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Enron Mail |
Does anyone else see any irony in this guy's name? I swear I did not modify this in any way.
PERSPECTIVES A tale of greed and hubris Waldo Proffitt 11/18/2001 Sarasota Herald-Tribune All F2 (Copyright 2001) For anyone not already disenchanted with the idea of total deregulation of public utilities, the most recent installment of the miserable Enron story as it unfolded last week should serve as a convincing example of the folly of relying on unregulated profit- driven enterprises to supply our energy. A year ago Enron was the darling of Wall Street, the poster boy for the utility industry, its stock selling for about $85 a share. Last week its stock was worth about 10 percent of that and the company had agreed to be bought by a competitor. There was fear the company's bond rating might fall to the "junk" level. What happened? It will take months, if not years, to untangle the details, but it is clear that the main culprit was greed, closely followed by hubris. Not too many years ago Enron was a small, struggling, gas pipeline company in Houston. As deregulation spread to more and more states, Enron began acquiring pipelines, gas producers and utilities. It also acquired friends in high places, especially the Bush family and their key political advisers. And, it discovered it could make money faster by selling and trading energy than by producing it. Enron sold many of its generating plants and became the biggest "power broker" in the nation. Though it was by no means the largest winner in the con game that bilked California consumers of tens of billions of dollars, Enron was one of the first power barons to take advantage of California's flawed deregulation law -- virtually written by in-state and out-of- state utility companies. The California fiasco soured (probably) most Americans on utility deregulation, but Enron was not singled out for calumny, and management saw no reason to examine its business ethics. Contrarywise. management had visions of even greater profits, which it felt no obligation to share with ordinary stockholders. The chief financial officer and other high-ranking executives set up affiliated or subsidiary partnerships which made deals with Enron. I do not understand the details of these arrangements, but neither do independent accountants, the Securities and Exchange Commission or congressional investigators. It does seem clear that the Enron insiders made millions for themselves. Enron acknowledges, without explaining, that stockholder equity dropped $1.2 billion in the last quarter and that it had for the last five years overstated profits by some $600 million. Whether this was by design or by mistake is in dispute, but it is the sort of thing which tends to undermine the confidence of investors. So much for greed. Back to hubris. It seems not unlikely that Enron's leaders felt they might not be punished for a modest amount of corner-cutting because they had friends in high places. The chief executive, Kenneth L. Lay, was and is a personal friend of George W. Bush and has easy access to the White House. For many months after the new administration took office, Karl Rove, Bush's top political strategist, owned Enron stock valued at $100,000 to $250,000, and sold it only after he had been able to secure a ruling that he did not have to pay capital gains tax immediately because he sold to avoid a conflict of interest. Lawrence Lindsey, the president's chief economic coordinator, and I. Lewis Libby, Vice President Cheney's chief of staff, owned stock in Enron, and Lindsey was paid $50,000 last year as a consultant for Enron. Enron and its employees gave more than anyone else to Bush's four political campaigns -- one (unsuccessful) for Congress, two for governor and one for president. In 2000, Enron and its employees gave $113,000 to Bush's campaign, $250,000 to the Republican National Committee, and $300,000 to the Presidential Inauguration Committee. Cabinet appointments affecting energy policy, key sub-Cabinet appointments, administration action or inaction in the California energy mess, and the overall energy policy of the administration could hardly have been more favorable to the interests of Enron. And now a couple of questions: Is it possible the unusual financial maneuvers by Enron went unnoticed or even unsuspected by all the savvy Texas oilmen in the Bush administration? Were those of them with heavy investments in Enron unconcerned about the conduct of the company? Was Enron right in thinking its friends in government would not be in a hurry to investigate or to reprimand? Or, in light of our preoccupation with terrorism, will the Enron case get much attention from the federal government? Or from voters? Waldo Proffitt is the former editor of the Herald-Tribune.
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