The Stench From Enron's Crash-And-Burn

Fort Worth Star-Telegam ^ | December 11, 2001 | Molly Ivins

[bigdog]

AUSTIN - Hail and farewell, O Enron! What a flameout. The Establishment media, sucking its collective thumb with unwonted solemnity, is treating us to meditations on two themes: AUSTIN - Hail and farewell, O Enron! What a flameout.

The Establishment media, sucking its collective thumb with unwonted solemnity, is treating us to meditations on two themes: "How the mighty have fallen" and "Who would have thunk it?" Pardon me while I snort, in lieu of ruder noises, and offer two themes of my own: "What took so long?" and "Anyone with an ounce of common sense."

If you want to know what this story is about, pretend that Bill Clinton is still president. Pretend that Clinton's long-time, all-time biggest campaign contributor - a guy for whom Clinton has carried water for over the years, a guy with unparalleled "access," a shaper of policy, a man with a veto on regulatory appointments affecting his business, with connections at every level of the administration, a political fixer beyond the wildest dreams of James Riady - imagine that this guy's worldwide empire has tumbled into bankruptcy in just three months amid cascading reports of lies, monumental accounting errors, evasions, iffy financial statements, insider deals, a board of directors rife with conflicts of interest, top executives bailing out with millions while regular employees see their life savings shrink to nothing. Imagine all this back in the day of Bill Clinton.

Holy moley, we'd have four congressional investigations, three special prosecutors, two impeachment inquiries and a partridge in a pear tree by now. The Republicans would all be drumming their heels on the floor in full tantrum.

But this is not President Clinton; it is President Bush - so of course different standards must apply. The fact that Ken Lay, Enron's chairman, has been Bush's chief money man and key backer since he first went into politics is mentioned only in passing. The media don't want to be impolite. They have been credulously swallowing Enron's PR and overlooking the obvious for years.

The main problem with Enron is that it has never produced much of anything in the way of either goods or services; it has not added a single widget to the world widget supply. Enron is in the business of "financializing," making markets, trading in wholesale electricity, water, data storage, fiber optics - just about anything. One Enron executive told The New York Times that the company's achievement was to create "a regulatory black hole" to suit its "core management philosophy, which was to be the first mover into a market and to make money in the initial chaos and lack of transparency."

Enron started as a gas pipeline company that went into trading natural gas, and even then the company's critics claimed that Enron was making profits by stoking volatility in gas prices. The same charge showed up again in spades with the newly deregulated electricity markets. Enron had lobbied for utility deregulation relentlessly, formidably and very expensively at both the state and national levels.

The company seemed to spend more time influencing government than doing business. Like Long Term Capital Management, the hedge fund that went awry, it seemed to have only a parasitic relationship to actual economic activity. The problem with deregulating utilities is the reason that they were regulated in the first place: Monopoly power and the threat of market manipulation are a set-up for unholy price-gouging. How many times do we have to relearn that lesson?

Just a few spiffy eye-openers on Enron's connections:

• Lay and Enron together donated $2 million to Bush. In 2000, a company memo that was an open strong-arm recommended that employees give campaign checks for Bush to the political action committee; low-level managers were urged to contribute $500 and senior executives at least $5,000. Another $1 million was given to mostly Republican congressional candidates. It gave more money last cycle than any other energy company.

• Lawrence B. Lindsey, Bush's top economic adviser, got $50,000 from Enron in 2000 for consulting, presumably giving the company the same excellent economic advice now proving so healthy for the nation's economy.

• Karl Rove, Bush's top political strategist, sold between $100,000 and $250,000 worth of Enron stock earlier this year after being accused of conflict of interest.

• The California Legislature passed a contempt motion against Enron for failure to respond to a June 11 subpoena. The Legislature is investigating whether power-generating companies willfully manipulated the electricity supply in order to drive up prices last year.

• Lay was the only energy executive to meet alone with Vice President Dick Cheney while Cheney was drawing up a new national energy policy in secret.

• Enron influenced public policy time and again while Bush was governor here, including the infamous "grandfathered plants" deal. In 1997, Lay asked Bush to contact every member of the Texas delegation to explain how "export credit agencies of the United States are critical to U.S. developers like Enron, pursuing international projects in developing countries." These agencies provide political risk coverage and financial support to U.S. companies abroad. It's called corporate welfare.

• In Texas, Enron was a major player during the utilities deregulation debate, for which Bush lobbied actively, and, of course, in "tort reform," making it harder to sue corporations for the damage they do.

  Molly Ivins writes for Creators Syndicate. 5777 W. Century Blvd., Suite 700, Los Angeles, CA 90045

[laredo44]

I thought big energy was going to thrive under W. Molly and the dumb clucks were going to track all the excessive profits these companies were going to realize with Bush and Cheney in the White House. But first thing you know, ooops, Enron goes belly up. Yet somehow, she thinks Enron's failure is good for the Republicans? Molly's got both synapses firing today.

[laredo44]

Karl Rove, Bush's top political strategist, sold between $100,000 and $250,000 worth of Enron stock earlier this year after being accused of conflict of interest.

For the life of me, I can't figure where Molly is going with this. Rove was forced to unload his stock. There's no suggestion he used insider information to unload a bad position early. What's the point of this statement?

[lewislynn]

What chaps me is that they have cast utilities deregulation in such a bad light that a $250 million natural gas-fired generating plant in my area may never be built because of the fallout from this scandal.

That's because "deregulation" as regulated by regulators has no good light. "Deregulation" is a word that's lost it's meaning. "Deregulation", where ever it's instituted is riddled with regulation, price controls and a bailout for utilities "stranded costs" (debt)...simply put it's a scam on the end user. You in Texas will soon find out.

Everyone thought California had a shortage of supply...what happened?...Suddenly, in less than a year, there's an oversupply, only a few plants have come on line and some investigations/lawsuits are threatened.

[lewislynn]

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[SBeck]

I beleive at the time of Rove's sale that Enron employees were forbidden to sell their own stock. That makes this very smelly.

[SBeck]

I think the point is being missed here. The Enron stench blankets both parties and the executives at Enron were both duplicitous and greedy. They acted like Amway distributors and played loose and fast with the facts. Regardless of how you slice it, or cut it, the amount of flatulence in the air over this shell game is overpowering.

[Pres Raygun]

Karl Rove, Bush's top political strategist, sold between $100,000 and $250,000 worth of Enron stock earlier this year after being accused of conflict of interest.

This is actually very funny. The Democrats were falling over each other crying corruption regarding Rove's investments. In the end it backed fired on them. If they had not made such a stink about Rove's investment in Enron in the first place and he had sold the stock on his own when it began to fall, they could have used it against to much greater affect. Not only did they save his butt, but they saved him as much as a 1/4 million dollars. The Democrats are on a serious losing streak, dating back to the November/December election debacle.

[bigdog]

Hey Lewis -

Thanks for the informing chart. My ridicule of Molly should not be mistaken as support for Enron or its management.

Several previous posts call into question unethical and possibly illegal acts that may have swindled employees and other shareholders.

There probably will be a SEC investigation, and there should be. But, there aren’t any persuasive arguments in this article linking the White House or the Republican Party to these shenanigans.

Note the previous post illustrating the near equal contributions to the two parties.

[Pres Raygun]

I beleive at the time of Rove's sale that Enron employees were forbidden to sell their own stock. That makes this very smelly.

You've got to be kidding! According to your logic Rove would be guilty regardless of what action he took regarding his Enron stock. If he hung onto it he would have been guilty of a conflict of interest. If he sold it he would be guilty of selling his own private property. The fact that Enron employees were forbidden from selling their stock (however unfair that may be), has no bearing on Rove since he was neither an employee or an executive in Enron when he sold his stock.

[SBeck]

You're right about the equal campaign contributions. Unfortunately, that only suceeds in showing that Enron plays both sides equally as an unelected influencer over our lives. Once again, this entire mess smells to Hell and hopefully Lay and his cohorts will get to spend some time in a crowbar Hilton in the near future.

[SBeck]

Karl Rove had access to Enron's executives, who were, coincidentally, not forbidden to sell their options as previously posted, while the average Enron employee could only watch their retirement turn into used toilet paper. Regardless of how you feel about conflict of interest or whether Rove had inside information - you don't think for a second that CEO Lay didn't have a guy with direct access to the President on his speed dialer do you - is irrelevant, the fact that this mess is even tangentially connected to the WH smells.

[bigdog]

One question.

Do you beleive any Administration official mentioned new about Enron's executives illegal or unethical behavior?

[laredo44]

Karl Rove had access to Enron's executives, who were, coincidentally, not forbidden to sell their options as previously posted, while the average Enron employee could only watch their retirement turn into used toilet paper. Regardless of how you feel about conflict of interest or whether Rove had inside information - you don't think for a second that CEO Lay didn't have a guy with direct access to the President on his speed dialer do you - is irrelevant, the fact that this mess is even tangentially connected to the WH smells.

Sorry, but your point remains unclear. Rove was hounded by partisan Democrats to sell his energy stocks after Bush was confirmed as President because they were convinced that Bush/Cheney would mean big benefits/favors/speical treatment for big energy. [Democrats know these things because several of them profited handsomely by selling pharmacuticals short just before the Clinton Administration began bashing drug company profits]. Rove sold to quiet the Democrats. Enron was supposed to do swimmingly under the new administration and the jackals that pressured Rove would have a good laugh about how much their grandstanding cost Karl in capital gains. So what does Rove's divestiture have to do with Molly's rant?

And what exactly is the point that Lay had the White House on his speed dialer? Exactly how are you implying that Lay made use of it? I could see a connection if Bush sent Enron a big bailout but they didn't. What's the scenario? Lay called Bush or Cheney and what?

[Pres Raygun]

Regardless of how you feel about conflict of interest or whether Rove had inside information - you don't think for a second that CEO Lay didn't have a guy with direct access to the President on his speed dialer do you - is irrelevant, the fact that this mess is even tangentially connected to the WH smells.

Give it a rest. Rove didn't need someone at Enron telling him to sell. The Dumocrats did that for him. You can't have it both ways. Rove sold the stock just like the Rats wanted him to do and now you and Molly want to complain about it. If Rove was Enron's man in the White House, then the Rats unwittingly provided cover for him by raising such a stink over the potential conflict of interest in the first place.

[machman]

Yes, Enron slept with both parties. Who do you think was going on those Commcerce Dept. junkets around the world with Ron Brown back in 1994? Check the passenger lists.

Ken Lay and Jeff Skilling were Republicans, but businessmen first.

List Of Executives On Brown Trip

[machman]

Forgot to add this, who was greasing palms for Enron in places like China, India, Africa, and South America?

I wouldn't doubt if Rebecca Marks was a Clinton "girlfriend".

[SBeck]

My point should be crystal clear - no double standards. None were tolerated from ex-42's WH, none should be tolerated from the current administration. President Bush should take a chapter from Rudy Giuliani and announce his extreme displeasure regarding Enron and any members of his staff who played the slime game.

Even a remote whiff of a perception of conflict of interest or something fishy is enough to unbalance his Presidency.