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   Enron's Just A New Twist on an Old Scam

Op-Ed:

Enron's Just A New Twist on an Old Scam

by Scott R. Hotchkiss
The Enron scandal looks much the same as the savings and loan scam that occurred during the previous Bush administration two decades ago: Leverage the prices, default, and pick up the pieces at a reduced cost and keep the money and the properties.

Today most Americans think that Enron's business is oil and gas energy trading. They would be mistaken. The main business of Enron is financial manipulation. Let me explain. They moved their debts to phony offshore partnerships to keep them off the balance sheets. Artificially inflated profits caused the stock value to climb to stratospheric heights and insiders sold their options reaping hundreds of millions of dollars. As word got out that there were unreported debts hidden in those partnerships and the real losses were revealed, the stock value plummeted. After stock prices drop the insiders are free to buy back the same stock they had previously sold for millions spending considerably less to regain their shares. Nice, Huh? Looks much the same as the savings and loan scam that occurred during the previous Bush administration two decades earlier. Leverage the prices, default, and pick up the pieces at a reduced cost and keep the money and the properties.

Only this time Enron headed all the way into bankruptcy. Bankruptcy? Not to worry. These people are using the system and are poised to pick up the pieces with different corporate names playing the shell game courtesy of federal bankruptcy proceedings. Enron partner UBS Warburg who managed at least one of Enron's phony offshore private offerings [1] will get a large part of Enron's assets without the liabilities while creditors and stockholders are left holding the bag. Federal bankruptcy judge Arthur J. Gonzalez recently awarded Enron's flagship trading division to the Swiss investment bank with a price tag of zero. That's a pretty good deal for the unit that delivered $100.8 billion in the year 2000, 90 percent of the company's profits. [2] Judge Gonzalez was appointed Assistant United States Trustee in the Southern District of New York in 1991, [3] the final year of Sr. Bush's administration. ĘThanks, pardner!

Another piece of the Enron pie appears headed directly into the hands of Bush crony James A. Baker III who sits on the Board of Directors of Dynegy Corporation. Judge Melinda Harmon, who was also appointed to the federal bench by former President George Bush Sr. in 1989, [4] issued a ruling on December 19, 2002 favorable to a Dynegy Corp. suit seeking control of the Northern Natural Gas pipeline. The pipeline was one of the units sought by Dynegy in the busted Enron merger and is a crucial part of plans to recover losses in stock value caused by that failure. [5] Thanks pardner!

Rep. James Greenwood, chairman of the House Energy and Commerce Committee's investigative subcommittee said, "Enron robbed the bank and Arthur Andersen drove the getaway car..." Instead of Congress concentrating on scapegoat Andersen LLP and the shredding of documents, lawmakers should be looking at who will be benefiting from the new corporate shuffle. Andersen auditor David Duncan, who refused to testify before a Congressional panel, is described as being "at the wheel" of the getaway car and is obviously positioned to take the fall. [6] But to whom did he deliver the loot?

This citizen wants to know more than who shredded what. Who are the men in UBS Warburg or its parent company UBS AG that stand to profit from this arrangement? Who are all the people in the current and previous Bush administrations and in Congress that stand to gain from the fall of Enron? There are still too many questions and the investigators are only looking at a narrow slice of the whole pie.

Let's take a superficial look at a few more of the participants. Enron started out as Hughes Tool, as in Howard Hughes who inherited it from his father. It is now Baker Hughes, [7] as in James A. Baker III - former Secretary of State, Secretary of the Treasury, and twice White House Chief of Staff during previous Republican administrations. He's a good friend and business associate of fellow Texas oilman, former Director of the CIA and President, George Bush Sr. He is such a good ally that he volunteered to go to Florida as point man for the dubious vote recount that helped to install Jr. as President in the controversial and most debated election in U.S. history. Along with James A. Baker III, George Bush Sr. has a position as an "advisor" at the Carlyle Group whose membership included the Bin-Laden family [8] as recently as October 2001. [9] Carlyle's strategy has been in acquiring failing businesses and is the world's largest private equity firm. As one of the largest American military contractors they stand to make billions in profit on the war against terrorism [10] with its first battlefield in Afghanistan. It's also no secret that Afghanistan holds the key to the trillions of dollars worth of oil and natural gas reserves in the South Asia region. These Texas oilmen are everywhere, it seems.

It is also widely known that Enron and chief executive "Kenny Boy" Lay were George W. Bush's largest financial backers going as far back as his failed Congressional bid despite what Junior has recently falsely asserted. Lay even spent the night in the Lincoln Bedroom courtesy of Bush Sr. Enron was also a large contributor to Republican U.S. Senator Phil Gramm from Texas ($97,350 since 1989) whose wife, Wendy, as chairwoman of the Commodity Futures Trading Commission (CFTC) helped push exemption of Enron's futures trading contracts. Shortly after she provided the exemption that Enron wanted, she left her seat on the commission and was appointed to the Enron Board of Directors subsequently receiving as much as $1.85 Million from the corporation. [11] The financial manipulation scam works nicely when there are insiders placed in the right government positions.

I remember the Bush Family of the 1980's and the savings and loan scandal. It was a bonanza in leveraged financing. They bought on credit, defaulted the loans and let the government, meaning the taxpayers, cover the losses while keeping the proceeds courtesy of the system. It worked to add at least a billion dollars to the Bush friends and family fortunes during the decade. Jeb did it in Florida [12] and Neil did it in Colorado [13] while George Sr. looked on from the White House. It was a good system. It worked and nobody went to jail. In fact, it led to Governorships in two states. The people were briefly outraged but that quickly died down. The Republican administration aided by the lapdog media saw to that. Now history is repeating itself.

It seems the more one looks at the Enron scandal, the deeper one gets and all roads lead to Texas, Baker/Bush Country, while Congress just scratches at the surface. They are giving the public a token gesture of justice as they seek to fry the small fish. This investigation really needs an independent special prosecutor with resources to dig deep enough to catch the big fish. That's the only way to stop this new twist on the old scam.

I'm just a guy with a computer and a television set. I can see it. Why can't the professional investigators? But, after all, they would have to look toward associates of the former head CIA spook. There is already a consultant from Arthur Andersen, James Daniel Watkins, [14] and one Enron executive with inside information who had been sought to testify, J. Clifford Baxter, found dead with .38 caliber bullets in their brains. Perhaps that rightfully scares them.


The writer is a 47 year-old Florida tradesman and lifelong amateur musician. After the injunction by the U.S. Supreme Court halting the counting of legal votes in Florida and their controversial per-curiam decision appointing George W. Bush pResident he became energized as a political activist. He intends to honor his oath to uphold and defend the Constitution against all enemies foreign and domestic, and vigorously demands that his elected representatives honor theirs.

[1] Washington Post Tuesday, January 22, 2002; Page A01 "Enron Raised Funds In Private Offering"

[2] Washington Post Saturday, January 19, 2002; Page E02 "Judge Clears Deal for Enron Unit"

[3] Connecticut Journal of International Law

[4] Judges of the United States Courts

[5] abiworld.org Bankruptcy headlines December 20, 2001

[6] CNN.COM January 24, 2002 "Enron's chief auditor refuses to testify"

[7] Hughes Tool merged in 1987 during the Bush I administration with Baker International to become Baker Hughes.

[8] Judicial Watch 9/28/2001 "WALL STREET JOURNAL: BUSH SR. IN BUSINESS WITH BIN LADEN FAMILY CONGLOMERATE THROUGH CARLYLE GROUP"

[9] Judicial Watch 11/27/2001 "JUDICIAL WATCH TO FILE FOIA LAWSUIT TODAY OVER CARLYLE GROUP DOCUMENTS"

[10] Baltimore Chronicle October 1, 2001, "Republican-controlled Carlyle Group poses serious Ethical Questions for Bush Presidents, but Baltimore Sun ignores it"

[11] Public Citizen, December 2001, "Blind Faith: How Deregulation and Enron's Influence Over Government Looted Billions from Americans"

[12] St. Petersburg Times, January 13, 2002 "Enron collapse stirs echoes of '80s savings and loan woes"

[13] St. Petersburg Times, October 29, 2000 "Influence and bailouts a business tradition in Bush family"

[14] Rocky Mountain News, December 12, 2001 "Man's body discovered in van confirmed as suicide victim"


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This story was published on March 2, 2002.
  
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