Something smells rotten in Houston.
Energy giant Enron, which used to brag about becoming the world's biggest
company, now holds the record for the country's biggest ever bankruptcy
filing.
The human impact is staggering. Some 4500 employees are out of work.
Tens of thousands of investors watched their Enron stock sink suddenly from
$83 per share to 26 cents, wiping out $60 billion of stockholder value. And
those 11,000 employees whose 401K funds were invested exclusively in Enron
- and who were forbidden by Enron's own rules from diversifying - today
have no retirement plan at all.
But Enron may be more than the world's biggest corporate disaster. It could
also be the world's biggest case of corporate criminality.
Enron's demise wasn't due to business factors like strong competition, a
shrinking market or a lagging economy. It was due to deceitful, and perhaps
illegal, games played by corporate executives: diverting funds into secret
partnerships, cooking the books to keep those deals secret, lying to
investors and employees about the financial health of the company, while
selling their own stock to make sure they wouldn't be hurt when the whole
house of cards collapsed.
Unlike thousands of employees, for example, Enron Chairman Kenneth Lay
isn't crying the blues. He cashed out on $123 million worth of stock
options in 2000 alone, and this year pocketed another $25 million.
Even as the company started falling apart, other executives were rewarded.
Just days before filing for bankruptcy, Enron handed $55 million out to
some 500 senior officials: an average $110,000 bonus for screwing up.
Yes, something smells rotten in Houston. But something smells rotten in
Washington, too - because both the rise and fall of Enron are closely
linked to the political fortunes of George W. Bush.
For years, Ken Lay and George Bush have been joined at the hip, two
freewheeling Texas buddies. One helped the other succeed in "bidness;" the
other helped his pal make it big in politics.
Consider the Bush-Enron connections. Enron could never have happened
anywhere but Texas. It was only able to grow so big, so fast, because of
the deregulation of energy companies instituted by then-Gov. George W. Bush.
And Ken Lay rewarded his friend.
He and Enron together were Bush's biggest contributor, giving $2 million
to his campaigns for governor and president. Lay also loaned Bush his
corporate jet. In 2000, Lay sent a memo to company employees, suggesting
that they contribute personal funds to Bush through the company's political
action committee: $500 for low-level managers; $5000 for senior executives.
Once in the White House, Bush responded generously.
Ken Lay was the only energy executive to meet privately with Vice President
Dick Cheney to help shape the administration's new energy policy - which
included a recommendation to break up monopoly control of electricity
transmission networks, a longtime Enron goal.
For a while, Bush even considered naming Lay his Commerce Secretary.
Fortuitously, that appointment never happened. But he did surround himself
with Enron partisans. Lawrence B. Lindsey, Bush's top economic adviser, was
an Enron consultant.
Robert Zoellick, U.S. Trade Representative, served on Enron's advisory
council.
I. Lewis Libby, Cheney's Chief of Staff, was a major Enron stockholder.
Thomas White, Secretary of the Army, was an Enron executive for over 10
years and held millions of dollars in stocks and options when appointed.
Karl Rove, chief White House political adviser, owned between $100,000 and
$250,000 worth of Enron stock when he met with Ken Lay in the White House
to discuss Enron's problems with federal regulators. And, until he was
named Republican National Chairman recently, Marc Racicot was Enron's
Washington lobbyist.
No wonder the Bush White House refused to help California solve its energy
crisis last Spring. California's problems were caused by Enron's suddenly
inflating the price of electricity, forcing blackouts throughout the state.
But Bush refused to intervene to help consumers. He wouldn't do anything to
hurt his pal's big business.
Indeed, the Bush-Enron connections are so close, it's hard to tell whether
Enron is the house that Bush built or Bush is the house that Enron built.
We know George Bush and friends were major players in Enron's corporate
success. Were they also major facilitators of Enron's corporate wrongdoing?
Either way - and war or no war - the whole mess demands a congressional
investigation.
If Congress and Ken Starr could spend two years investigating a 20-year old
$100,000 real estate investment in Arkansas, they can and must examine a
multi-billion dollar energy scam in Texas, where millions lost their shirts.
Enron makes Whitewater look like peanuts.
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