ENRON - CRIMES INCORPORATED
The Ugly Face Of "Free Market" Capitalism - Tim Wheeler
ENRON! Never before, not even during the depths of the Teapot Dome and the
Watergate, has the scandalous influence of corporate money hung so heavy over
Washington. This scandal is exposing, in a new way, that the Federal Government
is "bought and paid for", and serves the interests of the corporate rich. This
scandal is going to keep unravelling for the rest of Bush's term in office. It
ranks with the Pentagon Papers, Watergate, the Iran-Contra conspiracy, and the
Savings and Loan debacle, in criminality and corporate venality. It could
eclipse these previous scandals in its long-term effects on the economy, and our
monopoly-ruled political system.
Bush choked on a pretzel and fell off his
couch a few days ago, but he sobered up quick enough to deliver a loud blast
against Enron in West Virginia. He bemoaned the 8,000 dollars his mother-in-law
lost in the Enron collapse. Extricating Bush from his crony capitalist
entanglement with Enron is now the highest political priority of the White
House, the Republican Party and the ultra-right. But there are so many smoking
guns in this crisis that the White House looks like the OK Corral.
The suffering and misery inflicted on innocent people by the Enron swindle is
already emerging as an overriding issue in the 2002 elections. It has pushed the
"war on terrorism" off the front pages. That war artificially inflated George W
Bush's approval rating. But the Enron scandal comes in the midst of a deepening
economic recession. Enron's bankruptcy is touching off a domino effect, with
creditors burned by Enron rejecting appeals for bail-out loans from other
troubled companies. K-Mart's filing for bankruptcy is blamed on this newfound
wariness on Wall Street. The collapse of Enron and K-Mart will add hundreds of
thousands more workers to the ranks of the eight million already unemployed. As
that reality dawns on the people, Bush's popularity could sink as fast as Enron
itself.
A Senate hearing has opened on the collapse of
Enron. There are at least eight hearings scheduled before House and Senate
committees. The Securities and Exchange Commission is investigating, the General
Accounting Office. There is a blizzard of lawsuits, including one by the
International Brotherhood of Electrical Workers, and another by the
labour-backed Amalgamated Bank of New York, on behalf of workers and
stockholders, whose retirement benefits have been wiped out in the Enron
collapse.
The Justice Department has set up a Task Force to
investigate into the Enron affair, headed by Deputy Attorney General Larry D
Thompson. All you need to know about Thompson is that he orchestrated the smear
campaign against Anita Hill in securing Senate confirmation of his crony
Clarence Thomas, to the US Supreme Court. Thompson belonged to an Atlanta law
firm that counted Enron as a client. Thompson was rushed into the breach because
Attorney General Ashcroft was forced to recuse himself.
Ashcroft received 57,000 dollars from Enron in his unsuccessful run for Senate
re-election in Missouri. The entire US Attorney's office in Houston was forced
to remove itself from the Enron probe because they are so tainted by ties to
Enron.
A striking fact of this scandal is the difficulty of finding elected
officials without ties to Enron to conduct the investigation. Half the Senate
and one third of the House, both Republicans and Democrats, received campaign
contributions from Enron. Enron clearly favoured the most rabid rightwing
Republicans like House Majority Leader Tom DeLay, of Houston, who rammed through
Enron's energy deregulation agenda. For the most part, the giving to the
Democrats was to buy their silence Now there is a panicky rush by these
politicians to donate their Enron cash to funds that benefit those who lost
their pensions in the Enron collapse.
The political establishment is so
tightly intertwined with Enron that calls for the naming of a special prosecutor
are certain to grow-although we know from the sandbagging of Lawrence Walsh in
the Iran-Contra that this is no guarantee of justice. This crisis has also
spurred a renewed effort to push through the Shays-Meehan Bill to ban "soft
money", to curb the poisonous influence of corporate political action
committees.
SWINDLERS 'PAR EXCELLENCE'
The crimes are legion: massive
corporate fraud; insider trading; influence peddling; obstruction of justice;
and tax evasion. Enron paid no taxes in four of the last five years and was
approved for 278 million dollars in tax refunds despite reports of hundreds of
millions in profits. They carried out this massive tax swindle by hiding the
profits in their web of 900 off-shore companies, many of them dummy
corporations. Enron was so determined to avoid paying taxes that they filed a
lawsuit in Texas to win tax relief.
Justice Priscilla Owen
wrote the majority opinion that reversed a lower court decision and reduced by
15 million dollars Enron's taxes for support of Texas public schools. She had
received a generous cash contribution from Enron when she ran for election to
the bench. George W Bush rewarded her by recently naming her to a vacant
judgeship.
Elliot M Mincberg, legal director of People for the American Way,
a group opposing her Senate confirmation declared:
"I think the combination
of campaign contributions from Enron and the fact that she ruled clearly in
Enron's favor could be a subject of significant concern for the (Senate
Judiciary) Committee."
RISE TO POWER
We are only now beginning to see
the inner workings of this corporation that virtually no one had even heard of
until the late 1980s. It rode to the top on the Bush family coat-tails. At this
time last year it was rated the 7th largest corporation among the Fortune 500,
with revenues of 101 billion dollars, its stock selling at its highest for 90.75
dollars a share. It was aggressively expanding from Houston across the nation
and around the world, with the help of James A Baker and other Bush (elder)
insiders.
Enron, along with Duke Power, Dynegy Corporation and other natural
gas monopolies generated the fraudulent "energy shortage" in California. Then
taking advantage of the deregulation they had rammed through, they jacked rates
to California consumers by 400 per cent and more.
Enron was also expanding
worldwide on every continent, linking its investments closely to Bush's "sole
superpower" military adventures in the Middle East and Russia. On the surface,
the company seemed strong if not impregnable. Yet read a letter from Enron Vice
President Sherron S Watkins, to CEO Ken Lay written last August, and it is
obvious that the entire corporation was built on smoke and mirrors, its double
book-keeping and corporate sleight-of-hand ignored by Arthur Anderson, the
wealthy accounting firm. "I am incredibly nervous that we will implode in a wave
of accounting scandals," wrote the vice president, adding that Enron's climb to
the top was "nothing but an elaborate accounting hoax."
Dummy corporations
and "partnerships" were set up, with each using the other's stock as
"collateral" to secure more loans. Enron used expectations of future earnings to
secure even more capital for expansion. The deceitful claims of profitability
drove Enron stocks higher and higher. Watkins told Lay her theory of why Enron
CEO Andrew Skilling suddenly resigned: Skilling "looked down the road and knew
this was unfixable and would rather abandon ship now than resign in shame in two
years."
Lay's only response to this letter-and other similar warnings- was
to unload his Enron stock as quickly as possible.
The systematic nature of
this gigantic swindle is coming home with a vengeance, the vile double standard
in which the rich are protected while the vast majority of working people are
fleeced. This week, two Enron workers in Portland, Oregon, employees of Portland
General Electric, wholly owned by Enron, spoke out on the company and its close
ties to Bush. They are members of IBEW Local 125, which has filed a lawsuit on
behalf of the 1,000 PGE workers who lost millions in the collapse of their Enron
401(k) accounts. Donald Eri told me:
"If I stole 100 dollars, they would do
more than slap my wrist. Enron stole billions. They should get more than a slap
on the wrist. This is no time to be meddling with Social Security after what
happened to us."
PGE worker, Al Kaseweter, told me his Enron 401(k) account
was worth 350,000 dollars a few months ago. Now it is worth 20,000 dollars. He
scorned George W Bush's deceitful attempts to distance himself from Enron.
Bush's father served on the Enron Board of Directors. "Their hands are dirty,"
he said. Like all other Enron workers, Kaseweter was not permitted to sell his
Enron stocks as they began to decline in value. But Lay and 29 other top Enron
executives, unloaded 1.1 billion dollars in Enron stocks in their portfolios
before the collapse.
"This was insider trading," Kaseweter charged. "Lay
kept telling us to buy Enron stock while he was selling his. He knew the ship
was sinking. They were siphoning off our retirement funds to keep the ship
afloat."
"Free Market" Capitalism - II
Tim Wheeler
THERE is a
profound ideological dimension to this crisis: It has exposed the big lie at the
heart of so-called "Free Market" capitalism. The big lie that justified
deregulation, that the "Free Market" would keep business honest, that the
government, as Reagan put it, should butt out and let the genius of the market
do what it does best. Enron's collapse has exposed the hoax behind schemes to
privatise Social Security. Bush told us, "Its your money! Why not invest it in
the market." You might get rich. But in what sense did Enron workers own those
stocks if they couldn't sell them? The workers toiled to earn those stocks in
lieu of a real Enron pension. But Enron executives reserved the right to siphon
off that money to cover their "golden parachutes" when the hall of mirrors came
crashing down. Behind Bush's privatisation of Social Security is the plan to
loot workers pension funds including both their private accounts and Social
Security itself.
PRIVATE INTERESTS NEGATES PUBLIC
Enron's meltdown lays bare the collision of public interest vs. private profit.
Since the administration of Ronald Reagan there has been an assault on
everything public, and a drive to privatise public services or publicly owned
industries, that could be a source of profits for Wall Street. It has included
calls to privatise the public schools, Social Security and Medicare. There is a
drive to privatise publicly owned electric utilities and hospitals, to open up
federally owned lands to the timber, mining, and energy monopolies.
Enron's
collapse may help tilt the scales against the privatisers and toward public
control.
First, fighters for reforming our electoral system say the only
real way to end the corrupting influence of money is to have full public
financing of our elections.
Secondly, the wiping out of Enron 401 (k)
accounts will reinforce the demands to preserve and strengthen Social Security
and Medicare. The grassroots movement demanding a national health care system
and a rescription benefit under Medicare should seize on the Enron debacle as a
clear refutation of Bush's privatization scam.
Finally,
Enron is a gas and electric giant that ripped off energy consumers coast to
coast. Already, the grassroots movement that fought this swindle in California,
are popularizing public ownership of energy and utility companies as the only
real solution.
THE DEEP BUSH CONNECTION
The Enron crisis presents many
opportunities to open a national dialogue on the logic and benefits of
socialism. The point is, Enron and a thousand other corporations like it, cannot
be reformed. No matter how many laws and regulations Congress enacts-and they
should enact them-sooner or later these corporations will be back picking our
pockets. Bush's incestuous "good-ole-boy" relations with Enron now place him in
grave danger. A frenzied cover up is in full gear. The shredders are running
full tilt at Enron, at Arthur Anderson, and no doubt in the basement of the
White House.
What did Bush know and when did he know it? He knew from the
beginning. Enron's Ken Lay was Bush's favourite CEO, so close that Bush called
him "Kenny Boy." Enron poured millions into Bush's political career starting
from his first run for Texas governor in 1994. As Craig McDonald, director of
Texans for Public Justice (TPJ) told me in an interview, "Bush was in bed with
Enron long before he made his first run for political office." McDonald and TPJ
wrote a report, "The Bush Gusher," which exposed Enron's support of the Bush
family. McDonald pointed out that Enron sent their top lawyer, James A Baker,
who had served as Senator of State under George Bush senior, on a victory tour
of Kuwait in 1993 to line up contracts with the Kuwaiti regime rebuilding after
the Gulf War. Lay and Enron executives poured millions into the younger Bush's
presidential election campaign, much of it hidden "soft money." Bush flew on
Enron jets to campaign rallies.
FLORIDA HEIST
When Bush lost the popular
vote, they rushed James A. Baker to Florida to orchestrate the stealing of the
2000 presidential election, using the same underhanded tactics they used to
hoodwink Enron stockholders. Baker was on CNN nonstop explaining why the Florida
votes should not be counted and why the US Supreme Court should choose the
president. As a headline in the PWW said, it was "A very American coup." And the
payback was not long in coming. Bush appointed at least 30 Enron executives,
consultants, and investors to his administration including Army Senator Thomas E
White who once owned 50 million dollars in Enron stock. Like so many other
insiders, White dodged the bullet and sold his stock for a handsome profit
before it became worthless. Other Enron-connected Bush officials include Defence
Senator Donald Rumsfeld, US Trade Representative Robert B Zoellick, White House
adviser Karl Rove, and economic adviser Lawrence Lindsey.
When Vice
President Richard Cheney set up his energy Policy Task Force, he met with or
spoke by telephone at least six times with Lay to make sure that every word in
the plan conformed with Enron's drive for total deregulation of the energy
monopolies. McDonald said, "Cheney may have been talking, but the words were Ken
Lay's." In a brazen obstruction of justice, Cheney has refused all requests for
documents generated by the secretive meetings of this Energy Task Force.
THE
QUID PRO QUO
When Enron began to falter, last summer, Lay telephoned
Treasury Senator Paul O'Neill and Commerce Senator Donald L Evans to plead for
help in securing bank loans to keep the sinking ship afloat. Bill Clinton's
Treasury Senator, Robert E Rubin, now chairman of the executive committee of
Citigroup, also telephoned the Treasury to plead Enron's case. Contrary to
Administration claims that they refused to help, Lindsey who had served as a
50,000 dollars a year Enron consultant, drafted a report on the danger that the
Enron collapse could spread to other corporations creating "global market
upheaval" similar to the collapse of Long Term Capital Management, the hedge
fund giant in 1998. The Treasury Department also drafted a similar report.
(Neither of them have been made public).
Jennifer Palmieri, a Democratic
Party spokeswoman, said these reports are "a significant conflict of interest"
and prove that the Bush White House "did a lot of thinking about the fact that
the company was going to collapse but they did absolutely nothing to make sure
that 50,000 Enron employees would not lose their life savings."
Enron has
been pouring out the money to buy influence in Washington since it was founded
in 1985. In the past ten years, Enron has admitted contributing 6 million
dollars to Republican and Democratic lawmakers. What did they get in exchange?
Tom DeLay rammed through Cheney's energy deregulation package through soon after
the September 11 terrorist attack.
Among the biggest recipients of Enron
largesse were former Texas GOP Senator Phil Gramm and his wife Wendy, who was
chairperson of Reagan's Task Force on Regulatory Relief. In a revealing report,
Public Citizen exposed how Senator Gramm won "stealthlike approval" of
legislation exempting energy commodity trading from government regulation and
disclosure, at the specific bequest of Enron. Wendy Gramm pushed through similar
exemptions for energy corporations in 1993, and was rewarded by Enron with a
seat on their board of directors. She was paid 915,000 dollars in salary and
1.85 million dollars in stock options and dividends from 1993 to 1998.
Bob
Herbert, New York Times columnist wrote, "The kind of madness that went on at
Enron could only have flourished in the dark. If the 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 than they are now."
Fellow New York Times columnist Paul
Krugman compared the Enron crisis to the meltdown of the so-called "Asian tiger"
economies four years ago, calling it "crony capitalism." But Krugman revealed in
an earlier column that Enron paid him 50,000 dollars to serve on an "advisory
committee." Krugman lamely claimed the body "did nothing." He's wrong. This was
part of Enron's efforts to infiltrate and silence the corporate media.
Writing in The Nation, William Greider pointed out that "there are more Enrons
out there," that the secretive, deceitful double-dealing that brought Enron
down, is part of the corporate culture of globalised transnational capitalism.
This is not a case of one rogue corporation, he wrote, it is the "system."
In "Lectures on Fascism" the great Italian Communist, Palmiro Togliatti, points
out that the "corporate state" lies at the evil heart of fascism. "We have seen
bailouts for faltering banks, interventions in which Mussolini is not afraid to
say, 'They have cost us billions.' At this moment, the corporations have entered
the field of legislation-the economic policy of fascism, the organisation of the
supremacy of finance capital in the country's life, has reached the highest
point."
Togliatti goes on to say:
"The corporative regime is a regime
that is totally inseparable from total political reaction, from the destruction
of every democratic liberty."
We do not have fascism. But Enron is a model
of Mussolini's ideal corporation based on the interpenetration of the
corporation and the state, its takeover of a political party to serve as its
political instrument, its seizure of power if necessary by coup d'etat.
THE
DANGER & OPPORTUNITIES
The collapse of Enron presents both dangers and
opportunities. So far, the Democrats have been at best weak and timid in
response to this crisis proving that Enron succeeded in largely silencing them.
Tom Daschle revealed this timidity when he went hat in hand into negotiations
with the Republicans on an economic stimulus package. His first move was to drop
the demand that all unemployed workers receive extended health care coverage. It
reflects the Democrats misguided estimate that the recession is already coming
to an end.
This political cowardice does not mean that we should write off
the liberals and centrists in the House and Senate. There is a core of fighters
in Congress, mostly in the Black Caucus, Hispanic Caucus, and Progressive
Caucus, that we should build around. Every lawmaker needs to hear our demands
that they take a stand, to bring Enron and its executives to justice, to expose
and fight Bush, Cheney, Rumsfeld, Ashcroft as well as DeLay, Trent Lott, and
other lawmakers in the service of Enron.
They need to hear our demands for a
real economic stimulus plan starting with a programme to save our steel
industry. Double the minimum wage. Double the weeks of unemployment compensation
to 52 weeks. Put money in the pockets of the needy. Take it from the bank
accounts of the greedy! Tax the rich! And stop Bush's "sole superpower" bully
wars around the world.
Clearly, the AFL-CIO led coalition must intervene to
mobilise a real fightback. Our Party must be in the middle of this struggle. We
need to go all-out to expose the Enron crisis as a crisis of the system in the
pages of the PWW and in Political Affairs. We need to hammer at the Bush
connection and not permit Bush, DeLay and the ultra-right escape their
ringleader role in the rise and fall of Enron. We should explore issues
untouched so far such as the connections of Enron with the Bush war policy and
the ripple effect of the bankruptcy in the worsening economic crisis. The fight
to expose Enron and defend all those hardhit by its collapse, could be a
determining factor in the 2002 elections, helping defeat the ultra-right. And in
2004, it could be a key factor in making Dubya a one-term president.
