Never before, not even during the depths of Teapot Dome and Watergate, has the stench of corporate money hung so heavy over Washington as it does today.
The Enron scandal exposes in a new way the fact that the federal government is “bought and paid for” and serves the interests of the corporate rich.
It ranks with the Pentagon Papers, the Iran-Contra conspiracy and the savings and loan debacle in criminality and corporate venality. It could eclipse these previous scandals in its long-term effects on the economy and our monopoly-ruled political system.
Extricating President Bush from his entanglement with Enron is now the highest political priority of the White House, the Republican Party and the ultraright. But there are so many smoking guns in this crisis that the White House looks like the OK Corral.
The suffering and misery inflicted on innocent people by the Enron swindle is already emerging as an overriding issue in this year’s elections. It has pushed the “war on terrorism” off the front pages. The scandal comes in the midst of a deepening economic recession. Creditors burned by Enron’s collapse are rejecting appeals for bailout loans from other troubled companies.
Kmart’s filing for bankruptcy is blamed on this new-found wariness on Wall Street. The collapse of Enron and Kmart will add thousands more workers to the ranks of the eight million already unemployed. Bush’s popularity could sink as fast as Enron itself.
The General Accounting Office (GAO) has announced they are filing a lawsuit against the administration because Vice President Richard Cheney continues to stonewall on its request for documents on meetings of Cheney’s secretive Energy Policy Task Force.
There is a blizzard of lawsuits, including one by the International Brotherhood of Electrical Workers and another by the labor-backed Amalgamated Bank of New York, on behalf of workers and stockholders whose retirement benefits have been wiped out in the Enron collapse.
Attorney General John Ashcroft was forced to recuse himself from the Justice Department’s investigation because he received $57,000 from Enron in his unsuccessful run for the Senate from Missouri in 2000. The entire U.S. Attorney’s office in Houston was forced to remove itself from the probe because they are so tainted by ties to Enron.
A striking fact of this scandal is the difficulty of finding elected officials without ties to Enron to conduct the investigation. Half the Senate and one third of the House, both Republicans and Democrats, received campaign contributions from Enron. Enron clearly favored the most rabid right-wing Republicans, like House Majority Leader Tom DeLay (R-Texas), who rammed through Enron’s energy deregulation agenda.
The crimes are legion: massive corporate fraud; insider trading; influence peddling; obstruction of justice; and tax evasion. Enron paid no taxes in four of the last five years and was approved for $328 million in tax refunds despite reports of hundreds of millions of dollars in profits. They carried out this massive tax swindle by hiding the profits in their web of 900 off-shore companies, many of them dummy corporations.
Enron rode to the top on Bush family coattails. At this time last year it was rated the seventh-largest corporation among the Fortune 500, with revenues of $101 billion, its stock selling for $90.75 a share. It was aggressively expanding from Houston across the nation and around the world with the help of former Secretary of State James Baker and other Bush insiders.
Enron, along with Duke Power, Dynegy Corporation and other natural gas monopolies, generated the fraudulent “energy shortage” in California. Then, taking advantage of the deregulation they had rammed through, they jacked up rates to California consumers by 400 percent and more.
An analysis of California’s energy market released last March by the Independent Systems Operator revealed that Enron and other natural gas suppliers overcharged the state by $6.9 billion. Consumers’ gas and electric bills quadrupled to $27.1 billion and were forecast to rise to $70 billion in 2001 or $2,000 for each person in the state.
Gov. Gray Davis pleaded with the Bush administration to impose a cap on these runaway energy prices. President Bush flatly refused, siding with his Enron cronies in this colossal rip-off.
On the surface, the company seemed strong, if not impregnable. Yet the infamous memo from Enron Vice President Sherron S. Watkins to CEO Ken Lay last August makes it obvious the entire corporation was built on smoke and mirrors and double bookkeeping.
“I am incredibly nervous that we will implode in a wave of accounting scandals,” Watkins wrote, adding that Enron’s climb to the top was “nothing but an elaborate accounting hoax.”
J. Clifford Baxter, former Enron vice chairman, was found dead in his Mercedes near his mansion in Sugar Land, Texas, Jan. 25. Baxter had resigned last May, claiming he wanted to spend more time with his family, but he had joined Watkins in sharply protesting Enron’s dubious corporate methods.
Despite a determined cover-up, the connections to the Bush administration keep bubbling to the surface. The president’s top adviser, Karl Rove, telephoned Lay to arrange for Ralph Reed, former top leader of the Christian Coalition, to be placed on Enron’s payroll at $20,000 a month during the 2000 presidential election. Reed’s main assignment was to keep the Christian right fully in support of Bush’s presidential campaign.
The media is also zeroing in on Secretary of the Army Thomas E. White, who held $50 million in Enron stock. He sold most of it off at a profit before it collapsed. Now questions are swirling about his repeated private meetings and telephone calls with Lay and his role in ramrodding privatization of $60 million worth of Enron contracts to supply gas and electricity to military bases.
The systematic nature of the Enron swindle is coming home with a vengeance, the double standard in which the rich are protected while the vast majority of working people are fleeced.
Thousands of Enron workers were forced to hold on to their Enron 401 (k) stocks as they plummeted, while Enron executives sold off $1.1 billion of their holdings before the collapse.
As one Enron worker told the World, “Lay kept telling us to buy Enron stock while he was selling his. He knew the ship was sinking. They were siphoning off our retirement funds to keep the ship afloat.”
Workers toiled to earn those stocks in lieu of a real pension, but Enron executives reserved the right to siphon off that money to cover their “golden parachutes” when the hall of mirrors came crashing down.
Behind Bush’s privatization of Social Security is the plan to loot workers’ pension funds, including both their private accounts and Social Security itself. Enron’s collapse may help tilt the scales against the privatizers and toward public control on many diverse fronts.
Advocates of reforming our electoral system say the only real way to end the corrupting influence of money is to have full public financing of our elections. The bankrupting of Enron 401(k) accounts will reinforce demands to preserve and strengthen Social Security and Medicare and establish a new national health-care system modeled on Social Security.
Enron is a gas and electric giant that ripped off energy consumers coast to coast. Already, the grass-roots movement that fought this swindle in California is popularizing public ownership of energy and utility companies as the only real solution.
Bush’s incestuous “good-ole-boy” relations with Enron now place him in grave danger. A frenzied cover-up is in full gear. The shredders are running full tilt at Enron, Arthur Andersen, the accounting firm sucked into the scandal, and no doubt in the basement of the White House.
As Craig McDonald, director of Texans for Public Justice (TPJ), told the World, “Bush was in bed with Enron long before he made his first run for political office.”
When Bush lost the popular vote in November 2000, Baker rushed to Florida to orchestrate the stealing of the election. Baker was on CNN non-stop explaining why the Florida votes should not be counted and why the U.S. Supreme Court should choose the president. It was “a very American coup,” as the World dubbed it at the time.
The payback was not long in coming. Bush appointed at least 30 Enron executives, consultants and investors to his administration.
When Vice President Richard Cheney, former CEO of Haliburton, the oil and gas supply company, set up his Energy Policy Task Force, he met with or spoke by telephone at least six times with Lay to make sure that every word in the plan conformed with Enron’s drive for total deregulation of the energy monopolies.
McDonald said, “Cheney may have been talking, but the words were Ken Lay’s.” In a brazen obstruction of justice, Cheney has refused all requests for documents generated by the secretive meetings of this Energy Task Force.
The Bush administration fully implemented Enron’s deregulation agenda. Ironically, permitting the company to operate under the radar with virtually no regulatory oversight, was a major factor in its collapse.
Enron has been buying influence in Washington since it was founded in 1985. In the past 10 years, Enron has admitted contributing $6 million to Republican and Democratic lawmakers. Among the biggest recipients of Enron largesse were Sen. Phil Gramm (R-Texas) and his wife Wendy, who was chairperson of Reagan’s Task Force on Regulatory Relief.
In a revealing report, Public Citizen exposed how Sen. Gramm won “stealth-like approval” of legislation exempting energy commodity trading from government regulation and disclosure at the specific request of Enron.
Wendy Gramm pushed through similar exemptions for energy corporations in 1993 and was rewarded by Enron with a seat on their board of directors. She was paid $915,000 in salary and $1.85 million in stock options and dividends from 1993 to 1998.
In his “Lectures on Fascism,” written in 1976, the Italian Communist Palmiro Togliatti pointed out that the “corporate state” lies at the evil heart of fascism. “The corporative regime is a regime that is totally inseparable from total political reaction,” Togliatti wrote, “from the destruction of every democratic liberty.”
We do not have fascism here, but Enron is a model of Italian fascist Benito Mussolini’s ideal corporation based on the corporate takeover of the state, its stranglehold on a political party to serve as its political instrument, its seizure of power if necessary by coup d’état.
So far, the Democrats have been at best weak and timid in response to this crisis, proving that Enron succeeded in largely silencing them. This political cowardice does not mean that we should write off the liberals and centrists in the House and Senate.
There is a core of fighters in Congress, mostly in the Black Caucus, Hispanic Caucus and Progressive Caucus, around which we should build. We must demand that every lawmaker take a stand, to bring Enron and its executives to justice. Every candidate for election or reelection must be compelled to prove their independence from Enron in the 2002 election.
They need to hear demands for a real economic stimulus plan, including a program to save our steel industry: Double the minimum wage. Double the weeks of unemployment compensation. Put money in the pockets of the needy. Tax the rich. Stop Bush’s “sole superpower” bully wars around the world.
The Enron scandal can be a lightning rod for the movement to end right-wing Republican control of Congress in 2002. It can make Bush a one-term president in 2004.
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