Points to remember about Enron:
Enron is not a Monica-type scandal. Major harm was done. Major banks, law firms, accounting firms, and stockbroking firms have been discredited. We will be feeling the consequences for years.
It isn't really a bipartisan scandal. While a certain number of Democrats have something to be ashamed of, the money went 3 to 1 to Republicans, and the biggest single recipient by far was George W. Bush. (See Begala below).
It was probably criminal. Consumers, investors, and Enron employees lost billions of dollars, and fraud was almost certainly involved, especially in California.
It is a political scandal. Kenneth Lay was G. W. Bush's biggest donor, and Bush was Lay's biggest beneficiary. biggest We already know that the Bush administration did many favors for Enron -- we still haven't seen the energy task force records that Cheney is hiding. Big donors don't give money for nothing, and Enron got plenty. (See John Dean below). Whether or not laws were broken, the Bush administration did many favors for Enron which were harmful to the average American.
We don't really need a "smoking gun". In criminal law you are innocent until proven guilty, and guilt must be proved beyond the shadow of a doubt. The standard of proof in politics is, quite rightly, much different. There's obviously something fishy here. While Bush is unlikely to be impeached (much less prosecuted), we have enough evidence here to defeat him in 2004, and to defeat a lot of Republican Congressmen in 2002. If we use it.
Enron knew what they were doing was illegal and fraudulent (SFChronicle, May 16)
Enron lawyers warned company executives that the way the energy giant was trading electricity in California was deceptive and possibly illegal, the lawyers testified Wednesday.
The lawyers, testifying to the Senate Commerce Committee's consumer affairs panel, said the practices with nicknames such as "Death Star," and "Get Shorty" were halted after their warning in December 2000, just as California's power crisis was reaching a crescendo.
But Senate Democrats said they doubt the practices stopped, saying the schemes cost California as much as $30 billion in excess electricity costs. They called for the Justice Department to appoint a special counsel to investigate whether the now-bankrupt company illegally manipulated the California power market and why the Federal Energy Regulatory Commission failed to intervene.
Bush-Enron Ties Detailed (May 24 Washington Post)
"Portions of the chronology document the deep ties between the Bush administration and Enron, including three phone conversations between former Enron chairman Kenneth L. Lay and Bush's senior adviser, Karl Rove."
"The White House chronology shows that before Enron began disclosing massive losses, the company repeatedly turned to the administration on matters as broad as the national energy policy being drafted under Cheney's direction, and as specific as problems that a subsidiary was having with the German government over perceptions of unfair competition in the German electricity market."
A very complete chronology of Bush and Enron Everything you need to know, arranged chronologically.
Daily Enron Encyclopedic coverage. Frequent updates.
Enron 101 Daily Enron's summary of the case:
Enron's collapse into bankruptcy exposed not only its smoke and mirrors accounting methods, but also the full extent of Enron's influence in the federal government.
Over 50 high-level Bush administration officials have had meaningful ties to the now defunct energy company. For example, the Secretary of the Army Thomas E. White worked at Enron for nearly two decades, and he served as vice chairman of Enron Energy Services. The President's top economic advisor Lawrence B. Lindsey and Trade Representative Robert B. Zoellick served on Enron's advisory board. According to financial disclosure forms, at least 40 administration officials owned Enron stock. These officials include senior officials at the White House, the Departments of the Treasury, Commerce, and State, the U.S. Trade Representative's office and EPA. The President reportedly refers to Enron CEO Ken Lay by the affectionate nickname "Kenny Boy."......
So how exactly did Ken Lay and Enron have so much influence on George W. Bush, his White House, and congressional Republicans? The answer is simple: money.
Enron Corporation is President Bush's number-one career patron, having given him more money throughout his political career than any other contributor. Enron Corporation PAC, and Enron executives, employees and their family members contributed a total of $736,800 to President Bush from 1993 to 2001. Enron also contributed $250,000 to the Republican National Convention for its 2000 convention.
Kenneth and Linda Lay gave $276,500 to George W. Bush from 1993 to 2000, including $100,000 to the President's inaugural fund, $10,000 to his election recount fund and $40,000 to his 1999 State Victory Fund Committee.
But it was not just the Bush campaign that raked in Enron contributions. From 1989-2001, Enron Corporation PAC, and Enron executives, employees and their family members gave a total of $5,951,570 in hard and soft money to federal candidates and parties. Of this amount, 74% ($4,404,162) went to Republicans and 26% ($1,547,408) to Democrats.
More specifically, one of the top House Republican leaders has been a big beneficiary of Enron contributions and is deeply tied to Enron. Majority Whip Tom DeLay and his political network have collected more than $200,000 from Enron and its executives over the last seven years.
From 1989-2000, Majority Whip Tom DeLay has raked in more than $28,000 from Enron's PAC and employees for his congressional campaign. His PAC, Americans for a Republican Majority (ARMPAC) got $50,000 in soft money from Enron in 2001. Enron gave $10,000 in soft money to ARMPAC in 2000, and between 1995-2000 Enron and its employees gave $47,250 in hard money. Kenneth Lay gave $50,000 to Republican Majority Issues Committee in 2000 - another one of DeLay's fundraising operations. (Roll Call, 2/25/02)
Not only has Tom DeLay raised a lot of money from Enron, but his top staff have raked in Enron consulting fees. Ed Buckham, Karl Gallant and John Hoy were awarded a $750,000 contract by Americans for Affordable Electricity, an Enron-funded coalition, after DeLay recommended to Enron that they hire the team. (Roll Call, 2/25/02) His connections to Enron are so strong that "some call DeLay the 'congressman from Enron,'." (The National Journal June 3, 2000)
John Dean of Watergate fame on Enron
John Dean, a co-conspirator of Nixon who came clean and helped bring Nixon down, is now a respected legal scholar. He remains a moderate-to-conservative Republican.
Feb 15, 2002 (Findlaw):
Frankly, I have no doubt the Bush White House and Bush Administration are "covering up" relationships with Enron, which is why they failed to respond to Congressman Waxman's inquires. (I discussed the cover-up evidence and issue at greater length in a previous column). However, I have no information that any illegality is occurring and, of course, only illegal cover-ups are prohibited. Such cover-ups, the Administration should remember, lead to secondary scandals of their own that can sometimes even overwhelm the primary scandal from which they arise.
Should even one of the many concerns raised by Congressman Waxman prove correct, the Bush Administration is in trouble. Sooner or later the truth emerges; it always does.
At this time, it is too early to know how Enron will unfold. But I have little doubt that Enron is going to become a full-fledged political scandal. The odor of political influence being bought, sold, and traded is too strong for me - and apparently others -- not to strongly suspect that there is something putrid in the midst of Enron's political activities.
John Dean, Feb. 01, 2002 Cheney's stall on releasing information on his energy committee (Findlaw)
Cheney is hoping that if you repeat a lie enough, people will believe it. If the public knew how little GAO is seeking, it would be difficult for the Vice President to make his case publicly that GAO is being unreasonable. In fact, GAO seeks only "certain narrowly defined, factual information concerning the development of the National Energy Policy [which was publicly announced on May 18, 2001]."....
As someone who knows a White House cover-up from first-hand experience, I must say that if the Vice President forces the Comptroller to file his lawsuit, it will certainly appear that a cover-up is in the works. Whether the cover-up relates to Enron, or to his Energy Group's relationship with Halliburton (the energy company he ran before running for his present office), or to a dubious relationship with some other contributor that has received some benefit, or all of the above, I cannot say. But something is amiss....
Dick Cheney, like Dick Nixon, is too smart and shrewd to take a stand on a makeshift principle for no reason. There is a reason Cheney has decided to take the heat and political fallout from resisting GAO's request; the reason is that the alternative, of giving GAO access to the information it wants, would, from Cheney's perspective, be worse. As fine and dedicated a public servant as he is - he is stonewalling. This is how a cover-up begins....
John Dean: Jan 18, 2002 (Findlaw)
The mere fact that Enron's contributions did not buy off investigations into the largest bankruptcy in history means little - it would have been hard not to investigate given the dramatic allegations now being made. And prior to the eleventh hour, Enron's contributions seem to have purchased quite a bit of influence, as they were no doubt meant to do....
Having been involved in fund raising, I have few illusions about what is involved - particularly with the heavy hitters. There are many contributors - indeed, by far the greatest number - who give what they can afford to the candidate in whom they believe, hoping he or she will win. But these are typically the small contributors. Big money comes from wealthy persons and organizations who want something - in most cases, something that will add more to their wealth....
In all these ways - through favorable regulatory changes, lack of government oversight, and administration silence until the very end - Enron's investment in Washington paid handsome returns for a few insiders, who personally made millions (but obviously wanted billions) from Enron. Sometimes buying influence can simply mean buying silence - not buying specific actions or intervention....
Waxman on Enron Rep. Henry Waxman of California has been the Democrat's point man on Enron. This link documents his many attempts to get information out of the stonewalling Bush administration.
Waxman Interview (Dec. 2001)
"By and large, it's the Republicans who control the House of Representatives who are trying to treat the Enron issue in a very isolated way. There have been hearings about some of the financial aspects of Enron, or how the accountants handled the information. I think they're making hearings on the fact that the Enron employees couldn't dispose of their stock. But I think the Republicans can't avoid the issue. This is a dramatic collapse of such an important corporation. But the Republicans don't want to take on the broader perspective of how Enron has been able to manipulate a lot of the policies this Administration is pursuing because they are the recipients themselves of substantial campaign contributions from Enron.
I think their strategy is to try to take disparate aspects of the Enron story and try to bore people to death with the sliver that they're looking at, and have people think, well, that this is a complicated financial picture and maybe we'll never know what all went on. And it was interesting how the Republican majority leader Dick Armey responded when he was asked about the Enron corporation. Armey, who is also from Texas, responded that Enron is a private corporation, so therefore what happened to Enron is their private business. I don't look at it that way. When people are thrown out of work right before Christmas, when investors find that their investments become worthless and the executives of the company are able to loot hundreds of millions of dollars for themselves, it seems to me that something criminal has probably taken place, and we ought to get to the bottom of it."
Begala: Six ways Democrats tried to prevent the Enron disaster
Stopping Auditor-Consulting Conflicts by Accountants
2000: Clinton Securities and Exchange Commission Chair Arthur Levitt proposes regulations to prohibit accounting firms from simultaneously serving as consultants and auditors. Anderson and other accounting firms marshall a massive lobbying campaign against the Clinton-Levitt regs, killing them. The lead lobbyist for the accounting firms is Harvey Pitt. After being sworn in as President, Bush makes Pitt chair of the SEC.
· Greater Disclosure of Derivatives
1997: Clinton Commodities Futures Trading Commission Chair Brooksley Born proposes greater regulation (by way of more stringent disclosure) of derivatives. Her proposal is beaten back by House Republicans, including then-House Banking Committee Chair Jim Leach (R-IA) who scolded her for two hours at a hearing;
· CFTC Oversight of Energy Traders
2000: William Rainier, Born's successor as chairman of the Commodity Futures Trading Commission, told Congress he was "deeply concerned" about a bill to exempt energy trading from CFTC review, noting that those who trade energy derivatives were not subject to any other oversight. Rainer's objections were largely ignored by the Republican-controlled Congress, and the exemption, heavily backed by Enron, became law;
· Cracking Down on Tax Havens
2000: Clinton Treasury Secretary Larry Summers proposes a crackdown on tax havens such as those used by Enron. With the US co-chairing the OECD's Forum on Harmful Tax Practices, Summers crusades for a crackdown on money-laundering and tax havens. His proposal is opposed by the GOP Congress. When the Bush Administration takes office, Treasury Secretary Paul O'Neill abandons Summers' crusade, telling the Wall Street Journal, "The government has not been respectful of the cost it imposes on society." The New York Times reports that Bush's top economic adviser, Lawrence Lindsey (a former economic adviser to Enron) also opposed efforts to crack down on tax havens.
· Protecting 401(k)s
1997: Sen. Barbara Boxer (D-CA) proposes banning investment of more than 10 percent of the total 401(k) plan in the employer's stock--the maximum that investment experts recommend a person sink into any company. The GOP Senate waters-down her bill so much it no longer applies to any corporation in America;
· Protecting Investors and Shareholders
On December 20, 1995, President Clinton vetoed the Public Securities Litigation Reform Act, which would have restricted lawsuits against corporation accused of securities fraud. In his veto message, Clinton presciently noted that while he supported the notion of reducing frivolous lawsuits: "I am not, however, willing to sign legislation that will have the effect of closing the courthouse door on investors who have legitimate claims. Those who are the victims of fraud should have recourse in our courts. our markets are as strong and effective as they are because they operate -- and are seen to operate -- with integrity. I believe that this bill, as modified in conference, could erode this crucial basis of our markets' strength." The GOP Congress overrode Clinton's veto.
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