Posted on 05/17/2002 10:08:59 AM PDT by Medium Rare
By Jim Rarey
May 17, 2002
ELITIST HANDS IN THE COOKIE JAR
In this writer’s February 27th article this year, “Enronitis – A Communicable Disease” the following statement was made. “If the Enron practices are as widespread in other companies, as some believe, we may be seeing a domino effect with Enron and Global Crossing only the beginning. “
At that time, only Enron and Global Crossing, along with their mutual auditor/consultant Arthur Andersen, were under the microscope of public and Security and Exchange Commission (SEC)) scrutiny. At this writing there are at least thirty (and counting) companies that have admitted “accounting irregularities” and/or which are the subject of formal investigations by the SEC.
These disclosures should by no means be considered “voluntary mea culpas.” The Federal Energy Regulatory Commission (FERC) along with the SEC seem to have awakened from a decades long slumber and are giving the perception of vigorously pursuing accounting irregularities and other questionable corporate practices. The FERC compiled a list of suspect practices gleaned from testimony by Arthur Anderson and Enron officials and sent out a questionnaire to 150 energy companies. The companies were required to answer, under penalty of perjury, whether or not they were engaging in any of those practices. Ergo, a flood of disclosures.
Wall Street analysts estimate that over one trillion dollars in the value of those companies’ stocks has vanished and that doesn’t count the billions (perhaps hundreds of billions) of dollars in bonds for which an accounting is yet to be made. Enron has notified the SEC that it may have overstated its assets last year by as much as $24 billion and that its financial statements as far back as 1997 are not reliable. The company did not even attempt to file the required reports for the quarter ended in March.
The “problems” are not limited to energy producing and trading companies. Implicated in the scandals are retailers like K-Mart (a FBI criminal investigation), security analysts, brokerage houses, insurance companies, auditors and consultants, large investment banks and even bond rating services. Banks like CitiGroup, Credit Suisse First Boston and J. P. Morgan Chase find themselves victims of their own greed in participating in the scams as well as targets of lawsuits and investigations by hapless investors and regulatory agencies. It almost seems like a game of musical chairs where there were not enough chairs when the Ponzi schemes collapsed. Companies like Enron and Global Crossing, although in bankruptcy, ended up with most of the money for which an accounting has not yet been made.
The maze of sham transactions has set insiders against each other in a scramble to cut losses and point fingers. We are treated to the spectacle of a subsidiary of the Rockefeller controlled CitiGroup (Travelers’ Insurance) suing its own parent company for losses on transactions it insured between CitiGroup and Enron. CitiGroup is refusing to pay claiming it was misled.
Along with the regulatory agencies, corporate boards of directors seem to have been asleep at the switch. Some very powerful and well-connected directors are now claiming they were misled by company executives and/or auditing firms. Many are members of the premiere U.S. organization pushing world government, The Council on Foreign Relations (CFR). Others are associated with one of the CFR’s many spin-offs or organizations controlled by CFR members i.e. The Trilateral Commission (TLC) and the Business Roundtable.
Boards of directors are not necessarily controlled by their chairmen. If the chairman himself does not fill the role, we usually find on the board someone from an investment bank or a high-powered law firm. What counts is who controls or influences the voting stock of the company.
So let’s take a brief tour of some of those powerful men (and women) on boards of companies who were so easily “misled.” We shall start and end with Enron. Enron’s (former) Chairman and CEO, Ken Lay, was a close associate of both Bill Clinton and the George Bushes. He is a member of Rockefeller’s Trilateral Commission
Wendy Gramm is a member of the audit committee of Enron’s board. Just prior she was a Reagan appointee as chairman of the Commodity Futures Trading Commission, the powerful regulatory agency which oversees the nation's commodities and futures exchanges. Her husband is Senator Phil Gramm who sponsored legislation providing partial protection of professional firms like Arthur Andersen from class action suits. Gramm has decided not to run for reelection.
In our neighbor to the north a large bank got caught with huge losses when the Enron music stopped. The Canadian Imperial Bank of Commerce (CIBC) has on its board Lord ((Conrad M.) Black. An unabashed globalist, Black on his official biography lists memberships in the Council on Foreign Relations and the Bilderbergers (evidently that’s what they call themselves).
Canada’s largest energy company EnCana, which engaged in sham “round trip” transactions with Reliant Energy lists on its board T. Don Macy. Macy is the former Chairman and President of Amoco Eurasia Petroleum Co. In 1996 he signed an oil development deal with the Azerbaijan government joining a consortium for exploitation of Caspian Sea oil. Amoco and Unocal control 55.5% of the consortium.
Returning to the U.S., Rockefeller controlled CitiGroup (including subsidiaries CitiBank and Traveler’s Insurance) is a major player in the Enron scandal. Director Robert Rubin (CFR) is chairman of the firm’s executive committee that runs the group between annual board meetings. Rubin is the former U.S. Secretary of Treasury and a former CEO of Goldman Sachs.
CitiGroup director C. Michael Armstrong (CFR) is chairman and CEO of AT&T Corporation. He is the former chairman and CEO of Hughes Electronics. During his tenure there, Hughes and Loral illegally furnished classified rocket technology to the Communist Chinese government.
Another CitiGroup director is John M. Deutch (CFR), former head of the CIA. Deutch resigned his CIA position after he was caught with unauthorized classified information on his laptop computer. He is also a director on the board of CMS Energy, which has admitted to sham transactions with several other energy companies.
CitiBank was caught laundering hundreds of millions of dollars in cocaine money through the private account of the brother of the Mexican president. The only consequence was the resignation of a vice president.
The Security and Exchange Commission (SEC) played a large role in enabling the Enron scams. Arthur Levitt, the New York Democrat fund-raiser was appointed chairman of the commission by Bill Clinton. During his tenure, the SEC granted Enron huge exemptions from security laws. Although Levitt claims he can’t recall the exemptions, a former SEC regulator told Insight Magazine Levitt was involved in the decision. Experts say the exemptions allowed Enron to set up its sham offshore partnerships that played such a large role in the meltdown. Levitt is now a senior analyst for the Carlyle Group.
A book could (and probably should) be written about corporate governance through former government officials and titans of industry on corporate boards, of which most are committed globalists. Space considerations have only permitted a brief sampling of the phenomenon here.
No list would be complete without examining the connections of Herbert S. (Pug) Winokur, not exactly a household name. Winokur was chairman of the Enron finance committee. He is a former chairman and CEO of Dyncorp and currently chairs its compensation committee.
Catherine Austin Fitts has authored a devastating expose of Winokur and his influence. Fits is a former managing director of the Wall Street firm Dillon, Reed & Co., a former assistant secretary of HUD and president of the Hamilton Securities Group. The following information (some of it paraphrased) is from her expose titled, “Damage Control at Dyncorp – Harm at Harvard.”
Winokur (a Harvard graduate) is a director of the Harvard Corporation and Harvard Management Company. His investment firm, Capricorn Holdings, is a lead investor in Dyncorp.
Winokur claims he and other Enron directors were mislead by Arthur Anderson and Enron management and it legal counsel as to the true nature of its financial structure. Yet Highfields Capital which manages a large portion of Harvard’s $19 billion endowment, reaped a quick profit of somewhere between $50-120 million through short sales (puts) of Enron stock. Fitts suspects insider trading.
In addition to its contracts with the CIA and State Department, Dyncorp manages, under contract, much of the financial data and other electronic records of the SEC, Department of Defense (DOD), Department of Justice (including the FBI), and the Dept. of Housing and Urban Development (HUD).
Between just two of those departments, DOD and HUD, over $3 trillion dollars cannot be accounted for by auditors since 1997. Fitts asks the question, “Could it have moved through the 300-plus subsidiaries that Enron operated in the Cayman Islands?”
And who are the auditors? Dyncorp, DOD and HUD all use Arthur Andersen. In a letter directed to Winokur, Fitts asks him how he can allow Dyncorp to continue to us Arthur Andersen while he claims the auditors misled (lied to) him at Enron.
In closing, Fitts laments (justifiably),” Still worse yet, while most activists are trumpeting the dog and pony show being given by Congress, the SEC and the General Accounting Office (GAO), full of blustery rhetoric and convenient outrage, what the government and Congress are really doing is giving the bad guys all the time they need to destroy evidence, transfer assets, and hide the money.”
The author is a free lance writer based in Romulus, Michigan. He is a former newspaper editor and investigative reporter, a retired customs administrator and accountant, and a student of history and the U.S. Constitution.
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