Enron: Setting the Stage for Scandal
Connor Williams
Last week, Ken Lay and Jeffrey Skilling stood in a Texas courtroom and found out that a jury held them both accountable for the collapse of Enron, once the seventh-largest corporation in the United States. But did Enron’s corrupt methods reach even higher than the board room? Lay and Skilling were the two highest-ranking active participants in Enron’s fraudulent business practices, but their ability to cultivate strong ties with and attain favorable treatment from lawmakers – no fewer than 52 members of the current Bush administration had ties to Enron – helped to create all the necessary conditions that led to what was, at the time, America’s largest bankruptcy.
In short, Lay and Skilling’s recent convictions may have offered closure to a particular chapter of Enron’s sordid history, but they should also raise anew a series of important questions about the nature of money and politics.
Enron’s ties to powerful government officials, especially both Presidents Bush, have been overshadowed by the gross malfeasance of Lay, Skilling, Andrew Fastow and others. But the corrosive effects of Enron’s incessant push for deregulation – and its repeated ability to ply lawmakers in order to make it happen – is something that cannot be overstated in terms of importance for setting the stage for the company’s ultimate collapse.
In 1992, the Commodity Futures Trading Commission under the first President Bush created an exemption to allow Enron to begin trading energy derivatives – in retrospect, a crucial step that opened the door to all sorts of “creative” dealings. That commission was chaired by Wendy Gramm, who later became an Enron company director. (Gramm’s husband is none other than former Sen. Phil Gramm.) Bush was also a recipient of Enron’s largesse, as was his son, who counted Enron as his largest corporate benefactor during his run for the presidency.
It was no coincidence that Ken Lay had discussions about energy policy with Vice President Dick Cheney.
A corporate interest using its close government ties to secure favorable treatment? Minus Enron’s accounting hijinks, this is exactly the heart of the still-developing House Lobbying Scandal – and it demonstrates why the convictions of Lay and Skilling do not close the book on the Enron chapter for good.
In the summer of 2002, when corporate accounting scandals were in full bloom, Congress rushed to pass the Sarbanes-Oxley corporate accountability bill, which President Bush signed into law. It remains one of the few pieces of truly progressive legislation passed under the Bush administration, and it stands as a reminder to what can be accomplished when public outrage is channeled effectively.
But while Sarbanes-Oxley introduced new measures to hold executives accountable, it was not designed to fundamentally alter the cozy relationships between corporate honchos and government officials. And four years later, a new rash of corruption shows just how little has changed: former Rep. Randy “Duke” Cunningham helped award tons of federal money to defense contractors who bribed him, and Rep. Jerry Lewis is reportedly under investigation for appropriations he earmarked for a close lobbyist friend. Other members of Congress are reportedly under investigation as well. The pattern is the same: Big money interests elbowing their way into government at the expense of everything and everyone else.
That’s not the only connection. The parallel lines between the Enron scandal and the current House Lobbying Scandal actually converge at the doorstep of none other than indicted Rep. Tom DeLay (R-TX). By now could anyone be surprised to learn that DeLay’s former chief of staff Edwin Buckham was a lobbyist for Enron? Buckham’s firm Alexander Strategy Group (shuttered in the wake of the Jack Abramoff scandal), received $430,000 for lobbying services from Enron from 1999-2001. Buckham in turn focused on the Northern Marianas Islands (are we sensing a pattern yet?), and pushed for energy deregulation there. DeLay himself – no stranger to putting corporate donations to use – received tens of thousands of dollars to both his campaign coffers and his PAC from Enron and its employees. In the golden age of corruption, these “coincidences” just seem to keep stacking up.
In Enron’s case, 5,600 jobs were lost and $2.1 billion in employee pensions disappeared. In the current state of corruption, public confidence in Congress is nearing an all-time low. Faith in our democratic institutions is crumbling, and yet, unlike with Sarbanes-Oxley, Congress this time deafly turned away from the budding outrage and passed differing versions of watered-down sham ethics reform that would once again do very little to alter the system.
To be fair, Enron’s crooked accounting practices aren’t directly linked to its close government ties, but it’s impossible to tell just how much the climate of arrogance and entitlement fostered by having friends in high places contributed to Enron’s financial hubris. While Enron should stand as an all-time reminder to executive wrongdoing, the underlying lesson about the dangers of a system that allows well-funded corporate interests to ply lawmakers to create the conditions necessary for such schemes to thrive should not be ignored. Unfortunately, Congress’ latest stab at lobbying reform suggests that they are doing just that.
Do you have any ideas for the AM Feed? Any stories or issues that you'd like to see highlighted? We'd love to hear your feedback. Drop us a line at afv@americanfamilyvoices.org.
— kooorobbk Apr 27, 07:04 #