings and loan disaster to the Firestone tires fiasco. That problem is the obsession with deregulation that has had such a hold on the Republican Party and corporate America.
01-18-02 - The Gramms Regulated Enron, Benefited From Ties
The Enron Factor -
After Enron Corp. used its vast web of political connections to win December 2000 passage of commodities trading legislation that helped the company shield its energy trading activities from government scrutiny, Californias energy crisis suddenly took a dramatic turn for the worse as artificial supply shortages led to frequent rolling blackouts.
After all, not only was "Kenny Boy" Bush's major contributor, but it was Lay and Enron that Bush turned to for critical advice on how to further exploit U.S. natural resources. The media, which has hounded Bill Clinton on his Whitewater connections, has allowed Bush to maintain the fiction that his--and his father's--administration had nothing to do with the debacle that is Enron. Given the intense interest in the list of those who slept over in the Clinton White House, it's odd that no attention has been paid to "Kenny Boy's" sleepover in the early years of the senior Bush's White House. Those early Bush years were crucial for Enron, beginning with the passage of the 1992 Energy Policy Act, which forced the established utility companies to carry Enron's electricity sales on their wires.
At the same time, Wendy Gramm, who served under the elder Bush as chair of the Commodity Futures Trading Commission, allowed for an exemption in the trading of energy derivatives, which, as the Washington Post reported, "later became Enron's most lucrative business."
"The exemption was passed over the objection of the Clinton administration."
If the conservative deregulation zealots had their way, we'd be left with tainted food, unsafe cars, bridges collapsing into rivers, children's pajamas bursting into flames and a host of corporations far more rapacious and unscrupulous than they are now.
01-18-02 - The Spreading Enron Stain (How Many Enrons Are Out There)
The Bush do Nothing/did Something Factor -
"Millions of people in California paid outrageously inflated prices for electricity because of Enrons ability to manipulate the markets for electricity and natural gas, and thousands of Enron employees and shareholders have been devastated because of insider dealing and financial trickery," said Public Citizen President Joan Claybrook. "
Congressman Waxman's letter pointedly notes that a day after meeting with Lay, Cheney publicly commented that his administration would reject price caps on wholesale electricity prices as a solution to the energy crunch California was experiencing a position shared by Enron and other major energy suppliers and traders.
Bush adamantly resisted price controls even though Californias wholesale energy costs had almost quadrupled in 2001; at the same time, Enrons trading revenues nearly tripled.
2-2-02 - Boxer, Feinstein seize on 'smoking gun' note
White House actions mirrored Enron's ideas
The Public Citizen report Blind Faith: How Deregulation and Enrons Influence Over Government Looted Billions from Americans found that:
-- From June through December 2000, California experienced only one Stage 3 electricity emergency (which requires rolling blackouts). But following passage of the Commodity Futures Modernization Act, which shielded Enrons and others trading activities from regulators, the state had 38 Stage 3 emergencies ending only when federal regulators finally imposed price controls in June 2001.
-- Enron took advantage of lax government oversight and formed a complex web of more than 2,800 subsidiaries 874 of which were located in offshore tax and banking regulation havens, mostly in the Cayman Islands. Upon assuming office in 2001, Bush who has accepted $2 million from Enron during his political career and counts Enron chief executive Kenneth Lay as a close personal friend scrapped plans put into place by former President Bill Clinton to limit the ability of corporations to effectively use these offshore havens. The action came at the height of high West Coast energy prices, which would have allowed Enron to funnel billions in excess profits to offshore accounts.
01-18-02 - Letter to Paul H. O'Neill, Secretary of the Treasury
About Enron Cayman Islands Accounts & Bush Delays
-- As a lame-duck chairwoman of the Commodity Futures Trading Commission, Wendy Gramm exempted Enron and other energy futures traders from oversight in response to a request by Enron. At the time, Enron was a significant source of political funding for her husband. Five weeks later, she joined the companys board and served on the boards audit committee, where she would have had access to the companys financial details. The chief executive of Arthur Andersen, Enrons outside auditor, testified before congressional investigators in December that "illegal acts" may have been committed at the company.
The Enron CEO Game/Scam -
Enron Corp.'s Jeffrey K. Skilling dropped a bombshell on Aug. 14, 2001, when he abruptly resigned as the company's president and CEO, citing "entirely personal reasons (see BusinessWeek Online, 8/15/01, "Jeffrey Skilling's Surprising Split from Enron"). Enron immediately named its chairman, Kenneth L. Lay, as Skilling's replacement. Lay is no stranger to the job, having served as Enron CEO from 1985 until Skilling became CEO in January 2001.
In an exclusive interview on Aug. 20, 2001 with BusinessWeek Dallas Correspondent Stephanie Anderson Forest, Lay discussed Skilling's resignation and the future of Enron. Here is an excerpt from their conversation:
Stephanie Anderson: There has been some concern among investors that perhaps there is more to his resignation than meets the eye, perhaps accounting or other issues that have yet to come to light. Is there anything more?
Ken Lay: There are absolutely no problems that had anything to do with Jeff's departure. There are no accounting issues, no trading issues, no reserve issues, no previously unknown problem issues. The company is probably in the strongest and best shape that it has ever been in. There are no surprises. We did file our 10-Q [with the Securities & Exchange Commission] a few days ago [Aug. 14]. And, if there were any serious problems, they would be in there. If there's anything material and we're not reporting it, we'd be breaking the law. We don't break the law.
Ken Lay Lied to Businessweek Last August 2001
Ken Lays E-Mail From 8-14-01 Telling The Employees Everything is Great
The Non California Energy Crisis Factor -
Remember last Summer's so-called California energy crisis? Well...Ken Lay put some pressure on FERC Chairman Curtis Hebert to play ball, or Enron would not back him for his job.
The New York Times reported that Enron's Chairman Mr. Kenneth Lay told Curtis Hebert Jr., the chairman of the Federal Energy Regulatory Commission, that Enron would support him in his job if he backed a national push for retail competition in the energy business and a faster pace in opening up access to the electricity transmission grid to companies like Enron."
Hebert wound up RESIGNING from his Chairmanship a few months later, after he snubbed Lay's attempt at extortion. This was only a couple of months after Ken Lay called him up and threatened his job if he didn't play ball. AND after Ari Fleischer said Hebert's job was not in jeopardy.
Was Hebert a Clinton appointed Democratic holdover on the Commission? Nope...He was a Trent Lott crony, appointed by Bush, who had only been serving as FERC Chairman for 8 months!!! "Hebert, who grew up in the same town of Pascagoula, Miss., as Senate Republican leader Trent Lott and considers him a mentor, was named FERC chairman by Bush in January. At the time, Hebert was the only Republican on the five-member commission because of two vacancies."
After being forced to resign the former chairman of a federal regulatory agency painted a dark portrait Tuesday of Enron, saying the huge energy company had sought to manipulate energy policies to its own advantage.
"Everything they espoused to Congress and to state leaders was always what's in the best interests of Enron, never what's in the best interests of American energy companies," said Curtis Hebert Jr., a former commissioner with Federal Energy Regulatory Commission in the Clinton administration. He also served as FERC chairman in the Bush administration until the end of August.
In an interview with CNN, Hebert -- who left the FERC in August -- said Lay had wanted the agency to "mandate regional transmission organizations."
"When I told him that I didn't think it was the right thing to do and also that there was no legal basis for it under the federal Power Act, he told me that he and his company, Enron, could no longer support me as chairman," Hebert said.
Hebert's resignation is troubling because it reveals the workings of the invisible hand of Kenneth Lay, head of the Enron Corporation. In Washington, people don't just give up their powerful positions. People resign because somebody above them tells them to resign. Back in June, it was reported in the New York Times that Lay was putting the heat on Hebert to pursue a more federally-oriented deregulation stance in return for Lay's endorsement; the energy executive, after all, has enjoyed legendary influence with the President, who appoints Commission members and names the Chairperson. But Hebert snubbed Lay, who views the pro-dereg outgoing commissioner as not pro-dereg enough. Lay has been a long-time supporter of fellow Texan Pat Wood, who is expected to take over Hebert's post."
Bush is Linked to Ken Lay And They Are Both Liars
Ken Lay himself worked with the Bush transition team and helped screen candidates for the Federal Energy Regulatory Commission.
Then Governor Bush, appointed Pat Wood, nominee of Enron's chairman, Ken Lay, as head of the state's public utility commission, where he promptly pushed ahead with the deregulation the energy companies had been asking for. Last year, after Lay failed to persuade the head of the federal energy regulatory commission to agree to Enron's views, Bush gave Wood the chairman's job.
The Bush/Cheney Secret Energy Meetings Factor -
Enron executives had six meetings with the vice-president, Dick Cheney, and his staff when he was drawing up the administration's energy plan in the spring, a fact that has surfaced only since the company went bust. The White House has refused to tell Congress which other industrial magnates it consulted in drawing up the plan, which is broadly speaking a polluters' charter. Few, if any, environmentalists were invited.
01-20-02 - As Questions Get Louder, Cheney Stays Silent
This is precisely how Bush mixed business and politics when he was governor of Texas. Governor Bush introduced sweeping tort reform, making it harder for ordinary Texans to sue corporations. The oil and gas companies who supported his candidacy were given free rein, at secret meetings with Bush officials, to write their own rules when it came to state policy on emissions control. They, not surprisingly, chose a voluntary scheme with equally unsurprising consequences for air quality in Texan cities.
Texas Hall of Shame:
Number one rankings for the Lone Star state -
Smog (ozone - City of Houston)
Number of hazardous waste incinerators
Carbon dioxide emissions
Carbon monoxide emissions
Nitrogen oxide emissions (a key component of smog)
Total emissions of toxic chemicals
Release of toxic chemicals into the air
Underground injection of toxic chemicals
Cancer hazard from manufacturing facilities
Production of animal waste
Were Democrats Involved in The Enron Collapse ?
While it is true that the Enron corporation had its allies among the Democrats; campaign finance corruption and influence peddling are generally a cover-all-your-bets bipartisan activity. But in this case, the amounts given to Democrats were puny and late, and there's no doubt that Enron rode to power primarily on the strength of Lay's influence with the Bush family.
The Bush family ties to Kenny Boy Lay are just too intimate and lucrative to ignore.
There also are at least four Enron consultants and executives who hold high positions within the Bush White House, and some of them may be drawn into the investigations that cannot be avoided, despite the distractions of the war on terror.
Bush Lied About Early Ties to Ken Lay
On top of the possible legal and ethical violations The New York Times reported that Enron paid no income taxes in four of the last five years, using almost 900 subsidiaries in tax-haven countries and other techniques, an analysis of its financial reports to shareholders shows. It was also eligible for $382 million in tax refunds.
Sen. Charles Grassley, the top-ranked Republican on the Senate Finance Committee, said Tuesday that the panel will examine "whether Enron used certain tax vehicles that might have masked the company's financial condition."
The committee's line of inquiry was announced as the Bush administration confirmed that Enron Chairman Kenneth Lay contacted White House budget chief Mitch Daniels in October about economic stimulus legislation that could have meant a $254 million tax break for the Houston energy conglomerate.
The Times also reported that Enron used strategies common among businesses to avoid taxes. It also used some unusual methods including the creation of 881 subsidiaries abroad, including 692 in the Cayman Islands, 119 in the Turks and Caicos, 43 in Mauritius and 8 in Bermuda.
Also two Enron subsidiaries have been accused by a group of insurers of engaging in sham transactions in a tax haven, according to papers in federal bankruptcy court in New York.
Why do they need tax breaks! And a huge refund in the stimulus package. You know who's going to end up footing the bill in this country - the working stiff!
"Theres an object lesson here for those who decry government regulation: Absent a strong regulatory presence, greed prevails and consumers get the shaft. Weve seen it time and time again."
How long will it take ? How many decades and how many scandals have to come and go before we catch on ? We're human. We're self-interested. And when left to our own devices, some of us will do the wrong thing. Some perspective is needed. Unchecked deregulation is an express route to chaos and tragedy. Where the public interest is involved, a certain amount of oversight effective oversight is essential.
As John Dean once famously said of the Nixon administration, there is a cancer growing on the presidency, but in this case it's name is Enron, and it won't go away by being ignored.
Key Dates in Enron Case
o Jan. 20 - Bush sworn in; Enron and chairman Kenneth Lay each contribute
$100,000 to inaugural committees.
o Feb. 1 - Jeffrey Skilling named CEO.
o Feb. 22 - Enron officials meet with V.P. Dick Cheney.
o March 7 - Enron officials meet with White House energy task force.
o April 7 - Enron-Cheney meeting.
o May 7 - Energy task force report adopts many Enron proposals.
o May 18 - Lou Pai, CEO of Enron subsidiary, begins selling shares worth $353 million.
o July 31 - Lay completes sale of $101 million worth of stock over nine-month period.
o Aug. 14 - Skilling resigns after only six months as CEO.
o Late August - Enron vice president Sherron Watkins warns Lay that Andersen's accounting reports won't hide shaky Enron deals.
o Sept. 27 - Enron e-mails employees saying 401(k) accounts will be frozen as of Oct. 19 because of administrative change. Actual date was Oct. 26.
o Oct. 10 - Enron-Cheney staff meeting.
o Oct. 16 - Enron reports $618 million quarterly loss.
o Oct. 22 - SEC inquiry disclosed into possible Enron partnership conflicts of interest.
o Oct. 23 - Andersen's lead Enron auditor, David Duncan, begins effort to destroy documents, Andersen later says.
o Oct. 24 - Andrew Fastow ousted as Enron chief financial officer.
o Oct. 31 - SEC upgrades inquiry to formal investigation.
o Nov. 8 - Enron admits overstating profits by $586 million over five years.
o Nov. 8 - Dynegy Inc. agrees to buy Enron.
o Nov. 28 - Dynegy pulls out of deal.
o Nov. 29 - SEC expands investigation to Andersen.
o Dec. 2 - Enron files for bankruptcy.
o Dec. 3 - Enron announces 4,000 layoffs.
o Dec. 12 - Andersen CEO Joseph Berardino tells Congress Enron might have violated securities law.
o Jan. 9 - Justice Department says it has begun criminal investigation of Enron.
o Jan. 10 - Andersen reveals destruction of documents.
o Jan. 15 - Andersen fires Duncan.
1-17-2002 Update -
Here are some quotes from Ari (The Liar) Fleischer from 1-16-02 about Enron:
["The Bush administration feels under no obligation to catalog all of its contacts with Enron and will resist any "fishing expedition" aimed at forcing such disclosure, White House spokesman Ari Fleischer said yesterday"]
Webmaster: If clinton did this he would be stoned to death by the media and the conservatives ! What happened to the Bush administration restoring dignity to the white house ? Is hiding information restoring dignity ? If they would disclose the contacts like an honest person with nothing to hide would do there would be no need for a fishing expedition.
[Fleischer also said the Enron affair was of "a totally different nature" than the Whitewater controversy that embroiled former President Bill Clinton because "nobody has made any suggestions of wrongdoing by anybody in the White House."]
Webmaster: Does this guy (Ari) live on planet earth ? Every newspaper and media outlet in america has suggested their is wrongdoing by people in the white house. Ari should be fired for lying to the american people. Maybe foxnews could hire him.
[Fleischer said that while the administration will respond to specific questions, especially if they involve allegations of wrongdoing, it does not feel obligated to explain - or even to investigate internally - the totality of its contacts with the Houston-based company.]
Webmaster: If the top secret Bush administration wont disclose the contacts and do an internal investigation how do you ask specific questions when they have all the information ?
["If there's a suggestion of wrongdoing, we will pursue it," he said. "But in the absence of that, it's like saying how many times was the White House contacted by this company or this union. What's the specific question, other than contact ? Because communication is the normal business of government."]
Webmaster: If communication is the normal business of government why are they hiding all the information ? Bush should fire this guy (Ari) today for stupidity.
[When asked how investigators could possibly know if there were any wrongdoing if they did not first know about the contact, Fleischer said, "And that is the difference between an open-ended fishing expedition and answering specific questions when somebody has a suggestion of wrongdoing."]
Webmaster: Here is what Ari told us in laymans terms:
If you ask us about any specific wrongdoing we will answer you. But you have to know about the specific wrongdoing before you can ask about it. But you can't know about any specific wrongdoing because we will not tell you what we did or who we talked to.
If you think you know about any wrongdoing, and you ask us about it, we will tell you that there was no wrongdoing. So don't ask us about any wrongdoing because we wont tell you about it.
Full Story Here:
Bush: No 'Fishing' For Info Allowed in Enron Debacle
Source Links For The Above Story:
Enron and the Gramms
Bush, the Corporations' Flag-Carrier
Senate panel reviews Enron over tax breaks
Enron paid no Income Tax 4 of last 5 years
Deregulation Allowed Enron to Loot Billions
Bush And His Administration is Officially Linked to Enron
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