The Enron
Debacle
http://www.enron.com/
http://www.chron.com/news/specials/enron/
http://en.wikipedia.org/wiki/Enron
http://www.time.com/time/2002/enron/
http://www.lewrockwell.com/rajiva/rajiva9.html
http://www.dissidentvoice.org/Apr07/Rajiva03.htm
When people discuss the morality of government
intervention in the affairs of private businesses, there are those who feel that
the government is derelict in its duty if it doesn't regulate and inspect
virtually everything. Others suggest that the needs of society are best
served by businesses made productive by the absence or near absence of all state
control. Beyond the federal government's questionable constitutional
authority to regulate as much as it does, those of us who advocate little or no
regulation point to the history of more powerful businesses making use of the
government as a tool to eliminate their less powerful competitors.
The national firm can afford an army of lawyers to do all
of the things and file all of the reports necessary to be in compliance with the
most complicated regulations. The national firm can afford a battalion of lobbyists
to make sure that the regulations are really complex, while favoring those
things which the firm does best, and wherein it may hold exclusive patent
rights. The large firm may actually have some of its employees on the working
committees that actually hammer out the regulations for congressional or agency
approval.
The “Mom & Pop” business owners don't
sleep well at night if they have to talk to a lawyer, and may be ruined by his
fees. If they know what a lobbyist is, suffice it to say that they have
none in their employ. “Mom & Pop” work long hours, six
days a week and keep the books after church on Sunday—in the unlikely event
that they were invited to the working committee, there is no time left in the
day, and no budget for travel and lodging expenses. The mid-sized business
is in scarcely better a position.
The quintessential example of big business using
government to fight little business may very well be the Enron
debacle. In his day, Ken Lay and his executives were on every possible
committee, wined and dined everyone
of importance, contributed
mightily to their political campaigns.
The Kyoto
Protocol may well be the boldest attempt in history to control the economies
of the world, based on the politically correct presumption that the temperature
of the earth is rising, that the increase will be harmful, and, most
importantly, that the rise in temperature is being caused by human activities
which cause the emission of “greenhouse gases.” Although based on questionable
science, the protocol would cause planetary economic disruption.
In his Politically
Incorrect Guide to Global Warming and Environmentalism,
(p. 194-199) Christopher C. Horner gives us his eyewitness account of how
Enron was scheming to squeeze out competing energy firms:
The media were right about Enron's
ethics, but they missed the best examples of the company's
unscrupulousness. It is quite possible that the most emblematic among
them were Enron's Kyoto games. At all levels the company would lobby and
connive with green groups and like-minded Big Businesses to put power-hungry
America on an energy diet through the Kyoto Protocol or legislation to the
same effect. Meanwhile the company steadily bought up businesses to
provide those renewable energy sources that Kyoto would force-feed on the
population of the developed world....
Don't forget the billions to be made
when demand soars for Enron's gas pipelines—a network that at the time was
second only to Russia's Gazprom—once coal was regulated out of business
(talk about conspiring to drive up prices on consumers). Add to this the
emissions-credit trading scheme Enron planned to exploit for billions more—just
like the scheme currently siphoning off hundreds of millions of dollars from
Europe's energy consumers with no environmental benefit—building on their
success playing bookie to an earlier cap-and-trade scheme in emissions credits
of sulfur dioxide (an actual pollutant). Top it off with Enron's
building (with U.S. subsidies, of course) coal fired plants in poor countries
not covered by Kyoto's restrictions—plants that would no longer have to
compete so much with Europe for their coal.
Horner gives a list of meetings between
Ken Lay and other high Enron executives, and the President of the United States
and other officials of the Department of Energy, the State Department, end the
EPA (pp. 196-198). He concludes:
All of this is by way of illustrating
that the debate is not greens vs. business, but quite often greens and
business vs. consumers and the economy. A common refrain in
environmental discussions is “even XYZ big business is ‘responsible’
on this issue.” When you hear this, do the reporter's work and ask the
question that in this context seems to be so uncomfortable: Cui bono?
For whose advantage? How, at whose expense, and what has this to do with
being responsible? Usually you will find the “even” is
pure puffery to confuse an otherwise transparent example of rent-seeking.
As
mentioned earlier, reporters generally have no interest in asking such
questions that simply do not fit the story template. One Washington
Post reporter even responded to me that well, huh, maybe Enron wasn't
all that bad after all when informed of Enron's Kyoto shenanigans.
Whether this says more about the state of journalism or business today I leave
to you.
Enron was
protected from
government regulation by something called the “Enron
loophole,” which exempted energy speculators trading electronically
electronically from US regulation. The “loophole” wasn't
closed
until more than two years after the Enron bankruptcy.
Very likely, Enron's accountants
believed that the firm was “protected”; that government regulators would
look the other way if the debits and the credits would up on the wrong side of
the ledger. Many of Enron's debts and the losses that it suffered went
unreported on the company's books, so as to make the company seem more valuable
to investors.. Only toward the end did accountants shred the
books. Arthur Andersen went out of business as an accounting firm, loosing
its CPA licenses and the right to audit firms governed under the rules of the
Securities Exchange Commission
Even after Enron went “belly up,” and thousands of employees
and stockholders were left “holding the bag,” and Lay was headed to
prison for his activities, his untimely funeral
was attended by a former President of the United States, his First Lady, and his
Secretary of State. According to MSNBC,
“Enron’s demise wiped out thousands of jobs, more than $60 billion in market
value and more than $2 billion in pension plans,” and the 5th U.S. Circuit
Court of Appeals and the Supreme Court have ruled against investors suing the
investment banks deemed responsible. But beyond the fortunes lost, it is
impossible to calculate the moral cost of all this: the lives ruined, the
reputations besmirched, the officials corrupted, the smaller businesses
destroyed.
