It is expected for me, the columnist, to present you, the reader, with a situation that I either strongly disapprove of or strongly approve of (usually the former) and then tell you why it is that I approve or disapprove. If I disapprove, I then usually suggest what, if anything, can be done to improve the situation.
This week, it's not so cut and dry.
Something huge took place last week in the business world, the political implications of which have yet to be fully understood. For those of you who don't watch CNBC or read the business pages, Enron, number seven on last year's Fortune 500, went bankrupt last weekend. Its stock went from a 52-week high of over $84 a share to less than a quarter (it has since bounced back to $1.01 as of the close of business Wednesday).
Enron is a Texas-based company that owns energy pipelines and trades energy and other commodities from electricity to Internet bandwidth. For the last few years, the company was lauded as the Next Big Thing, a successful business model to be emulated. However, the financial situation at Enron was not nearly as good as the wide-eyed commentators suggested. Although details are still sketchy and are likely to be completely fleshed out only after years of litigation, it has come to light that Enron was shifting losing ventures off of its books and over to offshore "partnerships" where they would not hurt the bottom line.
Arthur Anderson, as Enron's accounting firm, looked at the books and assured investors that Enron's financial statements were an accurate representation of the company's financial situation. In a relationship that is common, although it raises eyebrows, Arthur Anderson also did management consulting for Enron and quite possibly set up some of the shenanigans that now have Enron in such hot water.
People have called Enron's practices a Ponzi scheme. Class action lawsuits are forming. Thousands of retirement nest eggs of people who invested money in Enron are now nearly worthless. Worst of all, Enron employees, the vast majority of whom could have had no idea that the books were being cooked, were "locked" into Enron stock as it slid, under the pretense that the company was changing 401K fund managers.
Why, you may ask, do I care? What makes us left and them wrong? Well, take a guess as to the political orientation of a company that deals in energy and is from Texas. Enron and its executives gave more money to political campaigns in 2000 then did any other energy company. Since 1993, Enron and its executives have given nearly $2 million to George W. Bush for his various campaigns. Chief economic advisor and member of Bush's energy task force Lawrence Lindsay served on an advisory board for Enron, for which he received $50,000. According to The New York Times, Karl Rove, another Bush administration bigwig, owned $68,000 worth of Enron stock when he spoke to Enron chairman Kenneth Lay about a prospective appointee to a commission that regulates part of Enron's business.
So, what does $2 million and a few cushy jobs buy you in the Bush administration? Think back to that energy task force I mentioned earlier. This task force was formed in response to the "Energy Crisis" earlier this year (do you remember when it was predicted that gasoline would cost $2.50 a gallon?). As should be expected from an entity that is chaired by the former chairman of Halliburton (Vice President Dick Cheney), it called for drilling in the Arctic National Wildlife Refuge, increased strip-mining of coal and greater use of nuclear power. This was back when Cheney said that conservation of energy was simply a matter of "personal virtue" and nothing more.
Apparently, the task force invited people to meet with them as they were formulating their final report. Who got an audience with Dick and pals? Nobody knows, since the administration claims that it's none of the public's business, although it was done in public buildings with public opinions, quite likely while noshing on taxpayer-funded coffee and donuts. Environmental groups say that they weren't invited (big surprise there), so it is generally assumed that in crafting their report, the only people who had the task force's ear were people who represented energy producers.
The secrecy surrounding the list of people who met with the task force is so unprecedented and ridiculous that the General Accounting Office, Congress' investigative arm, has been considering suing the Bush White House since before Enron collapsed. Since someone with Enron was probably called before the task force and since Enron's financial statements misrepresented the promise of its commodity trading model, could it be that not only was the Bush energy plan a greedy attempt to steer resources toward energy producers, but was also based on bad data?
So far, the GAO hasn't gone to court and the entire extent of Enron's mess (as well as who is responsible) has yet to be unfolded. It is too early to assign blame, but Congress is beginning to investigate the extent that deregulation brought about by Enron contributions could have made things worse.
As this story develops, remember Deep Throat's immortal words: "Follow the money.
Please note All comments are eligible for publication in The News-Letter.