MORE ENRON MYTHS
Extra!! Extra!!
Elian Gonzalez is the new CEO of Enron!!!
Shark attacks in the Enron company pool!!
Tonya Harding is now in charge of Enron security!!
All of these things are obviously ridiculous. The fact of the matter is that almost everything surrounding Enron that has been reported to the public has been ridiculous. Here are three myths that we would like to clarify.
MYTH ONE:
Enron was one of the most devastating corporate bankruptcies in history.
Enron traded weather. Enron traded bandwidth. What really did Enron do? How does a company that contributes so little to our overall daily lives be devastating? The bottom line is that Enron did nothing of real importance. My lights didn’t flicker when the company went belly up. The sky did not fall and most of Enron’s former employees are finding work. The K-mart bankruptcy pains our economy a thousand times more than Enron. Enron was just a single part in one of the greatest Ponzi schemes ever played. That is what Enron will be remembered as, a scam, a hoax, a fraud, not a fallen captain of industry.
MYTH TWO:
The Bush administration was on the take with Enron.
Enron and it’s lobbyists including former Treasury secretary Robert Rubin tried to garner preferential treatment for Enron. What they got was the shaft. Enron did contribute money to the Bush Presidential campaign. However, they also contributed to Joe Lieberman and Shelia Jackson. There can be little doubt that Enron was trying to buy influence. The most interesting thing is where they bought it…
Bill Clinton (Were you expecting someone else?)
The Clinton administration provided more than $1 billion in subsidized loans to Enron projects overseas at a time when Enron was contributing nearly $2 million to Democratic causes.
Clinton officials refused to finance only one out of 20 projects proposed by the energy company between 1993 and 2000 to build power plants, natural-gas pipelines and other big-ticket energy facilities around the world, according to the Export-Import Bank and the Overseas Private Investment Corp., the agencies that provided the subsidies. In addition, the administration, which lauded Chairman Kenneth L. Lay as an exemplary “corporate citizen,” granted about $200 million worth of insurance against political risks for nine Enron projects in such politically volatile areas as Argentina, Venezuela and the Gaza Strip, according to documents the agencies provided to the Senate Finance Committee. The Reagan and Bush administrations approved no loans for Enron between 1985 and 1992 and provided insurance for only one Enron power project in Guatemala in 1992. The Clinton administration provided three loans between 1994 and 1998 to the now-defunct Dabhol power project in India. Mr. Clinton’s commerce secretary, Ron Brown, trumpeted the approval of the Dabhol loans on a trade mission to India in 1995, with Mr. Lay by his side.
The trip was one of 11 Clinton trade missions provided at taxpayer expense for corporate executives from Enron and other companies. The U.S. Trade and Development Agency, which sponsored the trips, also provided $1 million in funding to study Enron energy projects in Russia, Eastern Europe and former Soviet states.
Mr. Lay at times was Mr. Clinton’s golf partner and slept in the Lincoln Bedroom. Other top Enron officials attended the White House’s infamous “coffee klatches” with Mr. Clinton, according to published reports. Mr. Lay offered a seat on Enron’s board of directors to Robert E. Rubin, Mr. Clinton’s Treasury secretary, in 1999 just before he left government, the Associated Press reported. Mr. Rubin tried to get Treasury to intervene on behalf of Enron last fall when the company credit rating was threatened.
In May 1996, Mr. Clinton lauded Mr. Lay as a good “corporate citizen” at a White House event because of Enron’s enlightened personnel policies, including profit-sharing of Enron stock and generous health and pension benefits. Enron employees now are suing because those benefits are as worthless as the bankrupt company’s stock.
During the Clinton years, Enron contributed more than $1 million to the Democratic Party, including $600,000 to the Democratic National Committee, according to Federal Election Commission records. Mr. Clinton and Vice President Al Gore received contributions of $11,000 and $13,750, respectively, for their presidential campaigns.
One $100,000 contribution to the DNC was provided before India gave final approval to Enron’s Dabhol project in June 1996. The largest and most expensive capital project ever undertaken in India, Dabhol was of dubious economic value and never went on line.
The World Bank, on reviewing the project, said it was not economically viable and inordinately benefited Enron, which was a 65 percent owner. Enron still owes $203 million on an ExportImport Bank loan for the project, which the bank says is covered by guarantees provided by five Indian banks.
Congressional aides said it is not clear what the taxpayers’ liability will be for that and other loans now that Enron is bankrupt. The Export-Import Bank said its loans were extended to overseas subsidiaries of Enron and not the bankrupt corporation. The overseas investment agency said its exposure is limited to paying any missed premiums on Enron’s political risk insurance.
Top Clinton officials lobbied personally to obtain Indian state guarantees for the Dabhol project after it encountered early problems in 1995. Thomas F. “Mack” McLarty, the White House chief of staff, made it a top administration priority to keep the project from failing. The Bush administration has continued efforts to salvage the project.
Clinton Energy Secretary Hazel O’Leary led a succession of missions to India, and Mr. Clinton’s ambassador to India, Frank Wisner, was charged with keeping the project afloat. After Mr. Wisner left government in 1997, he took a seat on the board of directors of a company then controlled by Enron. Mr. McLarty also performed work for Enron after leaving the administration.
MYTH THREE:
The top Executives at Enron are completely responsible for the whole mess.
Ken Lay and Jeff Skilling are not good guys by any stretch of the imagination. However, they are not the roots of the problem. I would compare them to mid-level captains in a powerful mafia. The real “Godfathers” are the big investment banks that we all know and love. That’s right! CSFB, Merrill Lynch, Paine Webber, Smith Barney Wachovia and many more. They all made fortunes putting together the “Enrons” of the 1990’s. Without them there would not have been an Enron scandal or “Tech Wreck”. While investors lost trillions. The market value of more than 4,300 stocks listed on the NASDAQ went from $7.6 trillion on March 10th, 2000, to $2.4 trillion on April 6, 2001. Investors lost $5.2 trillion.
To put that into perspective…
In 13 months, more money was lost than in all the worst market crashes in world history. Half of the gross domestic product of the United States gone.
Where did it go?
Ask your favorite investment bank. They make money the old fashioned way, they steal it.
