Viewpoint: Enron mess could snare Bush, Cheney
By Joe Baker
Enron mess could snare Bush, Cheney
By Joe Baker
Congress will launch a full-scale investigation in February into the collapse of Houston-based energy giant Enron Corp. It has the potential to rock the government to its core.
Its a story that has not received the attention it deserves. The national media is too busy flag waving and delivering the administrations version of the war on terror. But the Enron scandal, if thoroughly exposed, could snare Bush, Cheney and a goodly number of administration lackeys.
Joseph Berardino, CEO of Arthur Andersen, Enrons accountants, has been testifying before a couple of congressional subcommittees. He told the lawmakers that his company was kept ignorant of some of the partnerships that brought about Enrons downfall.
Much of his testimony dealt with the accounting device of Special Purpose Entities or SPEs, an accounting gimmick that allows companies such as Enron to raise capital without putting more debt on the balance sheet. Problems with SPEs caused the energy company to restate its earnings in November and eventually forced it to file bankruptcy on Dec. 2.
On the larger of these, which was responsible for 80 percent of the SPEs-related restatement, it appears important information was not revealed to our team, Berardino said. We have notified the (Enron) audit committee of possible illegal acts within the company.
Enron announced that it overstated its income by $569 million over the previous four years, and said its accounts for the period 1997-2000 were not reliable. Sir David Tweedie, chairman of the International Accounting Standards Board, commented: Everyone is suddenly aware that anyone could have an Enron, and awareness of the part flawed accounting standards had to play allows us to take a tough line.
Enrons collapse is a story, not only of accounting errors, but of lies, evasions, insider deals, dubious financial statements, a board of directors filled with conflicts of interest and top executives jumping ship with millions while the rank and file employees and others were left holding an empty bag
The demise of this huge enterprise cost the state of Texas, or at least some of its retirees, about $60 million, according to the Houston Chronicle. The newspaper said that was the amount lost to the retirement fund for teachers and state employees because the fund managers kept buying Enron stock even as it slid into the trash heap. Some smaller state investment funds lost another $3.3 million, the Chronicle said.
State officials claim the loss will not affect retirees. The Teacher Retirement System (TRS) bought $9 million worth of Enron stock three weeks before the collapse when prices ranged between $9 and $10 a share.
When the party ended, the stock tumbled from a high of more than $80 per share to just 67 cents a share last Monday. TRS lost $35.7 million. The Employee Retirement System did not get in on the late buying spree of the stock, but did buy a $10 million bond for Ospret Trust, one of the partnerships implicit in Enrons failure, the paper said.
For Enron employees, the crash was a disaster. On Nov. 28, Enrons bonds were reduced to junk bond status. Nov. 30, one employee told the Chronicle, we were given the right to move Enrons matching funds for our retirement savings plans from Enron stock to another fund. My personal account amounted to $46.01. Another friend, with almost 20 years service, had $102.
Californias retirement pension fund was caught with 3 million shares of Enron stock, about 1 percent of its fund. Florida officials fired an outside investment adviser because they lost $306 million through stock purchases as Enron was sinking into the dust. The chairman of Texas Senate Finance Committee asked the state comptrollers office earlier this month for a report on the statewide effect of the Enron collapse.
Enron began as a gas pipeline company, then went into trading natural gas and moved on to trade in wholesale electricity, water, fiber optics, data storage and several other things. It went after and got deregulation of markets at state and federal levels. Because of its connections, it prospered greatly.
National media politely neglect to mention those connections. Enron CEO Kenneth Lay has been the main money man for George W. Bush since Dubya first went into politics, as well as for the senior Bush. Lay and Enron handed the Bush campaign $2 million. Enron gave more money to Bush and congressional candidates than any other energy company.
Last year, Lawrence Lindsay, top economic adviser to the president, got $50,000 from Enron for consulting, according to syndicated columnist Molly Ivins. Karl Rove, top political strategist for Bush, unloaded up to $250,000 worth of Enron stock earlier this year after conflict-of-interest charges were raised against him.
Thomas White, Jr., Secretary of the Army, is a former top Enron executive who sold his $50 million to $100 million holdings in the company before the bottom fell out. Jeffrey Skilling, former CEO of Enron, bailed out in August ahead of the crash and walked away with tens of millions of dollars.
Robert Zoellick, trade representative for the Bush White House, and Lindsey both went directly from Enron to administration jobs.
Lay was the only energy executive to have private meetings with Vice-President Cheney while the veep was drafting the administrations top-secret energy policy. Can you believe that, a SECRET energy policy?
Back then, the Bank of Credit and Commerce International (BCCI) a mammoth money-laundering operation, was riding high, wide and handsome. Skolnick claims to have documents from the Bank of England showing that BCCI bribed 28 U.S. senators and 108 members of the U.S. House of Representatives.
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The Bush family and Cheney have a very sizeable stake in Enron either directly or indirectly. Dubya is invoking national security in an effort to head off any real investigation of this mess. The only security at risk is that of Bush and Cheney and their buddies.
At least $600 billion of Enrons bucks went, its believed, to prop up the U.S. stock market. Until August of 2000, Dick Cheney was CEO of Halliburton, a supplier of oil industry machinery and other oil-related items. The stock of that company has dropped sharply in recent weeks. Halliburton is beginning to smell as well.
While Bush proposes tax breaks for his affluent and oil-soaked buddies, he staunchly refuses to help the employee-investors who lost out through debacles like Enron. Some of them will have to try living on Social Security (SS). Some $40 billion of SS trust funds have been borrowed to finance our adventure in Afghanistan.
Bush pointed to Enron as the model for economic progress. He is a strong believer in deregulation. He seems to believe that whats good for General Bullmoose, is good for the country.
If you want to see what a fully deregulated economy is like and what may lie ahead for us, just take a look at todays Argentina.
Bush ought to be the first witness before Congress and he ought to be made to explain what he intends to do about the biggest bankruptcy in this nations history.