Enron Metastasizes

Article excerpt

"Death Star," "Get Shorty," "Fat Boy"--the revelation of Enron's trading schemes in California have turned the Enron scandals virulent again. Just when the White House thought the disease was in remission and relegated to the business pages, the California scams exposed more of a still-metastasizing cancer of corporate corruption.

Internal Enron memos reveal that it and other companies preyed on California's energy crisis, helping to manufacture shortages and using sham trades to drive up prices. The somnambulant Federal Energy Regulatory Commission (FERC)--headed by Pat Wood III, "Kenny Boy" Lay's handpicked chairman--decided that its initial finding of no market manipulation in California was inoperable and opened a broader investigation. With stocks plummeting and lawsuits piling up, CEOs at Dynegy and CMS Energy resigned, as did heads of trading at Reliant Resources and CMS.

The Bush Administration was directly implicated as the White House's Enron stonewall began to collapse. A reluctant Joseph Lieberman, chairman of the Senate Governmental Affairs Committee, finally got sufficient spine to issue subpoenas, stimulating the White House to release more documents about its contacts with Enron. These showed that the White House had lied to House investigators when it reported only six contacts between Enron officials and the White House energy task force. The incomplete White House submissions now admit four times that number, with more surely to come.

Lay and the Enron executives were pressing Vice President Cheney not only to influence the President's energy policy but also to oppose price controls on electricity in California, even as they were gaming the market. Cheney and Bush responded to their leading contributor by publicly scorning price controls, while White House aides encouraged the energy industry to organize an ad campaign in California against controls. Cheney surely felt comfortable with Enron's shady side: As we recently learned, when he was CEO of Halliburton and its profits were declining, his accountants--the ubiquitous Arthur Andersen--suddenly started counting as revenue a portion of payments that were in dispute, without informing investors of the change.

The Administration has painted Enron as a business, not a political, scandal. Now it is apparent that the scandal is political and economic, showing the problems of a system with too little accountability and too much corporate influence both in the White House and on Capitol Hill. …