bc on Sun, 2 Dec 2001 18:20:46 +0100 (CET)

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<nettime> ENRON.gov

  [article from salon.com. at least one of the US admin's enron-related
  people stepped out of the spotlight and quit their .gov posts weeks prior
  to the public outing of Enron's misdeeds. not one newspaper article makes
  any link between the Enron fiasco and the connections to the current US.gov.
  likewise, it will be interesting to see if Enron's SEC (securities and
  exchange commission) investigation will withhold data due to 'national 
  security' issues.
  furthermore, one of the 'economic stimulus packages' presented backed by
  the US.gov was to give Enron 250 million dollars, to graciously help them out.
  note that Ken Lay, Enron's CEO, has been guiding US Energy Policy thus far,
  behind closed doors. it is unlikely there will be any investigative reporting.
  hope is that the US.gov will rethink/reexamine a policy that has public
  integrity, or face a furious political clash, as this is only a dead-ender.]

Will Bush be tarnished by Enron's collapse?
By Andrew Leonard


- - - - - - - - - - - - Sat Dec 1 15:31:27 2001

[note: article added by nettime-l mod]

Will Bush be tarnished by Enron's collapse?
The crash of his top corporate backer should discredit the president's
anti-regulation economic policies, but it's unlikely to lead to reform.

- - - - - - - - - - - -
By Andrew Leonard

Nov. 30, 2001 | When President Bush surveys the wreckage that currently
goes by the name of Enron, he must feel something akin to the discomfort
of a lover looking to get out of a relationship suddenly gone sour. Has a
president of the United States and a single corporation ever been locked
in a tighter embrace than Bush and Enron?

As anyone who has glanced at the business pages this week is aware, Enron,
once the darling of Wall Street, is now a synonym for corporate 
The SEC is investigating a series of private partnerships set up by Enron
executives that allowed the company to keep at least half a billion 
dollars worth of debt off its books. In the past two months, the company
has fire its CFO, treasurer and top lawyer, and is facing a flood of class
action suits from both investors and employees. And after the failure of
its last-gasp merger attempt with competitor Dynegy, Enron is now
frantically struggling to set up a bankruptcy plan that will allow it to
keep some semblance of its operations intact. Its stock, which traded at
$85 a year ago, is now at 26 cents.

So what does any of that have to do with Bush? Well, it's not just that
the Houston-based energy trader has been the primary bankroller of Bush's
political aspirations, back to his first run for Texas governor. The
current Bush administration is also studded with Enron
connections. Secretary of the Army Thomas White is a former high-ranking
Enron executive, and Robert Zoellick, the U.S. Trade representative, was a
paid member of Enron's advisory board. The Washington consulting firm run
by Lawrence Lindsey, the White House's top economic advisor, worked for
Enron. And other top officials, including Karl Rove, Bush's chief
political strategist and I. Lewis Libby, Vice President Dick Cheney's
chief of staff, both owned huge chunks of Enron stock when they joined the
Bush administration. It's also worth remembering that at the end of the
first Bush administration, Enron hired chief of staff James Baker and
Commerce Secretary Robert Mosbacher.

Current CEO Ken Lay was also widely rumored to be a possible pick as
either Bush's treasury secretary or energy czar, although in retrospect,
given the huge profits Enron was raking in during the California energy
crisis just as Bush took office, such an appointment might have been
politically problematic.

Given all those links, it's fair to think Enron's collapse, at the very
least, raises questions about the Bush administration's energy and
economic policies, given that much of the administration shares Ken Lay's
oft-stated views on promoting deregulation and allowing markets to rage
unchecked by any government meddling.

But some Bush critics are going one step further, succumbing all too
easily to the proposition that Bush is somehow culpable for Enron's
misdeeds, or at least a co-conspirator. The argument appears to be
this: If, as it seems increasingly clear, Enron's executives are guilty of
cooking their books, defrauding investors and ruining the lives of
thousands of their employees, shouldn't Bush come in for criticism too,
given his close ties to the company? And isn't it even possible some
administration figures, past or present, might be involved in Enron's
misdeeds? Some are even whispering "Teapot Dome" -- as if the current
situation were analogous to the Warren G. Harding administration scandal
in which Secretary of the Interior Albert B. Fall leased oil reserves to
private companies in return for kickbacks.

It's too soon to say, of course, whether any smoking gun linking the Bush
administration to Enron's woes or Enron's previous actions will ultimately
emerge. Given the scope of the company's meltdown, anything seems possible
-- though it is worth noting that the irregularities being investigated by
the SEC in Enron's financial filings mostly occurred on Clinton's watch,
not Bush's. But in any case, to look for Bush culpability is to miss the
true significance of Enron's catastrophic implosion.

The list of guilty parties in the Enron debacle is not limited to Enron
executives or Bush administration officials. It includes the fawning
business press that lauded Enron as the most "innovative" company in
America, the Wall Street analysts who shrugged off Enron's
incomprehensible financial statements, and Arthur Andersen, the
accountancy that signed off on those same statements.

But Enron's roller coaster ride is not as astounding as everyone would
like to believe. It is, instead, exactly the way capitalism works when
government is asleep at the wheel and greed is allowed -- nay, encouraged
-- to be the primary operator in the marketplace.

Forget about the Teapot Dome. This is more like the South Sea Bubble of
the early 18th century, when the failure of the South Sea Trading Company
to make good on its promises of huge profits from New World trading led to
the ruination of thousands of investors. As a result, unincorporated joint
stock corporations were forbidden -- a reform that was the legacy of a
company whose "negligence, profusion and malversation," in the words of
Adam "invisible hand" Smith, resound down through history as a case study
in what governments should not allow companies to get away with.

Will energy trader Enron spark a legacy like its slave-trader forbear, and
usher in new regulations? Don't hold your breath. Instead, just watch as
Enron's failure is placed at the doors of specific Enron officials, while
everyone else scurries around noting how "unprecedented" and 
"unparalleled" the meltdown is. Try to keep your patience as years and
years of legal wrangling attempt to sort out the bankruptcy mess and class
action accusations that will keep Enron's name in the papers long after
the company itself stops functioning.

But come on. What could possibly be more business as usual than
high-ranking executives cashing out at the top of the market, as Lay did,
while employees are left holding the bag? What could possibly be more
standard practice than jiggering the books to make your numbers look good
every quarter? What could possibly be more ordinary than accountants,
analysts and investors ignoring what they can't understand, as long as the
profits accumulate?

It would seem fair that the Bush administration pay some sort of political
price for Enron's woes, given its close ties to the company. And this
would no doubt be a bigger headache for Bush if there wasn't the
convenient distraction of a war on terrorism right now. After all, it's
just a tad embarrassing when one of your closest allies turns out to be a
house of cards operated by wheeler-dealers whose rise and fall will be a
staple of economic textbooks and business school seminars for at least the
rest of this century, if not the millennium.

Even if it turns out Ken Lay wasn't primarily responsible for, or even
aware of, the shenanigans being conducted by his once-anointed successor
Jeffrey Skilling and his cadre of cutthroat traders, it still doesn't say
much for Bush's judgment that his reputed No. 1 pick for treasury
secretary is now a figure who, at best, let the company fall apart on his
watch, and at worst bears some responsibility for its legal and economic

But it's still probably too much to hope that as a result of Enron's
collapse, other companies will come in for closer scrutiny or regulation,
or that any systemic changes will result to prevent the future fleecing of
the many for the profit of the few. And you don't have to look for any
conspiracy between Bush and his energy buddies to prove that. Enron and
Bush are business as usual in the 21st century. You'd think that we might
have learned something in the centuries since the South Sea Bubble, but in
fact, we actually appear to be headed backwards.

- - - - - - - - - - - -

About the writer
Andrew Leonard is a senior
editor at Salon.com and author
of Salon's Free Software
Project, an online
book-in-progress exploring the
history and culture of the free
software movement.

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