| Subj: | Enron: not the only bad apple |
| Date: | 2/2/02 4:32:53 PM Pacific Standard Time |
| From: APFN@apfn.org (American Patriot Friends
Network) Reply-to: apfn@apfn.org To: apfn@yahoogroups.com (APFN Yahoogroups) CC: greg@gregpalast.com |
|
Enron: not
the only bad apple
Guardian (London)
Special Report
Friday, February
1, 2002
by Greg Palast
- greg@gregpalast.com
I guess I'm
not a nice guy. But when I heard that
Enron's former
vice-chairman Cliff Baxter had shunted
his mortal
coil, I shed no tears.
One tabloid
even called Baxter a "hero" who
courageously
raised the alarm about his company's
fantasy financials.
Maybe I'm missing
something here, but this is the
Baxter who
last year quietly crawled out of Enron like
a cockroach
from a rotting log - then dumped his
stock on
unsuspecting buyers, thereby pocketing a
reported $35m
(£25m). You can just imagine Baxter
chuckling to
himself in January last year as Enron's
office staff
gathered their pennies for his retirement
gift while
he's thinking, "So long, suckers!" - knowing
they are about
to lose their jobs and life savings.
There have
been a lot of misplaced tears in the Affair
Enron. The
employees were shafted, no doubt about
it. But the
shareholders?
I didn't hear
any of them moan when Enron stock shot
up through
the roof when the company, joined by a
half dozen
other power pirates, manipulated,
monopolised
and muscled the California electricity
market a year
ago.
All together,
Enron and half a dozen others skinned
purchasers
for more than $12bn in excess charges.
That's the
calculation of Calfornia's utility watchdog as
presented to
federal regulators in a damning petition
for
refunds.
Here's an example
of how Enron's po' widdle
stockholders,
hero Baxter and chairman Ken Lay
made their
loot.
Soon after
California dumbly deregulated its power
markets, Enron
sold 500 megawatts of power to the
state for delivery
over a 15-megawatt line. Very cute,
that: the company
knew darn well the juice couldn't
make it over
the line, causing panic in the state -
customers would
then pay 10 times the normal cost to
keep the lights
on and traders could cash in.
The federal
regulator caught that one. Within weeks of
taking office,
George Bush demoted the troublesome
official. Lay
boasted to one candidate expected to
replace the
sacked regulator that President Bush had
given Enron
veto over the government appointment.
Nor did Enron's
stockholders object to their profitable
business of
trading politicians like bags of sugar. From
Texas to Argentina
to Britain, Enron used legal but
sick-making
use of political donations, consultancies
and lobbying
to twist contracts, rules and regulations
to their
liking.
You want to
cry for a power industry exec who came
to an early,
violent, end? Then let me suggest to you
Jake Horton,
late senior vice-president of Gulf power,
a subsidiary
of Southern Company. (Southern is one
of Enron's
cohort in that fixed casino called the US
electricity
market.)
Horton apparently
knew about some of his company's
less-than-kosher
accounting practices; and he had no
doubt about
its illegal campaign contributions to
Florida politicans
- he'd made the payments himself.
But unlike
Baxter, who took the money and ran, in
April 1989,
Horton decided to blow the whistle,
confront his
bosses and go to state officials.
He demanded
and received use of the company's jet
to go and confront
Southern's board of directors. Ten
minutes after
take-off, the jet exploded.
While the
investigation into the plane crash was
inconclusive,
the company's CEO believed his death
was suicide.
He told the BBC: "I guess poor Jake saw
no other way
out."
Ultimately,
Southern pleaded guilty to the charges
related to
the illegal payments.
Jake and Baxter
are the beginning and end of the
story of
deregulation. I was part of a team
investigating
Southern's finances after Jake's plane
went down,
just after a grand jury voted to charge his
company with
criminal racketeering for manipulating
its
accounts.
Millions of
dollars were charged to customers of
Southern's
subsidiary, Georgia Power, for spare parts
that were not
used.
The internal
revenue service recommended
indictment,
but George Bush Sr's justice department
put the kibosh
on the prosecution (their legal
prerogative)
- in great part because the fancy
financials
had been blessed by the company's auditor:
Arthur
Andersen.
The company
denied any wrongdoing.
But while Southern
Company didn't face criminal
charges, regulators
ordered it to pay back millions to
its customers.
And that's
the big connection to Enron. Because it was
in those years
of investigation that Southern Company
led the fight
to "deregulate" the power industry.
Rather than
conform to the rules, they lobbied to get
rid of the
rules.
Southern and
its buddies in the power industry were
successful
beyond imagination. Industry lobbyists and
lawyers eviscerated
America's Public Utilities Holding
Company's Act,
and made mincemeat of the rules
which once
barred power companies from making
donations to
political campaigns.
Crucially,
in the newly deregulated power markets,
the companies
were relieved of the requirement to
follow the
strict government-designed Uniform System
of
Accounts.
Enron, founded
in 1986, was the Rosemary's Baby of
this satanic
coupling of free-market ideological hoodoo
and electricity
industry greed.
Enron played
it faster and looser than the others, but
it is wrong
and dangerous to say Enron was one bad
apple.
It's the whole
wormy tree of public services
deregulation
mania which is rotten, root and branch.
###
More information
on this topic can be found in Greg's
latest books,
The Best Democracy Money Can Buy
and Democracy
and Regulation, both of which will be
published in
April
Greg Palast
is an investigative journalist who writes a
column called
"Inside Corporate America" for the
Observer, Britain's
most respected Sunday
newspaper.
View all of Greg's columns at
http://www.gregpalast.com
http://www.guardian.co.uk/enron/story/0,11337,643422,00.html/
ENRON INVESTIGATION
RESOURCES
http://www.c-span.org/enron/index.asp
Columns - The Bush Family
http://www.gregpalast.com/columns.cfm?subject_id=4&subject_name=The%20Bush%20Family
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RESEARCH ON ENRON BOARD OF DIRECTORS IN
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`In a time of universal deceit, telling the truth is a revolutionary
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