ENRON 101
Barbara Burton
I think that the recent news stories and TV pundit�s arguments about the Enron issue show a lot of emotion and passion. I like that, but the problem with that is emotion is not based in fact. The relentless pursuit of Bill Clinton was based on emotion and it was very frustrating. Now the Republicans are getting it turned around on them and they are yelling "foul!" and that is very hypocritical.
The facts about Enron are difficult to understand and not all of the facts are out yet. As each day passes though it looks worse for both big business and republicans.
Enron did what many large companies do...they gave to both parties just to be on the safe side. They gave overwhelmingly to the republicans (73% of political contributions and opposed to 25% to democrats) because republicans were more inclined to give them legislative favor. Enron needed deregulation in order to independently trade energy without governmental price controls. Enron started as a relatively small pipeline company and expanded in to the electricity business. What they did was buy electricity from generators and sell it to consumers. In order to do that it needed credit to stay liquid. It didn't have huge profits so the company moved it's debts onto partnerships that were mostly offshore (no scrutiny) and then it could report only profit to the SEC and get high earnings rating and the stock price would go up. Now that only benefits you if you own Enron stock. If you own that stock you can sell it or borrow against it so you have a vested interest in keeping that stock price high. Get it? I'm not a lawyer but it looks like fraud to me. When it was forced to restate its earnings in October 2001 it showed that the company had overstated its earnings by $580 million dollars and the stock price quickly declined. Anyone owning that stock after that time lost his or her ass. But the people who were in a position to know that the price was about to decline had already gotten out. To many people that looks like insider trading.
Politics come in to the picture because of the large number of former Enron executives and/or investors that are now in the Bush administration. 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 a while back, Marc Racicot was Enron's Washington lobbyist. Bush considered naming Lay his Commerce Secretary. Lucky for Bush that appointment never happened. During the 2000 presidential campaign Lay even loaned the company jet to Bush. 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. Common sense tells me that if you own millions of dollars in stock and/or worked for a company you would more likely than not know more about that company than the average person did. It could be that only a small number of people at the company and at Arthur Andersen (the accounting firm for Enron) actually knew about the "fuzzy math" going on but considering the amount of people involved in document shredding I find that hard to believe. So if it comes to light that any Bush officials or Bush himself knew of the problem and let it continue it will look very, very bad. The same can be said for any member of congress, as well.
I think there probably is scandal. I could be wrong but there is an awful lot of smoke for there to be no fire, don't you think?
Hold off your final decisions until the investigations are over and pay attention and let the chips fall where they may. |
