By Michelle Mairesse
By November 2001, Chairman Ken Lay of Enron Corporation, a man who had hobnobbed with presidents and potentates, wasn't getting his telephone calls returned. His attempts to reach the ears of those who had enjoyed his patronage were unavailing, and by December 2, 2001 it was all over. Enron filed for chapter 11 bankruptcy protection. In the meantime, Enron's head honchos had surreptitiously sold their stock, raked in huge bonuses, and were now unconvincingly declaring that they were shocked, shocked by these sudden developments. Left holding the bag were thousands of employees, shareholders, creditors, and states and municipalities that signed contracts with Enron. Losses are estimated at $50 billion and counting.
Ratepayers in Connecticut are outraged at the mess Enron left behind when it signed up the state's trash disposal agency. Not only did the state take a $220 million hit, but it then tried to recap its losses by gouging ratepayers. The state attorney general believes that the Connecticut Resources Recovery Authority negotiated an illegal loan contract with Enron and hid the documentation. An investigation is in progress.
Only a short time ago, the billionaire boys who ran Enron were still riding high. They always got their phone calls returned. From August 2000 to June 2001, while California's energy consumers were screaming about gas and electric bills that kept doubling and redoubling, Enron executives communicated with federal energy regulators in twenty-five meetings and telephone calls, doubtless counseling the feds to let the "free" market work its magic. In the Golden State, the only cities not begging the federal government for price caps were those, like Los Angeles, with publicly-owned utilities. The new Federal Energy Regulatory Commission chief, nominated by Enron and installed by President Bush II in August 2000, did nothing for six months, made minor adjustments in April, and finally imposed price caps in mid-June 2001, at which time the "crisis" disappeared. Investigators discovered that an unprecedented one-third of the state's generators had been closed "for maintenance" during the "crisis" thereby creating an artificial shortage. After the FERC belatedly imposed price caps, the shortage vanished. But deregulating utilities had been only the second step in Enron's grand strategy. At the center of Enron's grand strategy was what American journalist Greg Palast referred to as "briberization." Enron ran a candy store for government officials, media figures, and influence peddlers. Political contributions, grants, consulting fees, favors, and salaried positions gushed out of the cornucopia in Houston. Not surprisingly, the Bush II administration is loaded with former Enron officials and consultants, and Enron chairman Ken Lay has had close ties with the Bush family.
"Lay was perhaps the most important figure in Bush's political career, having earlier supported the re-election campaign of his father, then hiring a number of former Bush Sr. officials. Over the years, Lay and Enron contributed $2 million to the younger Bush. He helped Bush win passage of energy deregulation and other initiatives in Texas. He also lent the use of his corporate jet for the Bush presidential campaign. Enron gave $300,000 to the Republican National Convention host committee and another $300,000 to the inaugural committee." Joan Claybrook, Public Citizen News, January/February 2002
Other good friends of Enron included lobbyist Wendy Gramm, serving simultaneously on the Chicago Board of Trade and Enron's board and audit committee, assisted by her husband, Senator Phil Gramm, who held out his bucket and received $97,350 in political contributions from the cornucopia. Enron's Ken Lay and Vice President Dick Cheney go way back. When Cheney was CEO of Halliburton, his Houston-based Brown & Root subsidiary built Enron's new baseball park in Houston. Secretary of the Army Thomas E. White was vice chairman of Enron Energy Services, U.S. Trade Representative Robert Zoellick served on Enron's Advisory Board, and White House Chief of Staff Karl Rove and the Vice President's Chief of Staff Lewis Libbey both owned sizable amounts of Enron stock. Enron lavished donations on conservative think tanks and foundations. It contributed to the American Enterprise Institute, which gave grants or salaries to such future Bush II administration staffers and supporters as Lawrence Lindsey, once a paid Enron consultant ($50,000) and future Secretary of the Treasury Paul O'Neill, who was an American Enterprise trustee for seven years, and future Vice President Dick Cheney's wife, Lynne, a senior fellow there. Enron's largesse flowed to the Institute for Policy Innovation (founded by Dick Armey), Citizens for a Sound Economy, which got a $20,000 contribution, and a Republican fund-raising machine benefiting Congressman Tom De Lay, which Enron gifted with $50,000. All of the Enron-financed institutions fervently supported deregulation, laissez-faire capitalism, globalization, and banking secrecy. Enron contributed to the political campaigns of thirty-three members of Congress who urged both the Clinton and the Bush administrations to ignore international demands for offshore banking regulations. "Not content simply to deregulate energy markets, Enron deregulated futures markets, making itself exempt from government oversight and from fraud laws." The maneuver "was tantamount to the company giving itself permission to launder massive amounts of money. Which it did." Larry Chin, Online Journal, February 1, 2002. Transcript from http://globalresearch.ca/articles/CHI202C.html. During the Clinton administration the Enron brigade successfully thwarted Clinton's attempts to regulate offshore tax havens. Treasury Secretary Paul O'Neill, speaking for the new Bush II administration, endorsed total banking secrecy everywhere in the world. After the attack on the World Trade Center, he modified the policy, but curiously, even though the Cayman Islands offered to open its banking records, he did not immediately accept the offer.
Security Exchange records show that by January 2001, Enron had incorporated subsidiaries in a number of offshore banks: 692 accounts in the Cayman Islands, 110 accounts in Turks and Caicos Islands, 43 accounts in Mauritius, 9 accounts in Bermuda, 5 accounts in Barbados, 4 accounts in Puerto Rico, 2 apiece in Hong Kong, and one each in Aruba, the British Virgin Islands, Guam, Gernsey, and Singapore. Using its offshore subsidiaries, Enron borrowed its own stock, traded with itself and reported the trades as income, hid debt and losses, paid extortionate sums to its executives, and moved its paper profits to avoid taxation for four of the previous five years. The subsidiaries offered cover for an orgy of speculation in derivatives, another facet of the Enron grand strategy. Public Citizen comments that having access to this number of unregulated accounts provided Enron "with potentially thousands of phantom accounts to hide money from U.S. tax officials, California energy crisis investigators or creditors during Enron's bankruptcy filing." Enron's nimble accountant-auditor-consultant, Arthur Andersen, shredded reams of documents after the bankruptcy meltdown, but some paperwork survived, including a memo indicating Enron's intention to grease palms at the International Accounting Standards Board with a $500,000 donation. Enron was never a company that thought small. Buying influence was the cost of doing business, but unfortunately, they were better at the former than the latter. After softening foreign officials with its briberization ploy, Enron positioned itself among the movers and shakers of globalization, the last phase of its grand strategy. In the hyperactive atmosphere of the nineties, Enron was driving in stakes all over the map. After the Gulf War resulted in the doubling of Kuwaiti oil production, three former Bush I administration officials employed by Enron talked Kuwaiti officials into awarding the giant firm a contract to rebuild the bombed-out Shuaiba power plant, even though Enron charged a higher price for power than other bidders did.
Frank Wisner, U. S. Ambassador to the Philippines in 1991, helped Enron win the contract to manage the two power plants in Subic Bay. Under Enron's management, energy prices jumped 20%, and the entire National Power Corporation Board resigned in disgust.
Wisner, now an Enron consultant, used his influence in 1992 to help Enron secure a lucrative contract for the Dabhol power plant in India. Sandip Roy's devastating report on the project appeared on the Pacific News Service website, February 8, 2000. Here is an excerpt: "From the get-go, the Dabhol project was mired in controversy. Enron worked hand in hand with corrupt Indian politicians and bureaucrats in rushing the project through. Charges filed by an Indian public interest group allege Enron and the Indian company Reliance bribed the Indian petroleum minister in 1992-93 to secure the contract to produce and sell oil and gas from the nearby Panna and Mukta fields to supply the plant. A Human Rights Watch report recounted incidents of farmers' land stolen, water sources damaged, officials bribed and opponents of the project arrested on trumped-up charges. In 1997, the state police attacked a fishing village where many residents opposed the plant. The pregnant wife of one protest leader was dragged naked from her home and beaten with batons. The state forces accused of abuses provided security to the Dabhol Power Corporation (DPC), a joint venture of Enron, the Bechtel Corp. and General Electric, overseen by Enron. The U.S. State Department issued the DPC a human rights clean bill of health. Charged with the assessment was U.S. Ambassador Frank Wisner, who had also helped Enron get a contract to manage a power plant in Subic Bay in the Philippines in 1993. Shortly after leaving his post in India in 1997, Wisner took up an appointment to the board of directors of Enron Oil and Gas, a subsidiary of Enron. Thanks in part to Wisner's positive rights review, Washington extended some $300 million in loan guarantees to Enron for its investment in Dabhol -- even though the World Bank had refused to finance the project, calling it unviable. A recent Indian investigative committee report exposed an 'utter failure of governance' -- bribery, lack of competitive bidding, secrecy, etc. -- by both the Indian federal government and two successive state governments as they rushed the Enron project through. By June 2001, the Maharashtra state government had already broken off its agreement with DPC because its power cost too much. That was the plant's one and only customer. By December, news of Enron's collapse was in newspapers across the world. But the company still filed a $200 million claim with the U.S. government's Overseas Private Investment Corporation, a U.S. taxpayer-funded insurance fund for American companies abroad, in an attempt to recoup losses from the DPC. Indian newspapers reported that Vice President Dick Cheney, Treasury Secretary Paul O'Neill and Commerce Secretary Don Evans tried to twist the Indian government's arm into coughing up the money. Otherwise, U.S. officials warned, other investment projects would be jeopardized. International media reported last month that U.S. government documents showed Cheney tried to help collect the debt. Today in Dabhol, the power plant is considered polluting and undependable. Spring water has become undrinkable, the mango crop is blighted and the fish catch is dwindling. Often at nightfall, the electricity fails."
According to Reuters, Enron's $2.9 billion gas-fired power plant and adjacent liquefied natural gas facility at Dabhol, about 155 miles south of Bombay, has been idle since June 2001 due to a tariff dispute with the government. After Enron-favored candidate Bush Senior lost his re-election bid in 1992, the pragmatic corporation poured money into the treasury of the Democratic National Committee. In 1994, Clinton's Secretary of Commerce Ron Brown helped Enron secure a construction contract with Paiton Power Plant through a sleazy deal with Indonesia's rapacious dictator, Suharto. In 1995, Clinton's National Security Advisor, Anthony Lake, helped Enron secure a contract to build a gas pipeline from Mozambique to South Africa, and to develop a gas field in southern Mozambique. During the 1998 World Economic Summit in Davos, Enron received Clinton administration help in the marketing of Russian gas in Europe. Ken Lay and Boris Brevnov of Unified Electricity Systems of Russia signed a 10-year strategic alliance. Enron, like many other big corporations, was committed to globalism. Not everyone was happy with this development. Some of the reasons for their discontent are highlighted in an Alec Jones Radio Show interview with investigative reporter Greg Palast, an American with a true global perspective. (March 4, 2002). Palast said that an interview with former World Bank official Joseph Stiglitz and a gift of documents from other sources at the World Bank and the International Monetary Fund detailed the sordid secret practices of international banking. Palast: "So what we found was this. We found inside these documents that basically they required nations to sign secret agreements, in which they agreed to sell off their key assets, in which they agreed to take economic steps which are really devastating to the nations involved and if they didn't agree to these steps, there was an average for each nation that signed one-hundred and eleven items that they are required to sign on to. If they didn't follow those steps they would be cut-off from all international borrowing. You can't borrow any money in the international marketplace. No one can survive without borrowing, whether you are people or corporations or countries . . . " Palast said the Argentinian plan, signed by Jim Wolfensohn, the president of the World Bank, forced Argentina to sell all publicly owned assets, including the water system. Palast: "And by the way, it's not just anyone who gets a piece of the action. The water system of Buenos Aires was sold off for a song to a company called Enron. A pipeline was sold off, that runs between Argentina and Chile, was sold off to a company called Enron." Jones: "And then the globalists blow out the Enron after transferring the assets to another dummy corporation and then they just roll the theft items off." Jones summarizes after a break in the interview: "They come in, pay off politicians to transfer the water systems, the railways, the telephone companies, the nationalized oil companies, gas stations--they then hand it over to them for nothing. The Globalists pay them off individually, billions a piece in Swiss bank accounts. And the plan is total slavery for the entire population. Of course, Enron, as we told you was a dummy corporation for money laundering, drug money, you name it, from the other reporters we have had on. It's just incredibly massive and hard to believe. But it is actually happening."
Palast expands on the devastation: "They hand it over, generally to the cronies, like Citibank was very big and grabbed half the Argentine banks. You've got British Petroleum grabbing pipelines in Ecuador. I mentioned Enron grabbing water systems all over the place. And the problem is that they are destroying these systems as well. You can't even get drinking water in Buenos Aires. I mean it is not just a question of the theft. You can't turn on the tap. It is more than someone getting rich at the public expense."
Palast describes Enron's dealings in the Texas and California energy markets as a three-card Monty game. "Well, you have to understand that some of the guys who designed the system in California for deregulation then went to work for Enron right after." Jones: "Go back into privatization. Go through these four points. That's the key. It sends billions to politicians to hand everything over." Palast says that former World Bank official Joseph Stiglitz calls the process "briberization," where "you sell off the water company and that's worth, over ten years, let's say that that's worth about 5 billion bucks, ten percent of that is 500 million, you can figure out how it works. I actually spoke to a Senator from Argentina two weeks ago. I got him on camera. He said that after he got a call from George W. Bush in 1988 saying give the gas pipeline in Argentina to Enron, that's our current president. He said that what he found was really creepy was that Enron was going to pay one-fifth of the world's price for their gas and he said how can you make such an offer? And he was told, not by George W. but by a partner in the deal, well if we only pay one-fifth that leaves quite a little bit for you to go in your Swiss bank account. And that's how it's done." Palast describes the influence of Enron campaign donations: "In fact, we saw some interesting documents, a month before Bush took office, Bill Clinton, I think to get even with Bush's big donor, cut Enron out of the California power market. He put a cap on the prices they could charge. They couldn't charge more than one-hundred times the normal price for electricity. That upset Enron. So Ken Lay personally wrote a note to Dick Cheney saying get rid of Clinton's cap on prices. Within 48 hours of George W. Bush taking office, his energy department reversed the clamps on Enron. OK, how much is that worth for those guys. You know that has got to be worth, that paid off in a week all the donations." Returning to the globalization theme, Jones asks what happens after the foreign banks have collected 21% to 70% interest and destroyed the economy of the debtor nations. Palast: "Like I said, you open up the borders for trade, that's the new opium wars. And once you have destroyed an economy that can't produce anything, one of the terrible things is that they are forcing nations to pay horrendous amounts for things like drugs--legal drugs." After that, the ruined country can only survive by trafficking in illegal drugs. Jones: "And so, drive the whole world down, blow out their economies and then buy the rest of it up for pennies on the dollar. What's Part 4 of the IMF/World Bank Plan?" Palast: "Well, in Part 4, you end up again with the taking apart of the government. And by the way, the real Part 4 is the coup d'etat. That's what they are not telling you. And I'm just finding that out in Venezuela. I just got a call from the President of Venezuela." Jones: "And they install their own corporate government." Palast: "What they said was here you've got an elected president of the government and the IMF has announced, listen to this, that they would support a transition government if the president were removed. They are not saying that they are going to get involved in politics--they would just support a transition government. What that effectively is is saying we will pay for the coup d'etat, if the military overthrows the current president, because the current president of Venezuela has said no to the IMF. He told those guys to go packing. They brought their teams in and said you have to do this and that. And he said, I don't have to do nothing. He said what I'm going to do is, I'm going to double the taxes on oil corporations because we have a whole lot of oil in Venezuela. And I'm going to double the taxes on oil corporations and then I will have all the money I need for social programs and the government--and we will be a very rich nation. Well, as soon as they did that, they started fomenting trouble with the military and I'm telling you watch this space: the President of Venezuela will be out of office in three months or shot dead. They are not going to allow him to raise taxes on the oil companies." [The CIA-IMF sponsored coup happened , just as Palast predicted, but the popular President Chavez survived and resumed his elected status as Venezuela's president.] Jones observes that the Bush administration set up a shadow government without advising Congress. "This looks like a coup d'etat here. I'm going to come right out with it. We had better spread the word on this now or these greedy creatures are going to go all the way." Palast concludes that only the mainstream press in Britain will carry his stories. "And I'm just very sorry that we have to have an alternative press, an alternative radio network and everything else to get out the information that makes any sense. I mean this information should be available to every American. I mean, after all, it's our government."
The URL of this interview is: http://globalresearch.ca/articles/PAL203A.html On March 22, 2002 The Institute for Policy Studies released an exhaustive study exposing public financing of Enron's overseas expansion. "It should be a national disgrace that the U.S. government was subsidizing Enron's far-flung and often harmful global operations," said John Cavanagh, Director of IPS.
The report details how, over the past decade, twenty-one agencies representing the U.S. government, multilateral development banks, and other national governments helped supply $7.2 billion in public financing approved for thirty-eight projects in twenty-nine countries. The study also reveals that the company was infamous for predatory policies in the developing world. Bolstered by taxpayer financing from agencies like the Overseas Private Investment Corporation and the World Bank, Enron began privatizing national energy sectors during the Reagan Administration, promising to supply reliable energy at a low price. Once Eron bribed officials and took charge, there followed price hikes, blackouts, and street riots in which people died. Enron's accounting firm, Arthur Andersen, was a big player in the piratization-privatization game. It assessed utilities at bargain basement prices so that Enron could acquire the properties on the cheap. For example, in the Dominican Republic, Enron paid almost $1 billion less than the public ulility's actual value. http://www.seen.org
Marc Edelman, a professor of anthropology at Hunter College and the CUNY Graduate Center, and author of Peasants Against Globalization, describes the Central American famine resulting from these policies. "Many are abandoning farms that failed because of globalized trade and the dumping of U.S. grain. Others are fleeing liberalized interest rates so high that they have no hope of ever starting a small business. Still others are trying to escape life in the free trade zones, where factory owners enjoy huge public subsidies and workers face immense obstacles in organizing for a living wage. "Central American land could produce decent living standards for small farmers if they could obtain small-scale irrigation systems, better access to land, secure title to property, low-cost credit and shelter from unfair competition and the ravages of global market forces." Marc Edelman, The Los Angeles Times, March 22, 2002. So there it is--deregulation, briberization, hidden speculation, and globalization, a recipe for disaster. At each step of the process, shock waves travel around the world. As long as America permits legally sanctioned financial rape and pillage, Enronization will continue to reward the greedy and pauperize ordinary citizens. In his testimony before the Senate Banking Committee March 21, 2000 SEC Chairman Harvey Pitt advised the committee against banning accounting firms from providing consulting services to companies whose books they audit, admitting, though, that auditing and consulting for the same corporate clients "can, and in a number of situations clearly does, create conflicts." So, what's your problem, Harvey? Let's hope that when President Bush visits El Salvador he won't convince his audience that the Central American Free Trade Agreement will make them rich and prosperous. Only one word is the key to their devastated economies: Enronization.
By Barry Crimmins, in Dollars and Sense , March/April 2002
- Enron has had to keep shredding files; otherwise they could have fallen into Arthur Andersen's hands.
- Imagine how much sooner Enron would have gone broke had the corporation paid ANY TAXES in the last five years.
- Clayton Vernon was fired from Enron when he wrote on an internet bulletin board, "Ken Lay is the sorriest sack of garbage I have ever been associated with, a truly evil and satanic figure." Enron apparently dismissed Vernon for disclosing company secrets.
- Connecticut Senator Joe Lieberman, who received campaign and PAC contributions from Enron, has promised a thorough inquiry that will not become "a witch hunt. Responding to calls for Lieberman to recuse himself over the Take the Money Enron scandal, an indignant Lieberman sputtered, "To say Enron owns me is absurd. Anyone who knows me knows that I am first, last and always a pawn of the insurance industry!"
- "Americans trust the Republicans to do a better job of keeping our communities and our families safe," White House Director of Scoundrelism Karl Rove told the Republican National Committee. He continued, "That is, unless those communities have poor people, Enron employees, or drinking water."
- Once again Ralph Nader's political incompetence is clear. How could he have called himself a politician and not gotten at least a few thousand from Enron?
- What's the difference between Osama bin Laden and Ken Lay? When bin Laden commits major crimes against innocent people, he goes into hiding. When Lay commits major crimes against innocent people, he goes to Aspen.
- The biggest challenge facing the Bush administration during its second year will be to find a way to link Enron's victims to the al Qaeda network.
- Little did we know that when Bush promised to return ethics to Washington, it was because he wanted them rounded up and destroyed. So where do the Houston Astros play next year? Enron Memorial Field?
Will congress Investigate U.S. Agencies' Enron Ties?
White--It Gets Worse By Robert W. Borosage