The Bigger Picture
2.16.01
CNN poll----> 73% Want Enron Special Prosecutor
And WE didn't even get to VOTE in this one!!!
http://www.cnn.com/POLL/results/52291.content.html
Should a special prosecutor be appointed to direct the Enron investigation?
Yes 73% 92435 votes
No 27% 34825 votes
Total: 127,260 votes
*****
Lay Sold $100 Million In Enron Stock After Warning Says Report 2-17-2
WASHINGTON (Reuters) - Former Enron Corp. Chairman Kenneth Lay sold $100
million in company stock last year, including a large portion sold back to
Enron after an employee warned him about an accounting debacle, a newspaper
reported on Saturday.
A spokeswoman for Lay confirmed the sale on Saturday but said the
transactions were motivated by a desire to pay off personal loans rather
than a lack of confidence in Enron's future.
The sales included $20 million of shares sold in the three weeks after
Sherron S. Watkins, an Enron official, warned Lay that the energy trading
giant was in danger of collapsing "in a wave of accounting scandals."
The Houston-based company, once America's seventh-biggest, unraveled last
year amid allegations it misled investors about its finances while top
executives reaped huge profits by selling their holdings.
Enron's collapse threw thousands out of work and wiped out many workers'
retirement savings.
"Mr. Lay relinquished shares of Enron stock last year to help repay his
loans," Kelly Kimberly, a spokeswoman for Lay, told Reuters in a telephone
interview from Houston.
"The vast majority of the proceeds were used to repay lines of credit
collateralized with Enron stock," Kimberly said, adding that the stock value
had "significantly diminished."
Kimberly said she could not confirm reports that Lay's stock sales were
valued at $100 million.
And she refused to describe the nature of the personal debts, saying she
wanted to "keep his finances confidential for the time being as a private
individual."
But Kimberly added, "Mr. Lay remained confident in Enron stock through late
2001 and his investments were primarily in Enron."
She said Lay was "surprised by the rapid decline" in Enron's stock price,
which "required him to borrow money from Enron and liquidate other
investments."
Lay, who this week refused to testify before Congress, asserting his Fifth
Amendment right against self-incrimination, was encouraging Enron employees
to buy shares as he was selling, the Times reported. It was not clear how
much profit Lay made on his sales.
While most stock sales by corporate executives are required to be reported
by the 10th day of the month after the sale, shares sold back to the company
do not have to be disclosed until the next year. So most of Lay's sales were
not revealed in the months before his company's collapse in December in the
nation's biggest-ever corporate bankruptcy.
Lay resigned as chairman and chief executive of Enron on Jan. 23..
*****
John E. Milich
jemilich@twcny.rr.com
Hi, Everyone.
Greetings and farewell, for awhile.
This capsule description of "Enron for Dummies" by Michael I. Niman was
received from Chip Gagnon, one of my primary sources and, in my humble
opinion, the maestro of networking the best, fast- breaking news articles
and analysis on the Internet. Please contact Chip hipg5@yahoo.com for
addition to his blind- copied group mailings. I promise you will not be
disappointed.
I will be giving your inboxes a break for the next couple weeks. My wife
Iris and I are flying to Salt Lake City tomorrow to visit our grandson,
Jovial, age 14 months. That's more important than any of this worldly
nonsense, as I'm certain other grandparents will agree. No, we aren't
timing our visit with Jovial to coincide with the Winter Olympics; quite the
contrary, next week happens to be Iris's winter break from teaching
elementary art in the Ithaca school district.
Regarding our flight to the Great Salt Lake: I have been warned not to leave
my airplane seat within 30 minutes of arrival; apparently, I could face
10-20 years in prison for such a serious violation. My Left Coast comrade
Doug Salzmann doug@talkpath.com (I highly recommend Doug's mailings, too)
sent me the following note: "Flying to Salt Lake, huh? Plan to sit very
still and keep your hands where the nice federal agents can see them."
More Later. Meanwhile, plug into Chip's and Doug's networks!
-- JEM
http://www.hightimes.com/News/2002_02/enron.html
Enron for Dummies
by Michael I. Niman
High Times Online Feb 13th 2002
During the last year Enron played a pivotal role in writing the Bush
administration's new energy policy a policy that deregulated energy
industries while removing government oversight. They were also the largest
corporate player responsible for California s recent energy crisis.
Ostensibly in the business of buying and selling energy on the new open
market, they also regularly purchased political clout on the electoral
auction block by bankrolling political campaigns on both the local and
national levels, buying the affection of politicians like drunken sailors at
a bordello. All the while, however, they enjoyed relative obscurity flying
below the radar of the national consciousness and its media sculptors.
Like all good parties, Enron's soirée ran its course, crashing and burning
with the fury of the Hindenburg, channeling the flames of hell directly into
the Bush White House where they re now burning out of control, threatening
to consume the dogma of free market economics while exposing a level of
influence peddling and corruption shocking even to seasoned Whitehouse
observers. Suddenly a bleary-eyed America is waking from its stupor,
mumbling, En-what?
What or Who is Enron?
Enron emerged from the high flying 90s as a star among new economy
corporations. Like Nike and Tommy Hillfiger, factory-less companies that
contract out for products they subsequently brand, Enron essentially
produces nothing. Nike buys and sells sneakers. Enron trades energy.
Originally an oil pipeline company, they shed most of their bulky physical
assets during the high flying 90s, transforming themselves into the ultimate
weightless corporation, buying and selling anything and everything ranging
from energy futures to internet bandwidth, while essentially producing
almost nothing. On paper they were worth more than GM, but in reality the
company held few assets other than a handful of generating plants. Enron
was a paper tiger.
Their product was also nonexistent. They didn't t invest, for example, in
building a new energy grid or significant new generating stations. To the
contrary, they invested in the concept of an energy shortage. They bought
energy, eventually taking control of approximately 25% of the nation s
wholesale electricity supply. They then reaped astronomical profits last
summer selling this electricity to brownout-plagued Californians, with
prices shooting up into the stratosphere.
The irony is that California s electricity continued to flow from the same
generating plants it always came from, into the same homes where it was
always consumed. Enron didn't t build new generators or power lines. No.
They simply inserted themselves, on paper, between the generators and the
consumers in what historians will no doubt record as a brilliant and
sinister paper shuffle. Electric flow stayed the same. All that changed was
the concept of what electricity was and who could own and trade it. In the
end Enron became the central player in a gargantuan rip-off dwarfed only by
the S&L crisis of the 1980s.
California s soaring electric rates sent its economy, the fifth largest in
the world, into a tailspin. Power starved manufacturers laid off thousands
of workers. Scores of small businesses, unable to keep up with their
electric bills, filed for bankruptcy. And working Californians were forced
to choose between food and electricity. Many chose food and conservation,
in effect boycotting overpriced power a move that added to Enron s financial
woes as electric demand and prices dropped.
Despite the personal pain and economic mayhem, Enron s California fiasco
violated no laws. Years earlier, California, seduced by false promises of
cheap electricity, adopted a Republican energy deregulation plan that opened
the door for Enron and its imitators to seize control of California s power.
When the good ship Enron came crashing down, they were in the process of
trying to do to the nation what they did to California. Key to their plan
was a corporate accrual of political power unprecedented in American
history. A quick look at George W. Bush s White House illuminates both
Enron s power and their plans.
Enron s Boyz in DC
Enron and Enron CEO Ken Lay together donated $113,800 to the recent Bush
presidential campaign, and another $888,265 to the Republican National
Committee, while hedging their bets by showering the Democratic Party with
spare change. In all, according to Vermont Congressperson Bernie Sanders,
they donated nearly $6 million to both the Republicans and Democrats during
the past year. Enron s accounting company, Arthur Anderson, showered
another $5 million on the two parties while at the same time looking the
other way as Enron overstated its profits and defrauded its investors.
Enron s political investments paid off in spades. Enron advisor Lawrence
Lindsey became George W. Bush s economic advisor, taking an Enron energy
policy proposal and incorporating it into Bush s election platform along the
way. Another former Enron Advisor, Robert Zoellick, became Bush s Federal
Trade Representative. Bush's secretary of the Army, Thomas White Jr., is a
former Vice Chair of Enron, who in recent months cashed out his $50 million
plus worth of Enron stock before the share price dropped from $90 to 29
cents. At the Pentagon, White argued for privatizing energy systems at
military bases. Then there s Bush s Wacko Treasury Secretary Paul O Neill,
the former CEO of Alcoa Aluminum. His lobbying company, Vinson and Elkins,
was the third largest contributor to Bush s presidential campaign, hence the
honcho position at the Treasury Department. Enron was one of Vinson and
Elkins largest clients.
The list goes on. Bush s chief advisor, Karl Rove, owned a quarter million
dollars of Enron stock, with nobody knowing for sure when he cashed out.
Bush s campaign advisor, Edward Gillespie, took a half- million dollars from
Enron as a lobbyist after Bush was elected.
Texas Republican Senator Phil Gramm s wife Wendy was on Enron s board of
Directors, compensated to the tune of about $1 million for her service to
the corporation. Immediately before joining Enron s board in 1993, she
worked as chair of President Bush Senior s (the Bush who was elected)
Commodity Futures Trading Commission, where she fought to eliminate energy
futures contracts from governmental oversight.
Other Republican homies on the Enron payroll include pundit William Kristol,
public opinion pollster Frank Luntz and speechwriter/talking head Peggy
Noonan. Even Harvey Pitt, the head of the Securities and Exchange
Commission, the federal agency in charge of policing stock transactions such
as the Enron insiders sell-off, turns out to be part of the Enron family.
Before taking of the SEC, he worked for Enron s accounting firm, the Arthur
Anderson company. That s the same company responsible both for Enron s
aggressive accounting practices, and for shredding documents associated with
these practices.
Enron s Boy in the White House
It gets thicker. Even the president himself seems to have the Enron mark
branded on his butt. According to Rodolfo Terragno, an Argentine Cabinet
minister during the Reagan years, then Vice President and former CIA
director George Bush s son, George Junior, contacted him on behalf of, yep,
you guessed it - Enron. It seems young George was aggressively using his
family s clout and his position as the Vice Presidential son, to close a
pipeline construction deal for Enron. Today Enron executives deny ever
having employed George W. Bush in any capacity, either as an employee or as
a consultant. With your average crackhead now having more credibility than
Enron s top brass, however, such denials must be taken with a grain of salt.
President Bush is also, by all accounts but his own, quite cozy with Enron s
former CEO, Ken Lay, the corporate captain who cashed out and bailed just as
the ship was going down. Though Bush had previously identified Lay as a
close friend, referring to him as Kenny Boy, after the Enron crash he
claimed to only be a passing acquaintance, arguing that Lay supported his
opponent, Ann Richards, during his 1994 gubernatorial race. In reality, Lay
and Enron s political PAC donated $12,500 to Richards campaign, while
showering the Bush campaign with $146,500. So much for presidential
credibility. Bush is Enron s boy.
So what did Enron get for all their investments? Well for starters, the
Bush economic stimulus plan, if passed, would have the feds cut a check to
Enron for $254 million dollars this despite the fact that they used over 600
offshore subsidiaries in a successful scheme to avoid paying any federal
taxes for four out of the last five years, a period when their profits
soared. But Enron wasn't content to simply raid the public till. More
importantly, they used their influence to shape federal energy policy,
opening the door for Enron to take their Californian scam to a national
level. Vice President Dick Cheney, an oil man himself, met with Enron
officials at least six times while drafting the Bush administration s
national energy policy. The Bush administration also sat out last summer s
California energy debacle while Enron savaged the nation s most populous
state, costing California s ratepayers billion s of dollars while Enron s
stocks soared.
Good Riddance!
Now Enron is down for the count in bankruptcy court. The lies piled higher
and higher upon each other, eventually smothering the paper giant as execs
looted the palace and the whole house of cards came tumbling down. It s the
largest bankruptcy in American history. Enron is dead. But make no
mistakes about it this is a good thing. I spit on their proverbial grave
and wish good riddance to them. Enron was the ultimate parasite. They were
in the process of doing to the nation what they did to California. For
America to live and prosper, they had to die. No one should lament this
loss. Especially not Californians, who just saw their wholesale electric
rates drop by well over 20% in the wake of the Enron collapse.
As for the so-called poor Enron employees who lost their retirement savings
as Enron s Potemkin empire came crashing down I have no sympathy for them
either. Enron was not a widget maker they were the ultimate racketeers.
Enron s employees more than anyone else knew what Enron was about. They saw
their pension funds magically shoot up like bottle rockets as countless
Californians lost their jobs, their businesses, and, in some cases, their
life savings. Yet they happily stayed vested during these golden days.
Ultimately they were victims of their own greed. It might sound cold, but
to hell with them. Not only did they choose to work for Enron, possibly an
unavoidable decision in some cases, but they chose to invest in Enron as
well. Their investments were hurting people. Their work for Enron was
hurting people. Their company tried to suck the wealth from society while
producing nothing. In the end they re left with nothing. No money, and
from me, no sympathy.
Unfortunately, institutional investors such as pension plans and mutual
funds owned 64% of Enron s stocks. Again, however, the issue of personal
responsibility arises. Investors need to research their mutual funds to
make sure their own money isn't undermining their interests and moral
beliefs. People also need to get more involved with their own pension plan
management and loudly voice their beliefs and concerns. It s Eleven o clock
do you know where your money is?
As much as those in power would like us to forget about Enron, the energy
giant s collapse will go down as a watershed in American history. There is
no magic in an unregulated free market it s just a mugger s paradise.
Corporations might be running the government, but their own investors have
lost both their confidence and their trust in them. Most importantly, with
Enron crashing down with an apocalyptic thud, possibly louder than that of
the World Trade Center, corporate misbehavior and greed is finally on the
national radar. Hopefully not even a war can distract us from this debacle.
Dr. Michael I. Niman's articles are archived at http://mediastudy.com/articles
" As a result of the war, corporations have now been enthroned and an era of
corruption in high places will follow and the money-power of the country
will endeavor to prolong its reign by working upon the prejudices of the
people until the wealth is aggregated in a few hands and the Republic is
destroyed." -Abraham Lincoln (Nov. 21, 1864 in a letter to Col. William F.
Elkins) [Shaw, Archer H./ The Lincoln Encyclopedia/New York: Macmillan, 1950]
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