The Story of Enron
“The story of Enron is the story of
unmitigated pride and arrogance.”
– Jeffrey Pfeffer, Professor, Stanford Business School
Sightings from The Catbird Seat
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January 7, 2005
Enron Directors Reach $168M Settlement
By Michael Liedtke, Associated Press
SAN FRANCISCO (AP) - Eighteen former directors of scandalized Enron Corp. have reached a $168 million settlement, including a $13 million payout out of some of their own pockets, with shareholders burned by the financial shenanigans that culminated in the company’s stunning collapse.
The agreement announced late Friday requires 10 of the former Enron directors to contribute a combined $13 million from the profits that they reaped from selling company stock before Enron revealed it had been grossly exaggerating its sales and profits. The debacle foreshadowed a wave of accounting scandals that sparked an overhaul of the country’s corporate governance practices.
The directors paying an unspecified amount of money are: Robert Belfer, Norman Blake, Ronnie Chun, John Duncan, Joe Foy, Wendy Gramm, Robert Jaedicke, Charles LeMaistre, Rebecca Mark-Jubasche and Ken Harrison, according to attorneys involved in the case.
Other directors who aren’t personally paying money but are neverless covered by the settlement are: Paulo Forraz-Pererira, John Mendelsohn, Jerome Meyer, Frank Savage, John Urquhart, John Wakeham, Charls Walker and Herbert Winokur.
None of the directors are admitting any wrongdoing as part of the settlement, which still requires final court approval....
< < < FLASHBACK < < <
December 14, 2001
Enron makes Whitewater smell like roses
By Bill Press, Tribune Media Services
WASHINGTON -- 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 free-wheeling 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 last week, 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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December 21, 2001 - From Public Citizen:
Electricity, Commodities Deregulation Allowed Enron to Loot Billions from Lenders, Shareholders, Employees and Consumsers
Tangled Web of Deceit, Political Influence Must be Unraveled by Congress
WASHINGTON, D.C. – After Enron Corp. used its vast web of political connections to win December 2000 passage of commodities trading legislation that helped the company shield its energy trading activities from government scrutiny, California’s energy crisis suddenly took a dramatic turn for the worse as artificial supply shortages led to frequent rolling blackouts, according to a new Public Citizen report released Friday.
The legislation reducing government oversight of energy trading was muscled through Congress —— without a Senate committee hearing —— with the aid of U.S. Sen. Phil Gramm of Texas. Gramm was chairman of the Senate Banking Committee, which had jurisdiction over the legislation he co-sponsored, but he chose to bypass his committee, and the bill was quietly tacked onto a "must-pass" appropriations bill late in the session.
Gramm’s wife, Wendy Gramm, also aided Enron’s rise to power. As chairwoman of the Commodity Futures Trading Commission, she pushed through a key regulatory exemption on Jan. 14, 1993, just as she was about to leave office. Five weeks later, she joined Enron’s board of directors, where she served on the board’s audit committee and had access to key financial information about the company.
On Sept. 4 of this year, Sen. Gramm announced that he would not run for re-election in 2002. Then in November, shareholders and federal regulators learned the extent of Enron’s financial troubles. Since the revelations, the company has filed the largest corporate bankruptcy in history, and shareholders, lenders and Enron employees have lost billions of dollars.
"Millions of people in California paid outrageously inflated prices for electricity because of Enron’s ability to manipulate the markets for electricity and natural gas, and thousands of Enron employees and shareholders have been devastated because of insider dealing and financial trickery," said Public Citizen President Joan Claybrook.
"Republicans in Congress investigated Whitewater for years and spent millions of dollars. But that pales in comparison to Enron-gate. Congress needs to turn over every rock and see what crawls out from underneath. They should ask, who knew what and when did they know it? Investigations into any criminal conduct should extend to the political players who aided and abetted this company’s rapacious rampage across America. We should make no distinction between the officers who committed these acts and the politicians who enabled them."
Public Citizen called on Congress to force Wendy and Phil Gramm and Treasury Secretary Paul O’Neill to testify under oath about their knowledge of Enron’s alleged accounting fraud and use of offshore tax and bank regulation havens.
Public Citizen also said that President Bush, Vice President Dick Cheney and political adviser Karl Rove should also be required to answer questions about whether administration officials discussed policies involving energy price controls, other energy regulations or tax havens with Enron representatives.
Bush adamantly resisted price controls even though California’s wholesale energy costs had almost quadrupled in 2000; at the same time, Enron’s trading revenues nearly tripled.
The Public Citizen report – Blind Faith: How Deregulation and Enrons Influence Over Government Looted Billions from Americans – details the political connections and government actions that helped Enron become the most prominent energy trader in the world before its recent collapse. The report found that:
From June through December 2000, California experienced only one Stage 3 electricity emergency (which requires rolling blackouts). But following passage of the Commodity Futures Modernization Act, which shielded Enron’s and others’ trading activities from regulators, the state had 38 Stage 3 emergencies – ending only when federal regulators finally imposed price controls in June 2001.
Enron took advantage of lax government oversight and formed a complex web of more than 2,800 subsidiaries – 874 of which were located in offshore tax and banking regulation havens, mostly in the Cayman Islands. Upon assuming office in 2001, Bush – who has accepted $2 million from Enron during his political career and counts Enron chief executive Kenneth Lay as a close personal friend – scrapped plans put into place by former President Bill Clinton to limit the ability of corporations to effectively use these offshore havens. The action came at the height of high West Coast energy prices, which would have allowed Enron to funnel billions in excess profits to offshore accounts.
As a lame-duck chairwoman of the Commodity Futures Trading Commission, Wendy Gramm exempted Enron and other energy futures traders from oversight in response to a request by Enron. At the time, Enron was a significant source of political funding for her husband. Five weeks later, she joined the company’’s board and served on the board’s audit committee, where she would have had access to the company’s financial details. The chief executive of Arthur Andersen, Enron’s outside auditor, testified before congressional investigators in December that "illegal acts" may have been committed at the company.
"Buried amid the rubble of Enron’s fallen house of cards are the political ties that allowed this greedy company to rip off the public and its own employees, who saw their retirement accounts vanish overnight – even as top executives were bailing out and walking away with hundreds of millions of dollars," said report author Tyson Slocum, research director for Public Citizen’s Critical Mass Energy and Environment Program.
"There’s an object lesson here for those who decry government regulation: Absent a strong regulatory presence, greed prevails and consumers get the shaft. We’ve seen it time and time again."
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August 26, 2004
Citigroup Sued Over Enron Scandal
NEW YORK (Reuters) - Citigroup Inc. faces a lawsuit from angry investors who allege they were defrauded in a “massive scheme of deception” when they bought securities tied to the credit-worthiness of bankrupt energy trader Enron Corp.
The suit, brought by Bank of New York Co. Monday in New York State Supreme Court on behalf of numerous investors in Enron-related securities, is the latest in a spate of actions at recovering billions of dollars lost when the Houston-based company collapsed into bankruptcy in 2001.
Plaintiffs include well-known distressed debt funds Angelo Gordon & Co. and Appaloosa Investment LP, who charged in the 77-page complaint that Citigroup concocted a fraudulent scheme to raise billions of dollars from the sale of notes called “Yosemite” securities.
Citigroup, the investors said, then used the funds to make “disguised” loans to Enron “to reduce its own Enron credit risk, prop up Enron’s failing financial condition and generate significant fees in the process.”
The complaint alleges fraud, breach of contract and fiduciary duty, and negligence in the Yosemite transactions, which it said took place between 1999 and 2001. Enron sought Chapter 11 bankruptcy protection on Dec. 2, 2001....
A successful lawsuit might complicate Citigroup’s plan to keep its already high legal costs from rising further.
The company in May roughly quadrupled, to $6.7 billion, its reserves for legal bills, including those for Enron, as it agreed to pay $2.65 billion to settle a lawsuit by WorldCom Inc. investors accusing it of participating in financial fraud.
Citigroup Chief Executive Charles Prince said at the time, “We feel very comfortable in saying that, with our advisers helping us, we have established a reserve that will cover all of our meaningful exposures.”
Reducing exposure
In their complaint, the Yosemite investors said Citigroup knew Enron’s debts were several billion dollars greater than the company publicly disclosed between 1999 and 2001.
They also said the bank wanted to cut its own, rising exposure to Enron. Though Enron was an investment-grade company until just four days before it filed for Chapter 11 bankruptcy, the complaint said Citigroup, because of undisclosed information it possessed about Enron, knew that defaults were “likely.”
“Citibank thus found itself in a bind. It knew Enron was not loan-worthy, yet if it failed to find Enron new sources of financing, it ran the significant risk that Enron would collapse before Citibank could recover the billions of dollars Enron owed it,” the complaint said.
“The Yosemite transactions were Citibank’s solution to its problem.”...
For more on Citigroup, GO TO > > > Vampires in the City
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February 14, 2003
Congressional Report Details
More Enron Scams
By Marcy Gordon, Associated Press
WASHINGTON - Enron set up an array of dizzyingly complex schemes to hoodwink the Internal Revenue service, reap more than $2 billion in questionable tax and accounting savings and inflate its income as it paid its executive lavishly, a congressional panel found in an investigation made public yesterday.
The bankrupt company created a dozen tax-sheltering transactions that used such techniques as claiming the same tax loss twice, according to a report by the House-Senate Joint Committee on Taxation, which spent a year investigating Enron’s tax practices.
With names such as Project Apache, Project Renegade and Project Condor, the transactions show a vast new arena of Enron activity beyond the web of off-balance sheet schemes and partnerships previously revealed.
“Money, money, money,” declared Sen. Charles Grasley, R-Iowa, chairman of the Senate Finance Committee, at a hearing on the committee’s report. “Money above honesty and financial accounting.”
The three-volume report “reads like a conspiracy novel,” Grassley said.
The evidence of Enron’s clever manipulation of the tax laws and the fact that other big corporations do the same are fueling a push by lawmakers to crack down on tax shelters. Senate Democratic leader Tom Daschle of South Dakota, called the report “a call to action, and we will act.”
Big accounting firms, investment banks and law firms – including Bankers Trust, Chase Manhattan, Deloitte & Touche and fallen Arthur Andersen – that gave Enron tax advice pushing legal boundaries, did not escape bleme from senators and congressional investigators.
The outside advisers, who received about $88 million in fees from Enron, colluded, said Sen. Max Baucus of Montana the Finance Committee’s senior Democrat.
“Enron and its advisers conspired to mine the tax code for tax schemes. ...They ensured that no one – particularly the IRS – would ever discover what they were up to.”
Enron’s failure in late 2001 destroyed the retirement savings of thousands of employees and hurt individual investors and pension funds nationwide. The taxation committee’s inquiry was among more than a dozen congressional investigations last year into Enron’s collapse.
Enron’s tax deals “pushed the concept of business purpose to the limit (and perhaps beyond),” the panel’s report said.
“Enron’s behavior illustrates that a motivated corporation can manipulate highly technical provisions of the law.” By using advice from sophisticated lawyers, investment bankers and accountants, “corporations like Enron have an inherent advantage over the IRS,” it said....
“Show Me the Money!” is emblazoned on an internal Enron document detailing a tax transaction, one of thousands of pages released by the Finance Committee.
HEARING OF THE SENATE COMMITTEE ON COMMERCE
"AN OVERVIEW OF THE ENRON COLLAPSE"
REMARKS OF U.S. SENATOR RON WYDEN
"Because of what happened at Enron, there are Oregon families going to grief counseling rather than holiday parties this year. These are Oregonians who lost retirement security because as Enron's stock plunged like the Titanic, in effect the senior executives on the deck locked the workers in the boiler room, preventing them from selling off 401(k) shares while they dumped their own.
"What is especially unsettling is that there is a law on the books today that was designed to prevent the sort of carnage that took place at Enron. I wrote this law, which is called the Financial Fraud Detection and Disclosure Act, so that there would be new, stiffer requirements on accountants to search for fraud at publicly held companies like Enron and disclose it when they found it.
"I intend to withhold my judgment on this case until the Security and Exchange Commission and criminal investigators have completed their inquiry, but given what is already on the record, it sure doesn't look like much was done to detect and disclose the very conduct that the Financial Fraud Detection and Disclosure Act was designed to root out.
"For example, the Financial Fraud Detection and Disclosure Act requires that every audit includes procedures designed to detect illegal acts and specifically identify related party transactions that are essential to the integrity of the financial statements. Here there were clearly related party transactions that had financial hide- and-seek written all over them and the auditors failed to have procedures in place to identify them. When Enron's Chief Financial Officer set out a special purpose entity funded primarily with Enron stock bought at a discount, while continuing to serve as an officer of Enron that should have set off the warning lights required by the law.
"Certified financial statements are not supposed to be a game of financial hide-and-seek and our review should play particular attention to how it was that Enron transactions big enough to bring down this financial house of cards were not big enough to be clearly and visibly reported by the auditors."
– Courtesy of: t r u t h o u t 2001
August 8, 2002
Lawmaker Seeks Inquiry of Rubin Intervention for Enron
Fox News
WASHINGTON —— A House Republican lawmaker is seeking an investigation into phone calls made on behalf of Enron Corp. to the Bush administration by former Treasury Secretary Robert Rubin.
Rep. Mark Foley, R-Fla., wants the Securities and Exchange Commission to look into the phone call, alleging that Rubin was attempting to tamper with Enron's credit rating.
"A former Treasury Secretary should not be soliciting financially-beneficial favors from colleagues at an agency that he once led," Foley wrote in a letter to SEC Chairman Harvey Pitt.
"I would ask that you would investigate all equity trades submitted by Citigroup or its subsidiaries and their clients in the two weeks preceding Mr. Rubin's call to Mr. Fisher as well as the two weeks following the call," the letter reads.
In his capacity as head of Citigroup, Rubin allegedly called Treasury Undersecretary of Domestic Finance Peter Fisher last November to see whether Fisher thought it would be a good idea for the Treasury Department to call bond rating agencies to halt an expected reduction in Enron's credit rating.
Former energy giant Enron declared bankruptcy last December after it revealed that it had been using capital accounts to cover for losses in its operating accounts. Its collapse was the first in a string of corporate scandals that has claimed Tyco International, Global Crossing, WorldCom and others.
Enron's credit rating and condition was very much on the minds of Citigroup because Enron is a huge client of the bank. Citigroup has millions of dollars of loans with Enron, and such an intervention on behalf of the Treasury to bolster Enron would have benefited both the bank and the energy firm.
The Treasury Department did nothing about the call, but Foley told Fox News that he wants to know whether Rubin or anyone else at Citigroup profited from insider knowledge of Enron's imminent demise.
"That's the timing issue that's critical, people were caught in the exits trying to sell their shares, there was no market. I want to make sure the fat cats, if you will, didn't prematurely sell their shares knowing of the deteriorating conditions," Foley said, adding that he is not alleging that Rubin participated in any criminal wrongdoing.
Senate Democrats have called Citigroup officials to testify about the relationship between the bank and the energy giant, but have not called Rubin specifically.
Democrats ask if Rubin is so important, why have Republicans who lead the House not bothered to call him to testify. Republicans say they will leave that open as an option.
Fox News' Major Garrett contributed to this report.
For more on Robert Rubin and Citigroup, GO TO > > > Vampires in the City
For more on Robert Rubin and Kamehameha Schools, GO TO > > > Dirty Money, Dirty Politics & Bishop Estate
For more on Robert Rubin and Goldman Sachs, GO TO > > > Dirty Gold in Goldman Sachs
April 9, 2002
Enron auditor pleads guilty
David Duncan agrees to work with prosecutors
WASHINGTON (AP) April 9 – The Arthur Andersen auditor who oversaw Enron’s books pleaded guilty Tuesday to ordering the shredding of Enron documents and agreed to cooperate with prosecutors in a deal that could break the scandal wide open.
FORMER PARTNER DAVID B. DUNCAN pleaded guilty to obstruction of justice, admitting he tried to thwart an Enron investigation by the Securities and Exchange Commission.
He is believed to be the first person in the Enron case to strike a deal with federal prosecutors.
“Documents were in fact destroyed so that they would not be available to the SEC,” he told U.S. District Judge Melinda Harmon, reading from a statement.
The charge carries up to 10 years in prison and hundreds of thousands of dollars in fines. Attorneys did not release details of any agreement on the sentence. Duncan remains free until his sentencing on Aug. 26.
He had no comment as he left the courthouse. His attorney, Sam Seymour, said: “He’s continuing his cooperation, as we’ve said all along.”
Attorney Rusty Hardin, who represents Andersen, said Duncan had denied any criminal wrongdoing until Tuesday and the firm was surprised and disappointed at his statement in court.
“Arthur Andersen made the decision to terminate Mr. Duncan last January based on his exercise of extremely bad judgment in this matter. We stand by that decision,” Hardin said.
Duncan was fired by Andersen after the accounting firm acknowledged the large-scale destruction of documents and deletion of computer files related to the collapse of the energy giant, whose bankruptcy cost thousands of employees their jobs and, in many cases, their life savings.
VITAL TO PROSECUTION’S CASE
Duncan could prove crucial in enabling prosecutors to build a case against Enron. As the senior auditor in charge of the Enron account, he would presumably have knowledge of the complex web of partnerships used by the company to keep millions of dollars in debt off its books.
Under the plea bargain, Duncan is immune to any further prosecution related to the Enron case as long as he fully cooperates with federal authorities — which could include testimony at future trials — and agrees not to sell his story or otherwise profit from the debacle.
In court, Duncan described how he ordered Andersen employees on Oct. 21 to destroy certain documents two days after he learned that the SEC was investigating Enron.
“I also personally destroyed such documents,” Duncan told the judge. “I accept that my conduct violated federal law.”
Prosecutors said the shredding occurred between Oct. 23 and Nov. 9. The SEC notified Andersen on Nov. 8 that it would subpoena documents related the firm’s work on Enron.
A grand jury indicted Andersen on March 7 on a charge of obstructing justice, accusing the firm of destroying “tons of paper” at offices worldwide and deleting enormous numbers of computer files on its Enron audits.
At times, the government said, the destruction was so frenetic that employees worked overtime and shredding machines could not keep up.
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February 7, 2002
Enron: Ultimate agent of
the American empire
by Larry Chin, Online Journal,
Centre for Research on Globalisation (CRG), globalresearch.ca,
Part II: Enron, the Bush administration, and the Central Asian war
Most experts agree that the Caspian Basin and Central Asia are the keys to energy in the 21st century. Said energy expert James Dorian (Oil & Gas Journal, 9/10/01), "Those who control the oil routes out of Central Asia will impact all future direction and quantities of flow and the distribution of revenues from new production."
America wants the region under total US domination.
The Caspian Basin has an estimated $5 trillion of oil and gas resources, and Central Asia has 6 trillion cubic meters of natural gas and 10 billion barrels of undeveloped oil reserves. Interconnecting pipelines are the key to accessing and distributing oil and gas to European, Chinese and Russian markets.
Policy planners have devoted years to this agenda. A report published in September 2001 detailing a conference held at the Brookings Institution in May 2001 provides clear evidence that the exploitation of Caspian Basin and Asian energy markets was an urgent priority for the Bush administration, and the centerpiece of its energy policy.
The report states that "the administration's report warned that 'growth in international oil demand will exert increasing pressure on global oil availability' and that developing Asian economies and populations——particularly in China and India——-will be major contributors to this increased demand" and that "options for constructing gas pipelines east to Asia from the Caspian have been discussed for the last decade."
For years, Enron (along with Unocal, BP Amoco, Exxon, Mobil, Pennzoil, Atlantic Richfield, Chevron, Texaco, and other oil companies) has been involved in a multi-billion dollar frenzy to extract the reserves of the three former Soviet republics, Turkmenistan, Azerbaijan, and Kazakhstan.
According to Project Underground (11/7/99), former Soviet, KGB and Politburo members are profiting from oil riches, along with "a formidable array of former top Western Cold Warriors, drawn principally from the cabinet of George [H.W.] Bush." The dealmakers include James Baker, Dick Cheney, Brent Scowcroft, and John Sununu. Also cashing in on the deals are former Clinton Treasury Secretary Lloyd Bentsen (close friend of Ken Lay and longtime recipient of Enron funding) and Zbigniew Brezezinski.
Brezezinski, a leading member of the Council on Foreign Relations and arguably the most influential policy planner in the world, spearheaded the American effort to destabilize the Soviet Union in Afghanistan in the 1970s. He is a consultant to BP Amoco. His recent book, "The Grand Chessboard" is a virtual blue print for a war and balkanization of Central Asia.
According to Alexander's Oil & Gas Connections (10/12/98), Enron signed a contract in 1996, giving it rights to explore 11 gas fields in Uzbekistan, a project costing $1.3 billion. The goal was to sell gas to the Russian markets, and link to Unocal's southern export pipeline crossing Turkmenistan, Uzbekistan and Afghanistan.
Turkmenistan (where Enron's project was based) and Azerbaijan are closely allied with Israeli military intelligence. Yosef Maiman, a former Israeli intelligence agent, is the official negotiator for energy development projects in Turkmenistan.
Enron recently conducted feasibility studies for a $2.5 billion trans-Caspian gas pipeline to be built jointly with General Electric and Bechtel. Enron's goal was to link this pipeline to another line through Afghanistan.
As described in many accounts, notably the recently published "Osama Bin Laden: The Forbidden Truth" by Jean Charles Brisard and Guillaume Dasique, a Central Asia Gas (CentGas) consortium led by Unocal had plans for a 1,005 mile oil pipeline and a 918 mile natural gas pipeline from Turkmenistan through Afghanistan to Pakistan. This project stalled because of the political instability in Afghanistan.
In August 2001, George W. Bush revived negotiations with the Taliban.
Writer William Rivers Pitt notes that, "intense scrutiny has shaken loose two e-mails sent by Enron's Ken Lay to his employees in August of last year. In them, Lay waxes optimistic about the strength and stability of his company, and exhorts his employees to buy into the company's stock program."
Pitt believes that, "while many observers view this as the gasping lies of a drowning criminal," Lay's messages must be considered in light of the timing: His last e-mail was sent on August 27, about the same time as the final Taliban meeting with the Bush administration. Was Kenneth Lay anticipating a piece of a new pipeline deal, and an Enron contract, courtesy of George W. Bush?
After the Taliban refused the Bush administration's "carpet of gold," America dropped its "carpet of bombs" on Afghanistan, allegedly in retaliation for the 9/11 terrorist attacks. Was Ken Lay also anticipating a war, and a way to profit from it?
Former Unocal lobbyist Hamid Karzai now heads a bombed and gutted Afghanistan. Bush's US envoy is Zalmay Khalizad, another former Unocal representative, who helped draw up the plans for the original CentGas pipeline.
The US has established four new permanent military bases, throughout the region, including a new one in Afghanistan. Recently, Uzbekistan, hosted dozens of members of the US House of Representatives and the Senate. The region will remain a zone of perpetual violence and conflict, and plunder.
If Enron had not made the mistake of collapsing, Kenneth Lay and his team would be in the thick of it.
Enron, Halliburton, Bush...bin Laden?
At the web site Rumor Mill News (www.RumorMillNews.com), a journalist named "Phoenix" has laid out business links that tie Enron to the bin Laden family. These connections, which have been independently verified by Michael Ruppert (www.copvcia.com), play out as follows:
1. Osama bin Laden's family business, the Saudi Binladin Group, is a major construction company. Saudi Binladin Group was an investor in the Carlyle Group. Carlyle's directors include George H.W. Bush, and James Baker. George W. Bush's firm Arbusto Energy was funded by an investment from Texas investment banker James Bath, who was also the investment counselor for the bin Laden family. Bath had connections to the CIA, and was involved with the Iran-Contra, savings and loan, and BCCI scandals.
2. One of Saudi Binladen's joint venture partners is H.C. Price Company.
3. H.C. Price is a major builder of pipelines, and is involved in large projects, including two projects for Enron: the Florida Gas Pipeline and the Northern Border Pipeline running from the US/Canadian border from Montana to Illinois.
4. In 1996, Dresser Industries and Shaw Industries merged their pipecoating businesses to form Bredaro-Shaw Group. H.C. Price became part of Bredaro-Shaw.
5. Halliburton acquired Dresser in 1998. George H.W. Bush's father, Prescott, was the managing director of Brown Brothers Harriman, which previously owned Dresser. Dresser Industries gave George H.W. Bush his first job in 1948.
6. Dick Cheney orchestrated the Dresser and Bredaro-Shaw acquisitions.
7. Both Halliburton, and its subsidiary Brown & Root, have deep ties to the CIA and the military. The company has been involved in US military conflicts in Vietnam, Bosnia, Kosovo, Macedonia, Chechnya, Pakistan, Colombia and Rwanda. Brown & Root builds oil rigs, pipelines, wells, and nuclear reactors.
It does not appear to be a simple case of coincidence that Saudi Binladin, a long time business partner with the Bush family, also has a partnership with a Dick Cheney-affiliated Halliburton that works with Enron.
The cover-up begins
In their book The Outlaw Bank, Jonathan Beaty and S.C. Gwynne wrote of BCCI, "It was a conspiratorialist's conspiracy, a plot so byzantine, so thoroughly corrupt, so exquisitely private, reaching so deeply into the political and intelligence establishments of so many countries, that it seemed to have its only precedent in the more hallucinogenic fiction of Ian Fleming, Kurt Vonnegut or Thomas Pynchon. As tales of its global predations were splattered across headlines all over the world, its apparent influence reached almost absurd proportions."
The scope of Enron's influence has reached well into the absurd, if not beyond. And there are many more Enrons out there, waiting to be blow open.
In describing the system that breeds Enrons, professor Michel Chossudovsky of the University of Ottawa (CovertAction, Fall 1996) wrote:
"Global crime has become an integral part of an economic system, with far reaching social, economic and geopolitical ramifications . . . the relationship among criminals, politicians, and members of the intelligence establishment has tainted the structures of the state and the role of its institutions . . . this system of global trade and finance has fostered an unprecedented accumulation of private wealth alongside the impoverishment of large sectors of the world population, and the prospects for change are dim. Meanwhile, the international community turns a blind eye until some scandal momentarily breaks through the gilded surface."
In light of congressional "investigations" headed exclusively by committee chairmen who have received Enron monies, weeks of FBI foot-dragging, continued White House secrecy, no independent counsel, and media complicity in White House damage control efforts, the Enron trail has already begun to grow cold.
The American corporate media has done its best to look the other way. This is no surprise, since Enron dumped handsome sums into the pockets of media moguls, and conservative journalists such as Lawrence Kudlow, Peggy Noonan, William Kristol and others.
Cronies and cohorts are meeting. Patsies and fall guys have been designated. Lies are being fabricated. Fifth Amendment mantras will be repeated.
As was the case with Watergate, BCCI, Iran-Contra, and the savings and loan scandals, it is not too cynical to expect the Enron hearings to expose only enough malfeasance to silence the public, while leaving the massive system intact. The masterminds and the largest beneficiaries are about to slip into the shadows.
The American empire is built on a thousand Enrons. It will exhaust every means to avoid implicating itself, even as it drowns in the cesspool of its own creation, dragging thousands of innocent people down with it.
Copyright Larry Chin. 2002. Reprinted for fair use only. Larry Chin is a freelance journalist and an Online Journal Contributing Editor.
March 7, 2002
The following excerpts are from an interview with Greg Palast, a journalist for the BBC and Observer, on the Alex Jones Radio Show.
If you care anything at all about what is happening to the quality of life in the United States – and the world – then you should read this carefully. You are not likely to see this in any of the mass media. You may not even be able to see it for long on the internet -- if the global elite gain control of this last bastion of free speech.
But, for now, the truth is here....
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From : "Catherine Austin Fitts" <catherine@solari.com>
To : "Solari Action Network" <catherine@solari.com>
Date : Thu, 7 Mar 2002 18:57:25 -0500
Subject: Transcript of Interview of Greg Palast, Journalist for BBC and Observer, London, by Alex Jones.
(Courtesy of A Great Listener) Alex Jones Radio Show, Monday (PM), March 4, 2002
_______________________________
AJ: This is earth shattering. Can you break it down for us and tell us what the economists have done?
GP: Well, I'll tell you two things. One, I spoke to the former chief economist, Joe Stiglitz who was fired by the (World) Bank. So I, on BBC and with Guardian, basically spent some time debriefing him. It was like one of the scenes out of Mission Impossible, you know where the guy comes over from the other side and you spend hours debriefing him. So I got the insight of what was happening at the World Bank. In addition, he did not brief me but I got some other sources. He would not give me inside documents but other people handed me a giant stash of secret documents from the World Bank and the International Monetary Fund. . . .
AJ: Just like you got W199I, from the same folks we got it from.
GP: And so one of the things that is happening is that, in fact, I was supposed to be on CNN with the head of the World Bank Jim Wolfensen and he said he would not appear on CNN ever if they put me on. And so CNN did the craziest thing and pulled me off.
AJ: So now they are threatening total boycott.
GP: Yea right. 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 - without borrowing some money and having some credit and...
AJ: Because of the debt inflation pit they've created.
GP: Yea, well, see one of the things that happened is that - we've got examples from, I've got inside documents recently from Argentina, the secret Argentine plan. This is signed by Jim Wolfensen, the president of the World Bank. By the way, just so you know, they are really upset with me that I've got the documents, but they have not challenged the authenticity of the documents. First, they did. First they said those documents don't exist. I actually showed them on television. And cite some on the web, I actually have copies of some...
AJ: Greg Palast dot com?
GP: Yea, http://www.gregpalast.com . So then they backed off and said yea those documents are authentic but we are not going to discuss them with you and we are going to keep you off the air anyway. So, that's that. But what they were saying is look, you take a country like Argentina, which is, you know, in flames now. And it has had five presidents in five weeks because their economy is completely destroyed.
AJ: Isn't it six now?
GP: Yea, it's like the weekly president because they can't hold the nation together. And this happened because they started out in the end of the 80s with orders from the IMF and World Bank to sell-off all their assets, public assets. I mean, things we wouldn't think of doing in the US, like selling off their water system.
AJ: So they tax the people. They create big government and big government hands it off to the private IMF/World Bank. And when we get back, I want to get to the four-parts that you elegantly lay out here where they actually pay off the politicians billions to their Swiss bank accounts to do this transfer.
GP: That's right.
AJ: This is like one of the biggest stories ever, Sir. I'm sorry, please continue.
GP: So what's happening is - this is just one of them. 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.
AJ: 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.
GP: You've got it. And by the way, you know why they moved the pipeline to Enron is that they got a call from somebody named George W. Bush in 1988.
AJ: Unbelievable, Sir. Stay right there. We are talking to Greg Palast.
BREAK
AJ: We are talking to Greg Palast. He is an award-winning journalist, an American who has worked for the BBC, London Guardian, you name it, who has dropped just a massive bomb-shell on the Globalists and their criminal activity. There is no other word for it. You link through at inforwars.com, you can link to his web site - gregpalast.com, or any of the other great reports he has been putting out. He now has the secret documents. We have seen the activity of the IMF/World Bank for years. 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 nothhing. 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. Greg Palast has now broken the story world-wide. He has actually interviewed the former top World Bank economist. Continuing Sir with all these points.
I mean for the average person out there, in a nutshell, what is the system you are exposing?
GP: We are exposing that they are systematically tearing nations apart, whether it's Ecuador or Argentina. The problem is some of these bad ideas are drifting back into the U.S. In other words, they have run out of places to bleed. And the problem is, this is the chief economist, this is not some minor guy. By the way, a couple of months ago, after he was fired, he was given the Nobel Prize in Economics. So he is no fool. He told me, he went into countries where they were talking about privatizing and selling off these assets. And basically, they knew, they literally knew and turned the other way when it was understood that leaders of these countries and the chief ministers would salt away hundreds of millions of dollars.
AJ: But it's not even privatization. They just steal it from the people and hand it over to the IMF/World Bank.
GP: 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.
AJ: And the IMF just got handed the Great Lakes. They have the sole control over the water supply now. That's been in the Chicago Tribune.
GP: Well the problem that we have is - look, the IMF and the World Bank is 51% owned by the United States Treasury. So the question becomes, what are we getting for the money that we put into there? And it looks like we are getting mayhem in several nations. Indonesia is in flames. He was telling me, the Chief Economist, Stiglitz, was telling me that he started questioning what was happening. You know, everywhere we go, every country we end up meddling in, we destroy their economy and they end up in flames. And he was saying that he questioned this and he got fired for it. But he was saying that they even kind of plan in the riots. They know that when they squeeze a country and destroy its economy, you are going to get riots in the streets. And they say, well that's the IMF riot. In other words, because you have riot, you lose. All the capital runs away from your country and that gives the opportunity for the IMF to then add more conditions.
AJ: And that makes them even more desperate. So it is really an imperial economy war to implode countries and now they are doing it here with Enron. They are getting so greedy - they are preparing it for this country.
GP: I've just been talking to, out in California just yesterday, from here in Paris, the chief investigators of Enron for the State of California. They are telling me some of the games these guys are playing. No one is watching that. It's not just the stockholders that got ripped off. They sucked millions, billions of dollars out of the public pocket in Texas and California in particular.
AJ: Where are the assets? See, everybody says there are no assets left since Enron was a dummy corporation - from the experts I've had on and they transferred all those assets to other corporations and banks.
GP: Well yea, this stuff has really gone just like a three-card Monty game. I mean remember that there is money at the bottom. You did pay California's electric bills according to the investigations, they are telling me that they were pumped up unnecessarily by 9 to 12 billion dollars. And I don't know who they are going to get it back from now.
AJ: Well they actually caught the Governor buying it for $137 per megawatt and selling it back to Enron for $1 per megawatt and doing it over and over and over again.
GP: Yea, the system has gotten completely out of control and these guys knew exactly what was happening. 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. In fact, here I'm in London right now and we have, the British has some responsibility here. The guy who was on the audit committee of Enron, Lord Wakeham. And this guy is a real piece of work, there isn't a conflict of interest that he hasn't been involved in.
AJ: And he is the head of NM Rothschild.
GP: There isn't anything that he doesn't have his fingers in. He's on something like fifty Boards. And one of the problems, he was supposed to be head of the audit committee watching how Enron kept the books. And in fact, they were paying him consulting fees on the side. He was in Margaret Thatcher's government and he's the one who authorized Enron to come into Britain and take over power plants here in Britain. And they owned a water system in the middle of England. This is what this guy approved and then they gave him a job on the board. And on top of being on the board, they gave him a huge consulting contract. So you know, this guy was supposed to be in charge of the audit committee to see how they were handling their accounts.
AJ: Well, he is also the head of the board to regulate the media.
GP: Yes, he is, because I have run into real problems, because he regulates me.
AJ: They are also trying to pass laws in England where you've got an 800-year old well, or in some cases a 2000-year old well that the Romans built that's on your property and they say we are putting a meter on it. You can't have your own water.
GP: Yea, and that's Lord Wakeham. I mean this is the guy from Enron. He is a real piece of work. He can't be touched here because like I say he actually regulates the media. So if you complain, he's got his hand on your pen.
AJ: Burrow into NM Rothschild, you'll find it all there. Go through these four points. I mean you've got the documents. The IMF/World Bank implosion, four points, how they bring down a country and destroy the resources of the people.GP: Right. First you open up the capital markets. That is, you sell off your local banks to foreign banks. Then you go to what's called market-based pricing. That's the stuff like in California where everything is free market and you end up with water bills - we can't even imagine selling off water companies in the United States of America. But imagine if a private company like Enron owned your water. So then the prices go through the roof. Then open up your borders to trade - complete free marketeering. And Stiglitz who was the chief economist, remember he was running this system, he was their numbers man and he was saying it was like the opium wars. He said this isn't free trade; this is coercion trade. This is war. They are taking apart economies through this.
AJ: Well look, China has a 40% tariff on us, we have a 2% on them. That's not free and fair trade. It's to force all industry to a country that the globalists fully control.
GP: Well, you know Walmart - I did a story, in fact, if you read my book. Let me just mention that I've got a book out, "The Best Democracy Money Can Buy" about how, unfortunately, America has been put up for sale. "The Best Democracy Money Can Buy" is coming out this week. But I have a story in there about how Walmart has 700 plants in China. There is almost nothing in a Walmart store that comes from the United States of America, despite all the eagles on the wall.
AJ: Exactly, like 1984, then they have big flags saying "Buy American" and there's hardly anything --- it's Orwellian double-think.
GP: What's even worst is they will hire a factory and right next to it will be the sister factory which is inside a prison. You can imagine the conditions of these workers producing this lovely stuff for Walmart. It's really....
AJ: And if an elitist needs a liver, they just call.
GP: (Laughs) I know, it's grim. In fact, I talked to a guy, Harry Wu, is his name and, in fact, he broke into, he's been in Chinese prison for 19 years. No one believed his horrible stories. He actually broke back into prison, took a camera with him and took pictures of the conditions and said this is the conditions of factories where Walmart is getting its stuff made at, it's all....
AJ: I was threatened to be thrown off TV here in Austin when I aired video of little girls 4-years old chained down, skinnier than Jews in concentration camps, to die. And I was threatened, if you ever air that again, you will be arrested.
GP: Well you know, it is horrifying stuff that, unfortunately, I have been handed and Stiglitz, was very courageous for him to come out and make these statements. Like I said, he didn't provide me the documents. The documents really sealed it because it said this is what really happened. They really do say sign on the dotted line agreeing to 111 conditions for each nation. And the public has no say; they don't know what the hell is happening to them. All they know....
AJ: Go back into privatization. Go through these four points. That's the key. It sends billions to politicians to hand everything over.
GP: Yea, he called it briberization, which is 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 quit a little bit for you to go in your Swiss bank account. And that's how it's done.
AJ: This is the ....
GP: I've got the film. This guy is very conservative. He knows the Bush family very well. And he was public works administrator in Argentina and he said, yea, I got this call. I asked him, I said, from George W. Bush. He said, yea, November 1988, the guy called him up and said give a pipeline to Enron. Now this is the same George W. Bush who said he didn't get to know Ken Lay until 1994. So, you know.....
AJ: So now they are having these white-wash hearings. You know I was at Enron yesterday in Houston because I'm now here in Austin. We were like 30-feet from the door, right on the sidewalk and I have it on video - goons came up and said you can't videotape. I said go ahead and have me arrested. I mean I'm talking on the sidewalk, Greg.
GP: Well, you know, I was there in May, telling people in Britain you've never heard of Enron, but ... And these are the guys who have figured out how to (garbled) this government. 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.
AJ: Listen at the bombs you are dropping. You are interviewing these ministers, former head of IMF/World Bank economist - all of this, you've got the documents, paying people's Swiss Bank accounts, all this happening. Then you've got Part 2, what do they do after they start imploding?
GP: Well, then they tell you to start cutting your budgets. A fifth of the population of Argentina is unemployed, and they said cut the unemployment benefits drastically, take away pension funds, cut the education budgets, I mean horrible things. Now if you cut the economy in the middle of a recession that was created by these guys, you are really going to absolutely demolish this nation. After we were attacked on September 11, Bush ran out and said we got to spend $50 to $100 billion dollars to save our economy. We don't start cutting the budget, you start trying to save this economy. But they tell these countries you've got to cut, and cut, and cut. And why, according to the inside documents, it's so you can make payments to foreign banks - the foreign banks are collecting 21% to 70% interest. This is loan-sharking. If fact, it was so bad that they required Argentina to get rid of the laws against loan-sharking. because any bank would be a loan-shark under Argentine law.
AJ: But Greg, you said it yourself and the documents show it. They first implode the economy to create that atmosphere. They institute the entire climate that does this.
GP: Yea, and then they say, well gee, we can't lend you any money except at these loan-shark rates. We don't allow people to charge 75% interest in the United States. That's loan-sharking.
AJ: Part 3 and Part 4. What do they do after they do that?
GP: 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. And by the way, that's how you end up with an illegal drug trade, what's there left to survive on except sell us smack and crack and that's how....
AJ: And the same CIA national security dictatorship has been caught shipping that in.
GP: You know, we are just helping our allies.
AJ: This is just amazing. 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?
GP: 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.
AJ: And they install their own corporate government.
GP: 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.
AJ: Greg Palast, here is the problem. You said it when you first came out of the gates. They are getting hungry, they are doing it to the United States now. Enron, from all the evidence that I've seen was a front, another shill, they would steal assets and then transfer it to other older global companies, then they blew that out and stole the pension funds. Now they are telling us that terrorism is coming any day. It's going to happen if you don't give your rights up. Bush did not involve Congress and the others who are supposed to be in the accession if there is a nuclear attack in the secret government, Washington Post -"Congress Not Advised of Shadow Government." We have the Speaker of the House not being told. This looks like 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.
GP: I'm very sad about one thing. I report this story in the main stream press of Britain. I'm on the BBC despite Lord Wakeham. I know he doesn't like me there. I'm in the BBC, I'm in the main daily paper, which is the equivalent of the New York Times or whatever, and we do get the information out. 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!
– http://www.infowars.com/palast.htm
Reprinted from NewsMax.com
March 5, 2002
Enron Linked to Corruption in
Clinton White House
By Charles R. Smith
Energy Giant Had Deal With Suharto's Son;
Sought NATO Membership for Croatia
The ongoing investigation into the failure of Enron has led directly to the corrupt Clinton administration. One such Enron deal pushed by the Clinton White House was an exclusive power plant project with the son of Indonesian dictator Suharto, Bambang Trihatmodjo.
Bambang is Suharto's second son and at one point he was worth over $3 billion. The 48-year-old Bambang also owns an $8 million penthouse in Singapore and a $12 million mansion in an exclusive neighborhood of Los Angeles, two doors down from rock star Rod Stewart.
Starting in 1994, Enron invested $25 million into a deal for the first natural gas-fired power plant in Pasuruan, East Java. According to Commerce Department documents, Enron's partner in the planned $525 million project was Bambang Trihatmodjo.
Despite the clear evidence of Suharto corruption, Ron Brown personally sought approval for the Enron electric power plant. According to a personal letter directed to the Indonesian minister for trade and industry, Brown endorsed Enron deals for two gas-fired power plants with the corrupt Suharto regime.
"Enron power, a world renowned private power developer, is in the final stages of negotiating two combined cycle, gas turbine power projects," wrote Brown in his 1995 letter.
"The first, a 500 MW plant in East Java, should begin commercial power generation by the end of 1997 if it can promptly negotiate a gas supply Memorandum of Understanding with Pertamina. The other project, a smaller plant in East Kalimantan, also awaits a gas supply agreement.
"I urge you to give full consideration to the proposals," concluded Brown to the Indonesian minister.
In October 1995, Brown wrote another letter, this time to Hartarto Sastrosurarto, Indonesia's coordinating minister for trade and industry, pressing him to conclude Enron's power plant deal.
"I would like to bring to your attention a number of projects involving American companies which seem to be stalled, including several independent power projects.
"These projects include the Tarahan power project, which involves Southern Electric; the gas powered projects in East Java and East Kalimantan, which involves Enron," wrote Brown.
"Your support for prompt resolution of the remaining issues associated with each of these projects would be most appreciated," concluded Brown.
By September 1997, Enron announced the Indonesian power deal was nearly complete. According to Enron, it had signed an agreement to acquire natural gas for its 500-megawatt power plant under development in East Java Indonesia. The 20-year supply agreement was signed with Pertamina, Indonesia's state-owned oil and gas company.
"This is one of the last critical steps before the East Java project can achieve financial close and commence construction," said Rebecca P. Mark, chairman and CEO of Enron International.
"We expect the power plant to be operational in early 2000," said Mark.
Enron and Li Ka-Shing
Although Enron's partner in East Java was Suharto's son, the gas supply contract points directly toward Beijing. The gas sold by Pertamina was to be produced under a contract with Mobil Madura Strait Inc. and Husky Oil Ltd. from the Madura field offshore of East Java in the Madura Strait.
Canadian-based Husky Oil is partly owned by Chinese billionaire Li Ka-Shing. Li is currently in business with the Chinese army and reportedly has very close links to Beijing's military intelligence.
By 1997 the Indonesian economy collapsed and Suharto was overthrown. The resulting economic mess forced Indonesia to default on its payments for the Enron power plants. These developments caused Standard & Poor's to downgrade Enron's ratings to triple "B" minus.
The Enron power project was suspended in September 1997, after the power purchase agreement had been signed and the gas contract was completed with the state-owned gas supplier Pertamina. Enron officials objected to the suspension because the final financial close on the power plant was reported to be only days away.
PLN, the state-owned Indonesian electric utility, said that the project was no longer viable because electricity demand did not justify it and the tariffs were unrealistically high.
Enron Gets World Bank Insurance Money
Despite the loss, the U.S. taxpayer, using its insurance obtained through the World Bank Multilateral Investment Guarantee Agency, paid off Enron.
"In June of this year, MIGA paid $15 million to Enron Java Power Co. for its investment in P.T. East Java Power Corporation in Indonesia," states the 2000 official public release from the World Bank.
"The venture was one of many suspended by the presidential decree of September 20, 1997, issued in response to the country's economic crisis," noted MIGA officials.
However, after heavy World Bank pressure, the Indonesian government agreed to pay the $15 million back to MIGA. Initially the World Bank suspended further guarantees of investments in the country until the government agreed to reimburse MIGA the amount paid to Enron.
Discussions on the payout took more than a year, and the amount represented compensation for Enron's preparatory work done on the project, which was canceled before construction began. Enron reportedly paid Suharto's son Bambang the $25 million in order to lay the groundwork for the project.
U.S. Aware That Suharto's Son Involved
According to documents obtained from the U.S. Commerce Department, the Clinton administration was keenly aware that Suharto's son was being cut in on various U.S.-backed power deals including Enron's Pasuruan gas plant. In fact, the warnings of corruption came directly from the U.S. ambassador in Jakarta.
"Java Power Company has obtained a USD 1.7 billion financing package for its 2 X 610 coal fired Paiton Swasta II power plant," states a 1996 cable from then U.S. Ambassador Barry.
"Java Power Company is 50 percent owned by Siemens Power, 35 percent Powergen PLC of the UK and 15 percent by PT Bumiperitwi Tatapradipta. The latter is a subsidiary of the Bimantara Group controlled by Bambang Trihatmodjo, President Soeharto's second son."
Bambang was not only in business with Siemens and Enron but also had an exclusive multimillion-dollar power plant deal with Duke Energy Corp., a no-cut satellite contract with Hughes Space and an Indonesian government-enforced monopoly trash contract with Waste Management. Bambang's corruption is so well known that even the U.S. Federal Reserve has published information on him.
"Shareholders of the 16 insolvent banks scheduled to be closed in December in Indonesia included several members of the former Royal family, relatives of the President, the brother of an industrialist convicted of bank fraud, and the former head of the state oil company, Pertamina, who was dismissed for unauthorized borrowing of $10 billion," noted a Federal Reserve report on bank fraud.
"Bambang Trihatmodjo, second son of Suharto, the President of Indonesia, admitted that his bank had broken the legal lending limit with loans to the Chandra Asri petrochemical plant, which he and other shareholders owned. He said 'We admit we broke the legal lending limit. ... But to be fair 90 percent of other Indonesian banks did the same.'"
Enron in China
Enron also sought to break the limits.
Bambang was not the only one involved in corrupt deals with Enron. Enron international deals made through the Clinton administration include construction of gas power facilities inside communist China, directly across from Taiwan, and a failed power plant in Croatia.
Enron's donations gave it exclusive access to Clinton administration support for deals inside communist China. One such project involved the direct intervention of the U.S. government with communist China to build the Songyu power plant and Liquid Natural Gas terminal located across from Taiwan.
According to U.S. Commerce Department documents, the Clinton administration successfully sought the approval of the Beijing government for the Songyu 2,000 megawatt power plant and for the Xiamen Liquid Natural Gas terminal in Fujian province.
"Project has support of City Gov't of Xiamen," states a 1999 Commerce Department advocacy document. "Support Enron and urge Chinese to approve project."
The twin gas projects inside China were worth nearly $2 billion to Enron. To the Clinton administration, however, a factor more important than money was the number of congressional districts in Texas that were involved. According to the Commerce Department document, 18 Texas districts would be involved in the Chinese project.
Enron Seeks NATO Membership for Croatia
Enron also pushed the limits inside the former Yugoslavia. Enron executives flew to Croatia with Clinton Commerce Secretary Kantor after making a $100,000 donation to the DNC just days before the visit. As a result, Enron struck a deal with the Croatian government to build a power station and run it for 20 years –– at a highly inflated price of nearly $200 million above market prices.
However, tapes of the Enron negotiations with Croatian officials show the U.S. energy company had promised more than electricity at higher than normal cost. According to the Financial Times, Croatia hoped the Enron deal would secure political favors inside the Clinton administration, including a state visit to Washington and membership in the World Trade Organization (WTO).
In one reported meeting, Enron's head of international operations, Joseph Sutton, guaranteed that Enron would lobby President Clinton for Croatia's entry into the WTO, the NATO partnership for peace program and even NATO.
Stockholders and law enforcement officials should be very interested in the payments made by the energy giant to its foreign partners and White House patrons. Clearly, with promises of NATO membership, Enron felt its donations had bought top-level White House influence.
It is little wonder that Democrats are no longer anxious to follow the Enron corruption trail. Enron's documented "corruption, collusion and nepotism" started and ended with Bill Clinton.
Read more on this subject in related Hot Topics:
From : "Jim Vallette" <jvallette@seen.org>
Reply-To : jvallette@seen.org
To : thecatbirdseat@hotmail.com
Subject : Public finance and Enron's globalization
Date : Fri, 29 Mar 2002 04:15:38 -0800 (PST)
Hello. I much enjoy your website, and thought you might be interested in our report, Enron's Pawns.
More info follows...
All the best, Jim
====================================
Stunning depths of government collaboration with Enron revealed:
Institute for Policy Studies uncovers $7 billion in public assistance for Enron’s global operations
WASHINGTON (March 22, 2002) –– The Institute for Policy Studies today released an exhaustive study of public financing toward Enron’s overseas expansion.
IPS’ new report, Enron’s Pawns: How Public Institutions Bankrolled Enron’s Globalization Game, explores how the now-fallen giant’s rise to global prominence absolutely depended upon close financial relationships with U.S. agencies, the World Bank, and other government institutions.
“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.
Researchers from the Sustainable Energy and Economy Network (SEEN), a project of IPS, have discovered that over the past decade, 21 agencies representing the U.S. government, multilateral development banks, and other national governments helped leverage Enron’s global reach with $7.2 billion in public financing approved for 38 projects in 29 countries.
In addition to detailing exactly who funded which Enron projects, the study reveals that long before Enron’s tricks came to light in the United States, the company was infamous for even more egregious practices in the developing world. Armed with taxpayer financing from agencies like the Overseas Private Investment Corporation and the World Bank, Enron marched into developing countries’ energy sectors.
The global strategy of privatizing these countries’ energy sectors has its origins in the Reagan Administration, and became a major priority of international financial institutions in the 1990s. The end results were not reliable energy at an affordable price, but rather, price hikes, blackouts, shady deals cut by government officials, and street riots in which people died.
Enron’s infamous partner in crime, accounting firm Arthur Andersen, also played a role in this global drama: It assessed a utility in the Dominican Republic that Enron ended up buying at almost $1 billion less than its actual value, reaping enormous profits for the company.
“When Enron exacted it modus operandi abroad, U.S. public officials considered it good for U.S. business. Only when Enron’s scandals began to affect Americans did these officials and institutions hold the corporation at arm’s length,” said Daphne Wysham, director of SEEN, and co-author of the report.
“And only when Enron’s leadership revealed their greed on home turf did it become the biggest corporate scandal in recent U.S. history.”
~ ~ ~
Enron’s Pawns will be available on SEEN’s website, http://www.seen.org, beginning at noon Friday, March 22.
For further information, contact Jim Vallette at 646-522-1605 or Daphne Wysham at 301-573-2468.
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March 6, 2002
Insurers accuse Morgan Chase of fraud
David Teather in New York, The Guardian (UK)
JP Morgan Chase, the battered Wall Street investment bank, was delivered another blow last night when it lost an attempt to force 11 insurance companies to honour $965m (£678m) in bonds related to failed firm Enron.
US district judge Jed Rakoff sided with the insurance firms, some of which have launched a countersuit against JP Morgan alleging fraud.
The insurers claim the oil and gas contracts against which they issued the surety bonds masked straightforward loans. The contracts were between Enron and Mahonia, a JP Morgan affiliate.
Judge Rakoff said the insurers had provided enough evidence that the bonds "were the product" of fraud by the second-largest bank in the US, to deny JP Morgan immediate payment.
"These arrangements now appear to be nothing but a disguised loan - or at least have sufficient [indications] thereof that the court could not possibly grant summary judgment to the plaintiff."
A JP Morgan spokesman said: "This is a case about a commitment made by the insurance companies and a commitment not kept. We expect to prevail on the merits of our arguments." A trial has been set for December 2.
JP Morgan fell $325m into the red during the most recent quarter as a result of bad debts. The bank wrote off $456m of trading losses and loans to Enron and still has exposure to potential losses of $2.1bn.
It emerged yesterday that a second analyst claims he was fired for issuing a sell recommendation on Enron. Chung Wu, former financial adviser at the Houston office of UBS PaineWebber, said he was fired after emailing the advice to more than 10 clients in August.
In a filing to the National Association of Securities Dealers, Mr Wu wrote: "Enron management was not pleased and due to the employee stock option relationship UBS PaineWebber has with them, the pressure came from my corporate office to dismiss me."
UBS said Mr Wu was fired for failing to obtain approval before sending firm correspondence to clients.
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The 'Rape' of Amcol
Picking up the pieces after a Singapore debacle
By Alejandro Reyes
LESS THAN THREE YEARS ago, Amcol Holdings was one of Singapore's hottest stocks. Today, the electronics and property group is again the talk of the town -- thanks to a boardroom struggle, accusations of wrongdoing and the conglomerate's near-collapse. According to Price Waterhouse accountants, Amcol, recently valued at $818 million, may now be worthless.
The group needs over $70 million to meet debt payments. Say investigators: "The situation is critical."
Amcol, whose main business is the distribution of Sony, Aiwa and Funai consumer electronics, is a "trustee stock," a counter open for investment by Singaporeans using their Central Provident Fund money. In late June, the Stock Exchange of Singapore (SES) appointed independent directors to Amcol's board amid allegations of anomalies.
Price Waterhouse was called in; after it issued a preliminary study on July 25, a Singapore court placed Amcol temporarily under the accounting firm's management.
What went wrong?
The troubles first came to light in 1994 when boss and chief dealmaker Kang Hwi Wah, a flamboyant self-made magnate, was jailed for eight months and fined for taking an $800,000 bribe from a Japanese partner in 1990.
Kang's prison term rocked the group, which was already suffering from a lack of direction. Before he went to jail, he had been trying to diversify out of low-margin electronics, cutting property deals in China, Indonesia, Malaysia and Singapore.
After his release, the tycoon still owned about 24% of Amcol, the biggest stake. In early 1995 he sold 17.3% to a firm belonging to Indonesian businessman Henry Pribadi, head of Jakarta's Napan Group and a close associate of both multi-billionaire Liem Sioe Liong and Sudwikatmono, President Suharto's half-brother.
Last August, Pribadi, whose Indonesian interests span real estate, banking, and petrochemicals, became Amcol's managing director, with Sudwikatmono as chairman. Coming amid a highly publicized wave of Indonesian investment in Singapore-listed firms, the publicity-shy Pribadi was touted as a white knight expected to inject new funds and give Amcol focus.
But in January this year, Kang sold a 6% stake to a company run by local businessman Lee Howe Yong and Indonesian-born executive Sukamto Sia, who heads Transmarco, a Singapore-listed telecommunications company.
The two have since raised their joint stake to just over 14%. Sia is said to be allied either with Kang, whose conviction bars him from company boards, or with Bambang Trihatmodjo, Suharto's second son, whose partner Tommy Winarta earlier bought Amcol stock.
The new Pribadi-controlled management hired Merrill Lynch to review operations. The findings were devastating: Amcol's core business was in tatters and the group lacked control over several joint ventures. Debt was high; earnings, mainly from one-off deals, were expected to fall after two years.
"Pribadi was asked to buy Kang out and he did at an exorbitant price," says an investment analyst. "Afterward, he found he had bought a lemon."
In June, as the boardroom fight intensified, some Pribadi-appointed directors approached the stock exchange about alleged irregularities. That prompted the naming of independent directors and the Price Waterhouse probe. By mid-July, trading in Amcol shares was suspended. The Commercial Affairs Department is investigating too; it has reportedly called in a Kang associate.
A picture is emerging of gross mismanagement, incredibly bad deals and dismal accounting. An electronics subsidiary sold goods at a loss to Funai, which resold them to another Amcol firm at a 12% profit. The group bought into a loss-making power plant in China's Guangdong province, which has surplus electricity. In Indonesia, an associate firm could not adequately document a supposed investment in satellite broadcaster Indostar, for which Amcol advanced $8.5 million.
The associate lent a similar amount interest-free to two Indonesians, including Peter Gontha, a top man at Indostar's main backer, Bambang's Bimantara group. Also cited: payments of $300,000 each to Amcol executive Lloyd Lochra and two others, made by its partner in questionable racetrack, casino and property projects in Mauritius.
Singapore Finance Minister Richard Hu has said the government will not rescue Amcol. Still battling for control, Pribadi and Sia are discussing with judicial managers how to revive the group once favored by institutional investors and considered safe enough for retirement money. Amcol stock could face a free fall without a hefty cash injection and a credible rescue plan. An insider alleges: "Whoever was on the throne raped the company."
However the saga plays out -- criminal charges may be laid -- there is already one clear loser: the minority shareholders.
For more on Sukamto Sia, GO TO > > > The Indonesian Connection
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February 26, 2002
ENRON - THE UNTOLD STORY
THE SHOCKING INSIDE STORY OF
ADULTERY - GREED - HOW THEY
RIPPED OFF AMERICANS
The National Enquirer
The Enron Corporation was a “sin city” of greed, adultery and corruption, where top executives lived the high life – and ordinary investors lost their shirts.
And The Enquirer has learned exclusively that the company secretly employed CIA agents to carry out its nefarious dealings!”
“It was all sex, power and booze at the top,” a former Enron employee declared.
An Enquirer investigation has revealed:
>> Enron executives frequented several Houston strip clubs and billed thousands of dollars directly to the company – including the tab for VIP rooms where sexual favors were dispensed to big spenders.
>> Enron-sponsored parties would often spiral out of control with senior officials’ bar tabs skyrocketing to over $10,000.
>> Kegs of beer were brought into Enron offices and employees drank excessively while at work.
>> Divorce rates among senior Enron officials were high and adulterous romances were widespread among employees – including attractive young women who rose through the ranks thanks to their connections with top execs.
“Enron was completely scandalous,” former employee Janice Hollaway told The Enquirer.
“The place was full of arrogance, superegos and betrayal!”
Enron’s high-flying style of business came to a crash in October when it was discovered the company covered up huge debts. The company’s collapse led to the layoff of 4,000 employees, who lost not only their jobs but also their retirement savings – as did millions of ordinary investors....
The massive losses were fueled in part by free-spending executives who used investors’ funds for sex and booze, insider reveal.
Sources at the Houston strip club Treasures told The Enquirer that Enron executives would often ring up thousands of dollars on private dances and expensive champagne.
“Whenever guys from Enron came into the club they bragged about who they worked for and the girls would flock to the tables knowing they’d be tipped extremely well,” a dancer who has worked at Treasures for over three years disclosed.
“Typically a group of five or six would come in for lunch, drink a few martinis and get private lap-dances from the girls. They always paid their bill with credit cards that clearly said ‘Enron’ on them.” . . .
In a detailed five-page e-mail sent to The Enquirer, a group of management-level former employees knowledgeable about the inner workings of Enron claimed:
>> One top executive brought three strippers into his office one night after business hours. They were caught on security camera – but he got off with a slap of the wrist.
>> Another top man at Enron was engaged to his secretary – but having sex on the side with one of his executives.
>> Even in a company where beautiful women were routinely on a fast track to promotion, one executive secretary’s $650,000 salary raised eyebrows. . . .
It wasn’t just the male Enron executives who led robust lifestyles. Enron director Rebecca Mark – who has been called one of the most powerful businesswomen in the world – was known as much for her wild streak as for the cutthroat business attitude that earned her the nickname “Mark the Shark.” . . .
An inside source told The Enquirer: “It was all about money, money, money: GREED, SEX and POWER were what motivated everyone at the top.
“It seemed like everyone was getting a promotion. Some traders earned bonuses as high as $300,000, and you knew when they’d been handed out because new Porsches and BMWs started rolling into the staff parking lot.”
Former chief executive Jeffrey Skilling earned more than $30 million from sales of Enron stock in the year 2001.
And chairman Kenneth Lay, a former Pentagon economist, raked in $100.3 million before the company crashed and ordinary investors – including pension funds – were socked with huge losses.
But the corruption at Enron went far beyond unbridled greed and rampant sex – it also involved international espionage and electronic spy warfare, The Enquirer has learned.
“No one cared about morals at Enron, at least not at the upper levels. It was an ‘anything goes’ atmosphere and they got the help of the U.S. government along the way,” said a top Washington insider familiar with several secret investigations into the company.
“There have been at least 20 CIA agents on the payroll of Enron in the past eight years. They were given leaves of absence without pay and put on the Enron payroll.
“They trained Enron employees in intelligence gathering and security and also worked in other corporate capacities around the globe. It was through intelligence gathering that Enron was able to get billions of dollars in lucrative contracts in Asia, South America and Europe.
“Basically what the CIA operatives were able to provide was detailed information on bids made by foreign companies on projects of interest to Enron.
“They used human intelligence and also info gleaned from a satellite project called ‘Echelon.’ The satellites intercepted e-mails, phone calls and faxes with detailed business information.
“With this information, Enron was able to put pressure on foreign governments through powerful figures in U.S. government. Enron could easily go to a local authority in, for example, Saudi Arabia or India, and say, ‘Our government is not going to be too happy with you unless Enron gets the contract.’”
Amnesty International cited Enron for engaging in human rights violations and conducting illegal payoffs to police and mid-level officials in India to put down protests over its construction of a $2.8 billion power plant in Dabhol.
“It was the CIA-trained employees and CIA insider information that made it possible for Enron to force its will on the citizens of Dabhol,” said a retired CIA operative.
The opposition to Enron’s CIA tactics at Dabhol became so critical last August that Vice President Dick Cheney implored Indian government officials to support the completion of Enron’s project.
The Washington insider disclosed: “Using the CIA for economic intelligence began with President George Bush Sr. and then exploded under President Clinton, when even the Commerce Department was infiltrated by CIA agents.
“Pure and simple, U.S. intelligence agents were involved in corporate espionage.”
A source with ties to the CIA revealed: “The cozy deal between Enron and the CIA allowed the ‘on loan’ undercover operatives to return to the Agency’s payroll before Enron’s collapse.”
Agents believe that foreign agents were also at work in Enron, the Washington insider added.
“What has the Justice Department investigators upset now is that a rogue CIA agent may have been compromised by a foreign nation. The money-hungry atmosphere at Enron left many vulnerable to blackmail.
“We know that there are intelligence agents from at least three European countries – France, Germany and Italy – who are currently very interested in the Enron probes. This thing has the potential of being the biggest scandal ever!”
And what makes the scandal most outrageous is the suffering it’s caused rank-and-file employees and investors who were wipe out by the company’s collapse.
Many former employees were enraged when Enron founder Lay’s wife went on TV and said she and her husband were close to bankruptcy.
“When she cried, I cried – with anger!” one former worker declared.
“They’ve got palatial homes all over the place and maybe they’ll have to sell a few. But how dare she plead poverty when so many ex-employees are starting to wonder where their next meal and the mortgage money is coming from!”
~ ~ ~
For more on the CIA connections, GO TO > > > The Secret Nests
For more on the Military-Industrial Complex and Cheney connections, GO TO > > > Nests in the Pentagon
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February 26, 2002
ENRON PROJECTS GOT
$1.2 BILLION IN U.S. LOANS
By Pete Yost, Associated Press
WASHINGTON – As Enron Corp. reached for markets overseas, power plants it helped build from Guatemala to India received $1.2 billion in government-backed loans from two U.S. agencies.
The Overseas Private Investment Corp. still is owed $453 million from the Enron-related projects, while the Export-Import Bank is due $512 million.
“They’re definitely among our top 10 borrowers,” spokesman Larry Spinelli said.
Though Enron is bankrupt, four of its projects are making its payments on time. Regarding a fifth project, Enron and two other U.S. corporations are seeking to have the overseas corporation pay off a huge insurance claim....
Enron’s relationship with the government is part of a two-pronged business strategy. Inside the United States, Enron has sought to free energy companies from government regulation. Internationally, Enron has embraced Washington’s help in the form of federally backed loans and insurance protection.
The irony is not lost on congressional critics.
The corporation “gave hundreds of millions of dollars in loans and other support to Enron-related projects during the Clinton administration,” said Sen. Charles Grassley, the ranking Republican on the Senate Finance Committee who recently obtained records showing Enron-related projects received $544 million in loans from the corporation.
Separately, the Export-Import Bank made more than $650 million in loans to Enron-related projects overseas.
“These projects obviously were a tremendous benefit to Enron’s operation,” Grassley said. “The disclosure of this information sheds light on the government’s actions in support of Enron over the years.”
Enron’s bankruptcy does not place the loans in jeopardy. Separately created corporation handled the overseas projects for Enron and other U.S. companies.
The overseas corporation and Export-Import Bank loans are backed with the full faith and credit of the U.S. government (a.k.a. US taxpayers).
Though it has just 200 employees, the overseas corporation has deep pockets – a $4 billion reserve that comes from the user fees. U.S. business pay for its loans and insurance. The agency operates at no net cost to U.S. taxpayers – the business fees cover its costs – and earned $215 million last year.
The Export-Import Bank says that it is still owed $203 million on the India project but that it can call on guarantees from five Indian financial institutions for repayment if necessary.
Enron and the other two companies filed an insurance claim in December asking the overseas corporation to pay $200 million. The claim is based on “political risk insurance” bought at the projects outset.
The companies say the Indian government has broken promises to stand behind the project, in effect denying the U.S. corporations their asset and therefore requiring the corporation to pay the insurance policy.
The claims process will take months to resolve.
The other four Enron projects that got corporation money are operating successfully and are paying back their loans in a timely fashion.
Those power plants are in the Philippines, Turkey, Venezuela and Guatemala.
The Export-Import Bank’s Enron-related projects are in Columbia and at the same plants that the overseas corporation is helping in Turkey and Venezuela....
~ ~ ~
To see more very big birds (like Ron Brown and Bill Clinton), GO TO > > > Export-Import Bank; Overseas Private Investment Corp.
To see why citizens should pull the plug on overseas power plants, GO TO > > > The Asian Development Bank
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February 21, 2002
LAY MADE OVERTURE TO RUBIN
Ex-Treasury chief was offered seat on Enron's board
By Marcy Gordon, Associated Press
WASHINGTON - Former Enron chairman Kenneth Lay offered a seat on the company's board of directors in 1999 to Robert Rubin, who was then US treasury secretary, and lobbied Rubin and his successor on issues affecting Enron, documents obtained yesterday show.
The notes and letters show that Lay pressed Enron's interests to Clinton administration officials. Last month, the Bush administration disclosed a series of telephone calls from Lay - one of President Bush's biggest campaign contributors - to members of the Bush Cabinet as the company was sliding toward bankruptcy last fall.
The documents were provided by the Treasury Department under a Freedom of Information Act request by the Associated Press.
Meanwhile, Stephen Cooper, Enron's current chief executive officer, said yesterday that someone could end up in jail on charges stemming from the government's investigation of the collapsed energy-trading company and the web of partnerships - hiding more than $1 billion in debt - that brought it down.
''Given the enormity of the damage that's been created, I think it's going to be difficult to not hold one or more people accountable,'' said Cooper, who took the helm at Enron after Lay resigned last month.
Rubin, who left the government in mid-1999, is chairman of the executive committee of Citigroup Inc., which along with other banks lent hundreds of millions of dollars to Enron, hoping to keep it afloat. Rubin called Treasury's undersecretary for domestic finance, Peter Fisher, last Nov. 8 to seek his intervention on Enron's behalf. At the time, rating agencies were poised to downgrade their opinions on the financial status of Houston-based Enron.
“If you are considering joining any corporate boards, I would like very much to talk to you,” Lay wrote Rubin on May 14, 1999, after Rubin announced he was leaving his post. ''Given the way Enron has evolved, not only do we badly need a person with your experience and insights ... but also I think you would find serving on our board intellectually and otherwise interesting.
“I have placed a call to you in the hope that I might mention this to you personally,” Lay told Rubin.
Rubin did not join Enron's board of directors.
The same day, Lay wrote a note to Rubin's successor, Lawrence Summers - now the president of Harvard University - congratulating him on becoming treasury chief and promising to be available ''if there is anything at all I or Enron could do for you or the department.'' . . .
In another letter, dated Dec. 3, 1998, Lay urged Rubin to approve Houston's application to be named an ''empowerment zone,'' a status that brings tax breaks and other incentives meant to promote economic revival.
''An empowerment zone would be extremely helpful in our efforts to diversify our economic base and to recover from a decline in oil and energy-related industries,'' Lay said.
Enron, with some 20,000 employees when it filed for bankruptcy on Dec. 2, has been one of the largest employers in Houston. The city has not been designated as an empowerment zone.
Bush, in his new budget proposed this month, is seeking to eliminate grants for empowerment zones in urban areas.
© Copyright 2002 Globe Newspaper Company.
For more on Robert Rubin, GO TO > > > Dirty Gold in Goldman Sachs; Dirty Money, Dirty Politics & Bishop Estate; Vampires in the City
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February 16, 2002
Ex-CEO sold $100 million in Enron stock
By Floyd Norris and David Barboza, The New York Times
Kenneth Lay sold $100 million in Enron stock last year, with a large part of that coming from selling shares back to the company after he was warned by Sherron Watkins that the company might collapse “in a wave of accounting scandals,” the company disclosed yesterday.
The sales, disclosed in a report filed by Lay with the Securities and Exchange Commission, included $20 million in shares sold between Aug. 21 and Sept. 4. Watkins, an Enron executive, sent her first letter to Lay on Aug. 15 and met with him Aug. 22.
It is not clear how much profit Lay made on his stock sales, many of which came while he was encouraging Enron employees to purchase shares....
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January 18, 2002
"THE ENRON BLACK MAGIC, PART THREE"
by Sherman H. Skolnick
ENRON---THE FORBIDDEN SECRETS
What happens to previous scandals and commotions? If left unresolved, if there is no closure, do they simply go away?
In large part, the oil-soaked, spy-riddled monopoly press is responsible for the growing short attention span of many Americans. Supposedly from nowhere, like a mushroom out of a cave, the press fakers present suddenly a new buzzing, separate from their usual war-mongering to aid the war-profiteering industries.
After such new item is served up to us, day and night, it disappears from the alleged "news". That is where the problem starts. Ordinary people, busy paying the landlord or the mortgage company, wrongly suppose the matter is ended. Why? The press whores have stopped bombarding us with it.
That being said, consider the following
About 1985, super international swindler Marc Rich, fled the United States for Zug, Switzerland. He was about to be grabbed and prosecuted by the American authorities for 40 Billion Dollars of fraud, and massive cheating and tax evasion. He proceeded to buy the key authorities in that part of Switzerland where is located his international headquarters. So, the Swiss were not about to send their great corrupt benefactor and paymaster to the U.S. As strange as it may seem, the local prosecutor was his DEFENSE ATTORNEY. Marc Rich was not about to be sent back to the U.S. to face the music.
In the years that followed, Marc Rich proceeded, among other things, to do the following. That was accomplished through his tremendous links to the Chicago markets, acting as his front men and agents for dirty worldwide dealings disguised as trading in currencies, commodities, and indices. Including the Chicago Mercantile Exchange, the Chicago Board of Trade, the Chicago Board Options Exchange, and the Chicago Stock Exchange (formerly the scandal-scarred Midwest Stock Exchange, subject as we have told on our website of massive embezzling of funds permitted by the corrupt IRS brass). Also, including money center banks, Chicago, New York, and London.
Some of the things Marc Rich International did or caused to be done or procured to be done---
=== Swindled Ferruzzi, the Pope's soybean company in America, out of billions of dollars and destroyed their business as competitors to Archer-Daniels-Midland, ADM, and Cargill, who have been monopolizing the business. To accomplish this, was the largest amount judicial bribery in U.S. history, over 62 million dollars in bribes given to five Chicago federal judges to cover up and whitewash related soybean cases, according to the witnessed confession made in our presence of a Director of the Chicago Board of Trade.
[Please do not heckle me with ill-informed, naive statements why these corrupt judges have not been prosecuted and jailed. Some of them, in violation of law, while on the bench, also represent the billion dollar stock portfolio of Rockefeller's University of Chicago, containing large blocks of ADM and other stocks. As Rockefeller puppets, such judges are immune from criminal laws.]
As part of this, the Ferruzzi chieftain was murdered at the same time in 1993 as Clinton White House Deputy Counsel Vincent W. Foster, Jr.
[To get a handle on this, you have to study our entire website series on Marc Rich, together with "Chief Crook Enters Microsoft Case" (then Chief Federal Appeals Judge negotiating possible settlement) as well as "Wal-Mart and the Red Chinese Secret Police, Part 3" and "Greenspan Aids and Bribes Bush, Part 4."]
=== Marc Rich International made a deal with the U.S. Military and other U.S. authorities to change over lead-bullet manufacturing to tungsten from Red China, the world's major supplier of the metal. As supervised by Marc Rich, the Red Chinese built and are operating a tungsten ammo factory in California. Eventually, as little publicized, all lead bullets, U.S. Military and civilian, on the pretended idea they are "toxic", will be unlawful in the United States. Notice the treason. A country as a sworn enemy of the U.S. will thus come to control all U.S. bullet-manufacturing including on U.S. soil. [Visit our Marc Rich website story for the details.]
After about 1985, the mass media said little, if anything, about Marc Rich. Occasionally the press did mention "nothing stories", as they are called, about his socialite wife, who later became his ex-wife, although she apparently continued to get boatloads of money from him from Switzerland and elsewhere. So, if the Marc Rich subject was already of no interest to the average person, well, you wrongly supposed there was closure.
And who after 1985, joined in with this giant money laundry, Marc Rich International, to be together as experts on money laundering, and political and financial corruption? Why, of course, Enron. They dealt in energy contracts and supplies, commodities, telecommunications, internet brokering. You name it, Enron traded it, sold it, bought it, and in the process, like Marc Rich, bribed any and all public officials necessary to be the subject of the BIG FIX.
After 1985, the resulting firm should have been properly called ENRON/MARC RICH INTERNATIONAL. And Marc Rich brought into the equation links to the American CIA as well as various foreign intelligence agencies. [Visit our Marc Rich website series for details.]
As is not well known, Bill and Hillary Clinton are closely aligned, financially and otherwise, with the Bush Family. For example, Bill Clinton as Arkansas Governor split huge dope funds, washed through the Chicago markets, with Daddy Bush, Henry Hyde, and Ollie North. Part of it was the Mena, Arkansas airport caper.
For example, Daddy Bush was a sizeable owner of the American unit of a French firm, American LaFarge, that reportedly supplied the ingredients to Iraqi strongman Saddam Hussein for the manufacturing of poison gas.
Hillary Clinton was a Director of American LaFarge.
In his zero hour, just before leaving office in January, 2001, William Rockefeller Clinton [we explain elsewhere where we call him that] pardoned Marc Rich. The George W. Bush White House, as a cover up for Clinton, removed the U.S. Attorney for the Southern District of New York, Jo Ann White, supposedly deeply investigating the pardongate scandal. Bill and Hillary reportedly had parked for them, in Switzerland and elsewhere offshore, several million dollars from Enron/Marc Rich International to whitewash Marc Rich through an arbitrary pardoning process. When she was yanked out of office, Ms White was in the process of fingering Bill and Hillary as well as Bill's dope trafficking brother Roger.
The question is CAN THE UNITED STATES REALLY BRING ENRON / MARC RICH TO JUSTICE?
Judge for yourself:
=== Enron/Marc Rich owns the George W. Bush Administration, as well as heads of pertinent federal regulatory agencies, and key Republicans and Democrats IN BOTH HOUSES OF CONGRESS.
=== The head of the U.S. Securities and Exchange Commission has to decide whether accounting firm Arthur Andersen's auditing is such that they are no longer dependable to sign approval of publicly-traded firm's doings. The current S.E.C. Chairman, Harvey Pitt, said his Enforcement Division and others will do something about Arthur Andersen irrespective of the fact that Pitt as an attorney represented Arthur Andersen. The monopoly press does not mention that the S.E.C. and other regulatory agencies are stuffed full of Enron and Arthur Andersen and Marc Rich yesmen and cowards.
The previous S.E.C. Chairman, Arthur Levitt, has been on the television news making noises like something should be done about Arthur Andersen & Co. What, if anything, did HE do? The press fakers do not mention that Levitt has been a Senior Consultant to CARLYLE GROUP, tied to Daddy Bush, Enron, the Bin Laden Group and Osama bin Laden, and apparent secret owners of what has been until now the firm with exclusive Pentagon contracts for making anthrax vaccine, BioPort, of Lansing, Michigan. [See our website story about the Anthrax Commissars.]
=== Then there is David M. Walker, Comptroller General of the U.S. who heads the investigative arm of the Congress supposed to check out matters related to S.E.C., Enron, Arthur Andersen, Marc Rich, and such, namely, the General Accounting Office, GAO. Until November, 1998, Walker was a partner, board member, and global managing director of Arthur Andersen & Co. And his agencies now are reportedly as well stuffed with Enron, Arthur Andersen, and Marc Rich yesmen and cowards.
=== Marc Racicot [pronounced ROSS-coe] is an Enron lawyer and lobbyist. When he was still Montana Governor, he was the Bush Family hatchet man to reportedly arrange massive bribes to DEMOCRAT officials in Southern Florida during the Electoral College vote episode in the 2000 Presidential Election. Along with former Cabinet Member in the Daddy Bush Administration, James Baker 3rd, Racicot reportedly used part of some 40 million dollars of dope money of Carlos Lehder, co-founder of the Medellin Colombia Dope Cartel. Lehder is a reputed business partner of the Bush Family. Although sentenced to a long federal prison term, but to protect the Bush Family from criminal charges by his testimony, Lehder has mysteriously DISAPPEARED from federal prison, sort of like they also do in Mexico. [See our website series on Chandra Levy for more details.]
The southern Florida DEMOCRAT officials were reportedly bribed to stop the ballot recount to help Bush steal the election process with the help of the "Gang of Five" on the U.S. Supreme Court.
To keep tabs on the thieves in both Houses of Congress, Racicot has been named head of the Republican National Committee, RNC.
Journalists in northern Montana as well as Canadian law enforcement officials contend that Racicot while Montana Governor was instrumentally implicated in cross-border dope trafficking. Little known or understood by many ordinary Americans, massive amounts of dope are coming through Canada and into the U.S. through Montana. The Canadian authorities reportedly have an arrest warrant issued for a top FBI official of southern Florida who has relatives in Canada and he is apparently part of the dope traffic and the cover up. The Clinton White House had blocked, and then the George W. Bush White House has stopped, the Canadians from using the arrest warrant to grab the FBI official linked to Clinton/Bush Family.
=== All the personnel of the U.S. Attorney's office in Houston have disqualified themselves as to Enron. Why? Because of their family and financial links to Enron. Hey, were they all blind, deaf, and dumb, in the past as to what Enron was doing?
=== When he was a U.S. Senator, John Ashcroft, had his campaign financed in part by Enron. He is now U.S. Attorney General. So, okay, he is disqualifying himself. BUT, the Justice, or Injustice Department, is stuffed full of Marc Rich, Enron, Arthur Andersen puppets, yesmen and cowards. Critics call him JOHN ASHCAN.
=== Pending in Houston, Texas, in the federal court is a case against the officials and directors of Enron. Hearing the case is U.S. District Judge Lee Rosenthal. Asked to freeze the assets of Enron's top brass, the judge hesitates. No wonder. Previously, she was a law partner to James Baker 3rd, in the firm Baker & Botts, reportedly interwoven with the Bush Family, the Florida election bribery, Enron, Carlyle Group, Bin Laden Group and Osama bin Laden.
As is typical of such situations, the chicken-hearted lawyers who brought the claims to court so far have not asked Judge Rosenthal to remove herself.
=== Sooner or later there will be cases involving Enron and Arthur Andersen & Co. in the Texas state courts. Notice the problem. The highest court of Texas is the Texas Supreme Court with nine judges. SEVEN OF THEM belong to Enron.
AND, there is no provision in Texas law to disqualify the state high court judges who will proceed to hear any such case.
=== During the Reagan/Daddy Bush Administrations, Wendy Gramm was for twelve years head of the Commodity Futures Trading Commission, regulating the commodity industry. As pointed out earlier in this series, she was reportedly the recipient of bribes along with her husband who has decided not to run for re-election as U.S. Senator (R., Texas), Phil Gramm. While leaving office she pushed through regulations freeing Enron from supervision.
She also reportedly covered up the bribery, by the infamous bank, BCCI, of 28 members of the U.S. Senate and 108 members of the House of Representatives. [Visit Part One of this series on website.]
As part of the apparent Enron cover up, Wendy was a Board Member AND on the inner auditing committee. She reportedly helped cover up the massive money laundering by Enron/Marc Rich International through the Chicago markets and major money center banks.
=== As mentioned in Part Two of this series, the Federal Reserve siphoned off 60 billion dollars of Enron funds, hidden partnership deals (some with Marc Rich International), and using fractional reserves, and derivatives hocus-pocus, has been temporarily pumping up the Dow Jones 30 Industrials.
=== Only fools would trust the Internal Revenue Service to supposedly investigate why and how Enron did not pay income taxes. In a series on IRS high-level corruption, we showed how their top brass are riddled with corruption including operating an ocean-going vessel, "California Rose", as a floating money laundry for illicit funds. [Visit our website series on the IRS.]
=== There is a serious dilemma. On the one hand, we ordinary Americans need to have the truth of Enron/Arthur Andersen/Marc Rich International fully exposed. The problem is that some foreign countries are helping bring out a few of these details in the press, such as major newspapers in England. Why? Since at least the War of 1812, the British have vowed to overthrow the U.S. Constitution and U.S. Government, and revert this Continent to being British puppet colonies with the inhabitants here subjects of the British Crown.
[For details, visit our website series, "The Overthrow of the American Republic".]
In the 1970s, Arthur Andersen & Co., to escape court scrutiny of their involvement with the American CIA, moved their financial structure to Switzerland, as an entity there known as a Societe Generale.
As the U.S. Government is currently constituted, a full and complete investigation of Enron/Marc Rich International/Arthur Andersen & Co., would cause the downfall of
[1] U.S. espionage agencies and exposure of the numerous American CIA proprietary companies, some trafficking dope through the money center banks and the Chicago markets;
[2] downfall of the Presidency as such, and making any future "election" a farce and a joke;
[3] The downfall of the U.S. tax-collection apparatus, such that the U.S. Government could not continue functioning minus the fund intake, legal or otherwise;
[4] downfall and discrediting of the judicial, executive, and legislative branches of the purported U.S. Government.
Some foreign countries are hoping to make more progress taking over the industrial and financial structure of the U.S. as a result of a terrible scandal. On the other hand, the American common people need these matters to be exposed. A resultant upheaval, even a Revolution, may simply pave the way for a Napoleon-like Emperor and Dictator, leading ordinary Americans, in an outburst of false "patriotism", to believe we should send our military in every corner of the world to stick our bloodied nose into every other peoples' culture and business.
Do we Americans have enough cemetery land for all the young dead American soldiers that would result? Or, would American dead soldiers be buried in foreign places, "In Flanders Field, poppies grow, between the crosses, row on row...." (as a World War One poem put it)?
More coming. Stay tuned.
Since 1958, Mr.Skolnick has been a court reformer. Since 1963, founder/chairman, Citizen's Committee to Clean Up the Courts, disclosing certain instances of judicial and other bribery and political murders. Since 1991 a regular panelist, and since 1995, moderator/producer, of one-hour, weekly public access Cable TV Show, "Broadsides", Cablecast on Channel 21, 9 p.m. each Monday in Chicago. . . .
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December 4, 2001
Companies circle to pick off Enron assets
By Mark Tran
Electricité de France today expressed an interest in buying Enron Direct, the European retail arm of Enron, the failed US energy giant.
"We are talking with PricewaterhouseCoopers to buy Enron Direct," Gérard Wolf, an EdF director said.
Enron Direct sells gas and electricity to small and medium-sized businesses mainly in Britain, where it has 150,000 customers....
With Enron filing for bankruptcy protection, companies are circling to pick off the company's best assets.
In the Philippines, the state-owned generator National Power Company, is looking at buying Enron's two power plant contracts in the country.
As for Enron Direct, apart from EdF, other companies said to be interested in include Britain's Centrica and Innogy groups and US-owned TXU Europe and Germany's RWE.
Unlike Enron's trading activities in the US, Enron Direct is not legally under administration but PricewaterhouseCoopers is supervising the sale of the retail business as part of its efforts to wind up Enron Europe.
Enron Europe went into administration on November 29, three days before its US parent filed for Chapter 11 bankruptcy protection in the biggest corporate failure in American history.
Enron, once America's seventh largest company, yesterday gained some breathing space when it secured an $1.5bn emergency round of financing.
Arranged by Citigroup and JP Morgan Chase, the money will be syndicated and is secured by substantially all of the company's assets.
Enron needs money to ensure delivery of commodities it had already paid for and to avoid eviction from its new 200,000 sq ft Houston trading floor. . . .
For more, GO TO > > > Vampires in the City; What Price Waterhouse?
November 13, 2001
Andersen Could Face SEC Sanction, Suits
Over Enron Accounting Error
Bloomberg News
HOUSTON -- Arthur Andersen may face U.S. Securities and Exchange Commission sanction and shareholder lawsuits because it certified Enron Corp. financial reports that the company disavowed last week as inaccurate, legal and accounting experts said.
Andersen, the world's fifth-largest accounting firm, served as Enron's outside auditor for more than a decade. Last week, the company reported that it overstated earnings by $586 million over 41/2 years, inflated shareholder equity by $1.2 billion because of an "accounting error," and failed to consolidate results of three affiliated partnerships into its balance sheet.
Enron restated its financial reports as the company suffered a cash crisis triggered by disclosure of the cut in shareholder equity and the start of an SEC investigation.
"I'd be very surprised if the SEC didn't go after Arthur Andersen," said Alan Bromberg, securities law professor at Southern Methodist University.
Andersen partner David Tabolt has said the firm is cooperating with a special committee of Enron's board of directors appointed to investigate the accounting problems.
Lynn Turner, who was the SEC's chief accountant for three years until he resigned in August, said Enron and Andersen ignored a basic accounting rule when they overstated shareholder equity.
Explaining the equity reduction last week, Enron said it had given common stock to companies created by Enron's former chief financial officer in exchange for notes receivable, and then improperly increased shareholder equity on its balance sheet by the value of the notes.
"What we teach in college is that you don't record equity until you get cash for it, and a note is not cash," said Turner, who is now director of the Center for Quality Financial Reporting at Colorado State University.
"It's a mystery how both the company would violate, and the auditors would miss, such a basic accounting rule, when the number is $1 billion."
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November 28, 2001
Enron Rescue Falls Apart
by Peter Behr, Washington Post Staff Writer
Dynegy Inc. today abandoned its plans to rescue Enron Corp., leaving the once-dominant Houston energy trading company with little alternative than to file for bankruptcy, analysts said.
Enron, whose financial expertise and political clout helped it capitalize on the deregulation of electricity and gas markets, now faces more than $7 billion in debts that come due during the next year. It has no lenders in sight, its formerly lofty stock price is now below $2 a share, its credit is in tatters, its pipelines mortgaged or sold and its credibility with investors shattered....
In a statement today, Dynegy chairman Chuck Watson said his company had pulled out of negotiations because of Enron's "breaches of representations, warranties, covenants and agreements" in the initial purchase agreement. Dynegy had agreed to buy Enron on Nov. 9 for about $23 billion, but after Enron's stock price plummeted following the deal, Dynegy demanded a renegotiation of terms to lower the price.
That effort collapsed today when Standard & Poor's Corp. cut Enron's credit rating to junk status, exposing Enron to accelerated repayment of more than $3 billion in debt that it could not fully cover, according to analysts....
A series of increasingly damaging disclosures by Enron in the past month about improper accounting of loans to outside investment partnerships involving some of its senior corporate executives swept away investor confidence, leading to the breakdown of the Dynegy deal.
It was an epic fall for a prideful company whose long-time chairman and chief executive Ken Lay was a close supporter and confidant of President Bush and the Bush family.
Enron, an influential lobbyist for energy deregulation in Washington and in state capitals, had led in the creation of a huge new market for energy products and related financial contracts and became the world's largest trader of these specialized transactions.
Its revenue tripled to $100 billion from 1998 to 2000.
In 1999, Enron launched EnronOnline, an Internet-based trading system for electricity, natural gas, crude oil and a wide range of other products. But Enron also spent billions of dollars acquiring a power plant in India, a water system in Britain, and fiber-optic networks to carry Internet traffic, all of which backfired.
The collapse of energy prices this spring started Enron's stock on a downward slide from a high of nearly $90 a year ago. That accelerated a cash drain at the company and confronted it with the threat of growing losses and asset erosion because of largely concealed deals with its energy partnerships.
In August, its chief executive officer Jeffrey Skilling resigned. He had been the architect of its expansion and had approved the outside partnerships, and his departure started the company's final down spiral...
AND JUST WHO OWNED
ENRON?
As of Sept 30, 2001, the top institutional holders were:
#1 - Alliance Capital Mgmt with 42,939,048 shares; followed closely by #2 - Janus Capital Mgmt with 41,361,200 shares; #3 - Putnam Investment Mgmt (Marsh & McLennan) with 23,122,100 shares; #4 - Barclays Global Investors (a member of the Committee of 300) with 23,047,196 shares; and #5 - Fidelity Mgmt & Research with 20,790,452 shares.
The remaining of the top 15 investors included: Smith Barney; State St. Global Advisors; Aim Mgmt; Vanguard Group; Morgan Stanley; Northern Trust; Deutsche Bankers Trust; Massachusetts Financial Service; Presdner Rcm; Cs First Boston Investment. . . .
~ ~ ~
And just WHO owned
ALLIANCE CAPITAL MANAGEMENT?
As of Sept 30, 2001, the top institutional holders were:
#1 - General Electric Co.; #2 - Citigroup; #3 - Pfizer; #4 - Tyco Int’l; #5 - AOL - Time Warner; #6 - Microsoft; #7 -- MBNA Corp; #8 - American International Group; #9 - Kohl’s Corp; #10 - AT&T Wireless; #11 - Bank of America; #12 - The Home Depot; #13 - Comcast Corp; #14 - Liberty Media Corp; #12 - Schering Plough.
January 17, 2002
Rubin Shouldn't Escape Enron Investigation
By Mark Weisbrot, AlterNet
One of the leading political figures embroiled in the Enron scandal is being handed a "Get Out of Jail Free" card, and he doesn't deserve it. That is Robert Rubin, President Clinton's former Treasury Secretary.
Rubin seems to have everything he needs to be inoculated from the scandal's contagion: One of the most powerful and influential people on the planet, he has charmed not only bankers and political leaders of both parties, but the media and opinion-makers as well. In the press he was often portrayed as a primary architect of America's longest-running economic expansion, in the 1990s.
A cover of Time magazine in 1999 displayed Rubin, Fed Chairman Alan Greenspan, and Larry Summers (number two at Treasury, later replacing Rubin) as "The Committee to Save the World." But more recently he has been caught peddling his influence for the financial giant Citigroup, where he left public office to become a top executive.
As Enron's accounting irregularities were being discovered and its fortunes rapidly sinking, Bob Rubin placed a call on November 8 to Peter R. Fisher, current undersecretary of the Treasury for domestic finance. According to Treasury, Rubin wanted to know if the Bush administration was going to intervene with the big credit rating agencies, who were about to lower their rating of Enron's debt. Since Rubin's Citigroup was holding hundreds of millions of dollars worth of Enron's debt, it had quite a large stake in the outcome of any such decision.
Treasury told the press that Fisher said no, and Rubin agreed with the decision -- as if this were just an informational call to discuss the pros and cons of political intervention to protect the credit rating on Enron's bonds. But this should not be allowed to drop.
The public needs to know more about this phone call, and any others that Rubin may have made on Citigroup's behalf. Whether or not they are technically illegal, such actions are a blatant and corrupt abuse of one of the highest offices of our government.
For those who followed Rubin's role in the Asian economic crisis a few years ago, this comes as no surprise. If we look at what Treasury actually accomplished with a $120 billion loan package for the region, it was quite different than what Time magazine and the rest of the press were led to believe.
They got the taxpayers of Indonesia, South Korea, and the other affected countries to guarantee the bad debt held by foreign corporations and banks.
Rubin and Summers did nothing to help these countries when they needed reserves to keep their currencies from falling, and we now know that Treasury's actions actually helped cause the crisis and made it much worse.
They were not "saving the world." They were saving Citibank and others from losses due to their bad loans -- just as Rubin tried to do when he called Treasury about Enron's debt.
But these details of the Asian crisis did not get much press. That is why it is so important that the current investigations pursue the political corruption involved in the Enron scandal. Rubin is holding one of the two biggest smoking guns so far discovered.
(The other is held by the Bush administration: According to former Federal Energy Commission Chairman Curtis Hebert, Jr., Enron CEO Kenneth Lay told him he would support him as Chairman if he changed his views on utility deregulation. Hebert said he refused. He was subsequently replaced by Pat Wood III, a friend of Ken Lay and George W. Bush.)
Of course most of the political casualties of an independent investigation would be in George W. Bush's camp. After all, this is the Enron administration -- the list of officials with Enron ties is long and goes right to the top, including chief economic adviser Larry Lindsey (former Enron consultant); US Trade Representative Robert Zoellick (former Enron advisory board); chief political advisor Karl Rove (investor).
But the Democrats have been unsure about whether to pursue the investigation into the political realm. Part of this timidity is a desire to avoid the appearance of partisan excess that, in the Clinton scandals, drew a backlash against the Republicans. But they are undoubtedly afraid that some of their own luminaries, Rubin chief among them, might end up on the wrong side of a subpoena.
It would be a shame if these fears, and the media's reluctance to pursue these issues independently, kept the public from learning the truth about the political corruption involved in Enron's rise and decline.
Mark Weisbrot is co-director of the Center for Economic and Policy Research, in Washington, D.C. ( www.cepr.net).
© 2001 Independent Media Institute. All rights reserved.
For more on Robert Rubin, GO TO > > > Dirty Gold in Goldman Sachs
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What they’re saying across the pond . . .
January 13, 2002
Greed is the creed
The stench that surrounds Enron's collapse must alert Britain's politicians to the corrupting influence of unregulated capitalism.
By Will Hutton, The Observer
American democracy is increasingly a fraud.
MONEY buys votes, influence and office. Contemporary Washington makes Caligula's Rome look like a vicar's tea party. American politicians' need for business donations on a gigantic scale to win their election campaigns now pollutes the discourse of the country's public life, with business writing public policy and corrupting everything it touches.
And the noxious consequences, in terms of ideas and business practice, spill over into Britain.
The bankruptcy of the energy trader Enron before Christmas with $40 billion of debts, the largest recorded in history, was spectacular. It had overstated its profits by half a billion dollars over three years and lost more still in private companies set up to enrich the coterie of top executives in schemes undetected by its auditors, Arthur Andersen. They, we learned last week, had happily disposed of potentially incriminating documents and misled Congress. In tougher times, Enron's capacity to hide what we would understand as theft was exhausted - and the company collapsed.
Now the subject of a criminal investigation by the Justice Department, the details spilling out offer a bird's-eye view of how business is done in the US, how favours are bought and how political ideas are honed to serve the interests of the political parties' benefactors. Two members of Bush's Cabinet - the Commerce Secretary and Attorney-General - have had to stand aside from the investigations because they received close to $100,000 in political donations from Enron. Chief executive Ken Lay, 'Kenny Boy' as Bush dubbed his close friend, personally gave Bush $100,000.
This was not innocent money for a buddy; Enron also greased the wheels of the Democrats. In 2000, it spent $2.4bn supporting candidates for public office in the US - $1.7bn for the Republicans and $700 million for Democrats. Enron wanted a return on its cash and could not afford just to back Republicans. As an energy trader, it needed to find markets in which to trade, which meant opening up the US's patchwork quilt of state and federally regulated electricity and gas grids to private interests; sometimes, Democrats served this purpose as well as Republicans.
Enron did not want to look like just another corporation using money to buy influence; it needed a cover story. It wanted minimal surveillance of its own operations and the maximum opportunity to enrich its directors while making paupers of its workers (before it collapsed, the directors sold $1bn of personally owned shares while forbidding its employees to sell their Enron shares in their private pension funds); energy markets opened up fast.
The story was deregulation.
No chief executive was as fervent an apostle of how regulation cripples wealth generation as Ken Lay, and now we know why. Republicans, of course, were willing allies in the belief that nothing inhibits businesses more than having to respect the law of the land and accept obligations to the wider society in which they trade. But money talks, and during the 1990s Democrats became evangelists for the same set of ideas. How could they accept Enron's money, and that of dozens of other corporations, otherwise?
Thus, over the last decade, Ken Lay and Enron have bought a series of decisions that have driven the company's growth. In the early 1990s, the company ensured via the good offices of Wendy Gramm, then chairman of the Commodity Futures Trade Commission and wife of Enron-supported Texan senator Phil Gramm, that key aspects of Enron's trading should not be regulated; she was rewarded with a seat on the board.
In the mid-1990s, Enron spearheaded the botched deregulation of California's electricity grid, ensuring, amid the mayhem that would lead to black-outs and sky-high prices, that at least there was a mandatory spot market in electricity in which Enron could trade.
It made sure, with Bush's election, that regulation remained favourable to Enron, helped design an energy policy based on more spot market trading and successfully lobbied for the repeal of minimum corporate taxes, the proceeds of which, had they come sooner, would have been used to plug the financial holes created by its own executives' venality. This was a much better use of the money than serving the public interest.
This was a pretty useful return on its political contributions, but Enron could not have made the progress it did without the intellectual backdrop that all regulation and taxation is bad - and that the more the US deregulated, the better its economy performed. This was, and is, balderdash.
Recent work by economists, notably at investment bank Credit Suisse First Boston, shows that after making the necessary accounting adjustments and including downward revisions, productivity growth in the US has done no more than match that in Europe. Indeed, countries like France and Germany have higher absolute productivity and faster rates of growth than the Americans, despite their approach to regulation and taxation. The deregulation philosophy that enriches Ken Lay and his cronies does not necessarily enrich anybody else.
This is not a case for red tape, bureaucratic regulation or stupid rules, all of which plainly hurt the economy. It is an argument for smart regulation, an imperative if capitalism is not to degenerate into profiteering and economic cannibalism....
For Enron was a major actor in the UK; it dominated energy trading, in particular in electricity and gas, and it took care to include a British political notable, Lord Wakeham, on its board as a non-executive director, though there is no suggestion that he has been involved in any alleged malpractice. When it collapsed, the untold story is that Britain's market-based electricity distribution system stood on the brink of collapse, too; without regulatory intervention, the country would have suffered a black out on a Californian scale. Yet the unseen and unpraised regulators at Ofgem (the merged regulator of Britain's gas and electricity markets) moved fast and effectively to ensure that other companies stood behind Enron's now defunct contracts . The lights stayed on.
Yet even Ofgem's powers have recently been reduced as part of the ceaseless quest, borrowed from the US as part of lifting the burden on business to foster 'wealth generation', to reduce and eliminate regulation. Taking our lead from the US, where companies buy political ideas to suit their interests, British politicians are following the same ideological logic but without the excuse that they need business's political donations.
Smart and effective regulation is the handmaiden of well-run markets that serve the public interest. It is time our politicians started saying so - and challenging the self-serving braying of our business lobbyists.
Enron, and the philosophy that created it, stinks.
February 11, 2002
When the Gods of the Market Tumbled
By Jamie Dettmer, Insight on the News
"There will be no witch-hunt," says Sen. Joe Lieberman (D-Conn.), eager as ever to cloak his partisan instincts with the rhetoric of high-mindedness. Having suffered Whitewater indignities for most of the 1990s, the Democrats are out to seize on Enron as an opportunity for some payback.
After all, the failed energy giant was President George W. Bush's largest corporate backer.
But Enron isn't the political scandal the Democrats are keen to make it, or at least not a clear-cut partisan one. Plenty of Democrats enjoyed the largesse of Enron, and for all the efforts of Rep. Henry Waxman (D-Calif.) to paint the Bush administration's energy policy as in effect Enron's, the Clinton White House also was cozy with the Houston-based energy trader and was obliging when it came to deregulation.
There was nothing wrong with that, as deregulation assisted consumers by lowering costs for suppliers. There is no evidence Bush aides responded to pleas for assistance made by some senior Enron executives. No creditors reported being leaned on by the Treasury Department.
No, the Enron collapse is a scandal of another nature, one that strikes at folly and the human condition. Every generation has to learn anew that what goes up must come down.
Greed distracts, and investors, employees, politicians and captains of finance and industry get drawn into presuming that success is forever.
Of course, the Greeks had a word for it: hubris. And that great chronicler of human frailties and follies, the English writer Rudyard Kipling, wrote a poem about it —— "The Gods of the Copybook Headings," the eighth stanza of which might have been written yesterday instead of in 1919:
Then the Gods of the Market tumbled, and their smooth-tongued wizards withdrew, And the hearts of the meanest were humbled and began to believe it was true That All is not Gold that Glitters, and Two and Two make Four — And the Gods of the Copybook Headings limped up to explain it once more.
A booming economy —— a New Economy no less —— had led the wise and foolish alike to succumb to the notion that the stock markets always would do well and that magical names such as Enron, Cisco and a bunch of other new commercial entrants would be untouched by adversity. Even Federal Reserve Chairman Alan Greenspan waxed merrily on about how the New Economy had slipped the moorings of the traditional ups and downs of the business cycle.
Oh, brave new world! And no one listened to the boring gods of the copybook headings because:
They denied that the Moon was Stilton; they denied she was even Dutch. They denied that Wishes were Horses, they denied that a Pig had Wings. So we worshipped the Gods of the Market Who promised these beautiful things.
And it wasn't just outsiders and investors who consoled themselves when things went bad with bizarre notions that Enron could walk on water, however dumb the commercial decisions it made. There was the auditing firm, Arthur Andersen, which as far back as February 2001, if the Washington Post is to be believed, were aware that not all was right at the energy trader.
According to a Jan. 17 Post article, senior executives at Andersen considered dropping Enron as a client last February because of concerns about the company's bookkeeping. But then greed kicked in: Why imperil lucrative consulting contracts with Enron by withdrawing from its auditing role? And, who knows, Enron might just save itself.
Hubris also apparently gripped the members of Enron's audit board, who were doing very nicely, thank you, and had no intention of rocking any boats and endangering some pleasant on-the-side financial ties with the company and its founder, Kenneth Lay.
Lord Wakeham, a former member of Iron Lady Margaret Thatcher's government, was on a separate $6,000-a-month consulting contract with Enron. Wendy Gramm, the wife of Sen. Phil Gramm (R-Texas), couldn't have been displeased with the $50,000 donation the Lay family gave her university.
And three of the six-member board held shares in Enron that last spring were worth in total about $7.5 million.
No, better to keep silent, better to hope that the gods of the market were right when they said the moon was Stilton.
The Democrats' vague blaming of the Bush administration risks taking attention away from where it should be and missing the point of this scandal whose seeds were planted during the Clinton administration. The focus should be on the sorry state of business ethics in the United States today. And on the failure of "the system" to protect investors and employees from crony capitalism and unabashed greed on the part of Enron bosses, the document-shredding auditors and Wall Street bankers who helped organize the dubious complex partnerships that hid Enron's massive debt.
That senior Enron management and Arthur Andersen felt able to ignore the basic rules says a lot about the regulatory and oversight systems that are meant to ensure transparency and the flow of reliable information on the state and behavior of companies.
But it also says a lot about old-fashioned covetousness and how even regulatory and watchdog systems can't protect from fraud and folly when people don't want to listen because, as Kipling says, "the burnt fool's bandaged finger goes wabbling back to the fire."
Jamie Dettmer is a senior editor for Insight.
February 19, 2002
TOP COPS CLAIM ENRON
SUICIDE WAS MURDER
By David Wright, Kevin Lynch & Courtney Callahan
The National Enquirer
IT WAS MURDER! That’s the stunning verdict of top law enforcement experts who have independently examined the shooting death of Enron executive Cliff Baxter, which was hurriedly ruled a suicide by a controversial medical examiner.
And insiders believe the popular boss’ tragic death is linked to the giant energy company whose shady dealings and bankruptcy have shattered the lives of thousands of employees. “Mr. Baxter’s death was NOT a suicide – and nothing points to a natural death, which leads to the unavoidable conclusion that foul play was involved,” said Peter Levin, a veteran prosecutor in Philadelphia.
Baxter, a 43-year-old former vice-chairman of the Houston-based company was found dead in his Mercedes just half a mile from his $700,000 home.
He had been steeling himself to testify before congressional committees about Enron’s questionable accounting practices – and just days earlier had talked to a business associate about “perhaps needing a bodyguard.”
“He knew where all the Enron bodies were buried and he was apparently ready to talk,” former congressman John LeBoutillier, who attended Harvard Business School with former Enron CEO Jeff Skilling, told The Enquirer.
“The evidence for foul play is pretty strong. Here’s a man who had everything to live for – children he loved and a comfortable future. He’s lying in bed in the middle of the night when he suddenly gets up, dresses, gets into his car, drives a short distance and blows his brains out. It doesn’t make sense.
“There’s billions of dollars missing. If the people involved are capable of cheating, lying and stealing money, it’s not going much further to hire a hit man and have someone whacked.”
Veteran prosecutor Craig Silverman, who nailed dozens of murderers in his 16 years as chief deputy district attorney of Denver, Colo., told The Enquirer:
“A trained killer can make a murder look like suicide. There are hit men who work for large sums of money and do a very efficient job of killing in the way that suits their clients’ purposes.”
Company insiders say Enron was a cesspool of greed, inflated egos and illicit sex.
And Baxter’s friends and co-workers have deep doubts about the so-called suicide of a former boss who knew the inner workings of the firm.
“He wasn’t the kind of guy who’d kill himself,” his friend Lyndon Taylor told The Enquirer. . . .
Added another close friend: “Here is a guy with everything in the world to live for. He still had his money, he had a huge yacht and a wonderful family. The thought that he would kill himself is absolutely mind-boggling.”
Baxter’s body was found at 2:23 a.m. on January 25. Harris County medical examiner Joye Carter completed the autopsy and decided it was suicide by that night – unusual speed, according to insiders.
Dr. Carter has a controversial past, an Enquirer investigation reveals. In 1993 she was the District of Columbia Chief Medical Examiner when Washington lawyer Paul David Wilcher was mysteriously found dead in his apartment. Wilcher had been investigating the events leading up to the Branch Davidian fire in Waco, Texas. But no cause of death was ever determined and autopsy reports were never made public.
In February 2001 Carter was fined $1,000 and narrowly escaped being fired for allowing an unlicensed pathologist to perform roughly 200 autopsies in the Houston area. And during her time in Houston, the county has paid hefty damages in two lawsuits brought by whistle-blowers on her staff who alleged official misconduct.
Nine days after Baxter’s death, police still hadn’t publicly supported the suicide verdict. “It’s highly significant that the police are being so cautious,” a former senior detective told The Enquirer.
“There are so many questions here – most importantly, why did he leave the house so suddenly? Was he lured by a phone call? Had he agreed to meet someone?
“The fact that the police investigation is still going on tells me that despite what the medical examiner says, the detectives on the ground haven’t ruled out murder.”
For another Suicide vs. Murder mystery, GO TO > > > Vince Foster
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