Enron Conservatives

By Borosage, Robert L. | The Nation, February 4, 2002 | Go to article overview

Enron Conservatives


Borosage, Robert L., The Nation


Concerned about potential taint from the metastasizing Enron scandal, George W. Bush met with reporters recently to distance himself from Enron's chairman, Ken Lay (nicknamed "Kenny Boy" by W. before the scandal). It is testament to how indelible that taint may become that Bush found it necessary to lie about his friend. He claimed that Lay supported Ann Richards in 1994 when Bush ran for governor of Texas and that he only got to know him later. In fact, Lay was a leading contributor to Papa Bush's re-election run in 1992, and by his own account was "very close to George W." Enron's PAC and executives pumped $146,500 into W.'s 1994 race (while Richards received all of $12,500 from Enron sources). Bush "was in bed with Enron before he ever held a political office," reports Craig McDonald, director of Texans for Public Justice.

W. has good reasons for trying to minimize his relationship with Lay and Enron in the dying days of his father's presidency. After Clinton's 1992 victory, Enron pushed hard to exempt its energy futures contracts from regulatory oversight before the new Administration took office. The lame-duck chairwoman of Bush's Commodity Futures Trading Commission, Wendy Gramm, wife of Texas Republican Senator Phil Gramm, brought the exemption to a final vote on January 14, 1993, six days before Clinton took office. Enron, a leading contributor to Phil Gramm's campaign coffers, then named Wendy Gramm to its board of directors, where she pocketed about $1 million in payments and stock benefits over the next nine years. She served on the company's audit committee and helpfully turned a blind eye to the shady private partnerships Enron set up off the books to hide debt and mislead investors. In 2000, as the Supreme Court was naming Bush President, Senator Phil Gramm slipped a bill exempting energy trading from regulation into Clinton's omnibus appropriations act, avoiding hearings, floor debate and notice. Enron was all set to operate in the dark.

What is the Enron saga about? Enron's bankruptcy, the largest in history, exposes the decay of corporate accountability in the new Gilded Age. No-account accountants, see-no-evil stock analysts, subservient "independent" board members, gelded regulators, purchased politicians--every supposed check on executive plunder and piracy has been shredded. Enron transformed itself from a gas pipeline company to an unregulated financial investment house willing and able to buy and sell anything--energy futures, weather changes, bandwidth, state legislatures, regulators, senators, even Presidents.

It is Enron's rise that lays bare the hypocrisy of modern conservatives--call them Enron conservatives. Enron conservatives fly the flag of free markets but actually use political and financial clout to free themselves from accountability, rig the market and then use their position to ravage consumers, investors and employees. These are not the small-is-beautiful compassionate conservatives George Bush advertised in the election campaign, or the tory conservatives who protect flag, family and honor. Enron conservatives make the rules to benefit themselves. "They have clout and the ability to get the rules written their way," said Stephen Naeve, chief financial officer for Houston Industries, Inc. about Enron in 1997. "They play with sharp elbows."

Ken Lay learned about regulation while working at the Federal Energy Regulatory Commission (FERC). After he created Enron, he lavished millions on lobbyists and campaign contributions to free Enron from regulation and to push energy deregulation. His lobbyist stable has included James Baker, Bush I's Secretary of State; Jack Quinn and Mack McLarty of the Clinton White House; and Marc Racicot, current head of the Republican Party.

Enron's lobbyists played a large role in California deregulation--setting the state up for a hit. Most experts believe that Enron, controlling about a quarter of wholesale trading in electricity with no regulatory oversight, was central to the market gaming that led to last year's "energy crisis," which cost Californians about $50 billion. …

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