People's Democracy

ENRON! Never before, not even during the depths of the Teapot Dome and the Watergate, has the scandalous influence of corporate money hung so heavy over Washington. This scandal is exposing, in a new way, that the Federal Government is "bought and paid for", and serves the interests of the corporate rich. This scandal is going to keep unravelling for the rest of Bush’s term in office. It ranks with the Pentagon Papers, Watergate, 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.

Bush choked on a pretzel and fell off his couch a few days ago, but he sobered up quick enough to deliver a loud blast against Enron in West Virginia. He bemoaned the 8,000 dollars his mother-in-law lost in the Enron collapse. Extricating Bush from his crony capitalist entanglement with Enron is now the highest political priority of the White House, the Republican Party and the ultra-right. 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 the 2002 elections. It has pushed the "war on terrorism" off the front pages. That war artificially inflated George W Bush’s approval rating. But the Enron scandal comes in the midst of a deepening economic recession. Enron’s bankruptcy is touching off a domino effect, with creditors burned by Enron rejecting appeals for bail-out loans from other troubled companies. K-Mart’s filing for bankruptcy is blamed on this newfound wariness on Wall Street. The collapse of Enron and K-Mart will add hundreds of thousands more workers to the ranks of the eight million already unemployed. As that reality dawns on the people, Bush’s popularity could sink as fast as Enron itself.

A Senate hearing has opened on the collapse of Enron. There are at least eight hearings scheduled before House and Senate committees. The Securities and Exchange Commission is investigating, the General Accounting Office. There is a blizzard of lawsuits, including one by the International Brotherhood of Electrical Workers, and another by the labour-backed Amalgamated Bank of New York, on behalf of workers and stockholders, whose retirement benefits have been wiped out in the Enron collapse.

The Justice Department has set up a Task Force to investigate into the Enron affair, headed by Deputy Attorney General Larry D Thompson. All you need to know about Thompson is that he orchestrated the smear campaign against Anita Hill in securing Senate confirmation of his crony Clarence Thomas, to the US Supreme Court. Thompson belonged to an Atlanta law firm that counted Enron as a client. Thompson was rushed into the breach because Attorney General Ashcroft was forced to recuse himself.

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 favoured the most rabid rightwing Republicans like House Majority Leader Tom DeLay, of Houston, who rammed through Enron’s energy deregulation agenda. For the most part, the giving to the Democrats was to buy their silence Now there is a panicky rush by these politicians to donate their Enron cash to funds that benefit those who lost their pensions in the Enron collapse.

The political establishment is so tightly intertwined with Enron that calls for the naming of a special prosecutor are certain to grow—although we know from the sandbagging of Lawrence Walsh in the Iran-Contra that this is no guarantee of justice. This crisis has also spurred a renewed effort to push through the Shays-Meehan Bill to ban "soft money", to curb the poisonous influence of corporate political action committees.

SWINDLERS 'PAR EXCELLENCE'

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 278 million dollars in tax refunds despite reports of hundreds of millions 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 was so determined to avoid paying taxes that they filed a lawsuit in Texas to win tax relief.

Justice Priscilla Owen wrote the majority opinion that reversed a lower court decision and reduced by 15 million dollars Enron’s taxes for support of Texas public schools. She had received a generous cash contribution from Enron when she ran for election to the bench. George W Bush rewarded her by recently naming her to a vacant judgeship.

Elliot M Mincberg, legal director of People for the American Way, a group opposing her Senate confirmation declared:

RISE TO POWER

We are only now beginning to see the inner workings of this corporation that virtually no one had even heard of until the late 1980s. It rode to the top on the Bush family coat-tails. At this time last year it was rated the 7^th largest corporation among the Fortune 500, with revenues of 101 billion dollars, its stock selling at its highest for 90.75 dollars a share. It was aggressively expanding from Houston across the nation and around the world, with the help of James A Baker and other Bush (elder) insiders.

Enron was also expanding worldwide on every continent, linking its investments closely to Bush’s "sole superpower" military adventures in the Middle East and Russia. On the surface, the company seemed strong if not impregnable. Yet read a letter from Enron Vice President Sherron S Watkins, to CEO Ken Lay written last August, and it is obvious that the entire corporation was built on smoke and mirrors, its double book-keeping and corporate sleight-of-hand ignored by Arthur Anderson, the wealthy accounting firm. "I am incredibly nervous that we will implode in a wave of accounting scandals," wrote the vice president, adding that Enron’s climb to the top was "nothing but an elaborate accounting hoax."

Dummy corporations and "partnerships" were set up, with each using the other's stock as "collateral" to secure more loans. Enron used expectations of future earnings to secure even more capital for expansion. The deceitful claims of profitability drove Enron stocks higher and higher. Watkins told Lay her theory of why Enron CEO Andrew Skilling suddenly resigned: Skilling "looked down the road and knew this was unfixable and would rather abandon ship now than resign in shame in two years."

Lay’s only response to this letter—and other similar warnings— was to unload his Enron stock as quickly as possible.

The systematic nature of this gigantic swindle is coming home with a vengeance, the vile double standard in which the rich are protected while the vast majority of working people are fleeced. This week, two Enron workers in Portland, Oregon, employees of Portland General Electric, wholly owned by Enron, spoke out on the company and its close ties to Bush. They are members of IBEW Local 125, which has filed a lawsuit on behalf of the 1,000 PGE workers who lost millions in the collapse of their Enron 401(k) accounts. Donald Eri told me:

PGE worker, Al Kaseweter, told me his Enron 401(k) account was worth 350,000 dollars a few months ago. Now it is worth 20,000 dollars. He scorned George W Bush’s deceitful attempts to distance himself from Enron. Bush’s father served on the Enron Board of Directors. "Their hands are dirty," he said. Like all other Enron workers, Kaseweter was not permitted to sell his Enron stocks as they began to decline in value. But Lay and 29 other top Enron executives, unloaded 1.1 billion dollars in Enron stocks in their portfolios before the collapse.

"This was insider trading," Kaseweter charged. "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."

(To be continued)

Tim Wheeler is editor of the CPUSA organ, Peoples’ Weekly World