Was it the result of Over-Confidence or a
understood that business is not just about numbers and the balance sheet:
it's about your brand, and the confidence you inspire."
- Chuck Watson, Dynegy
by Judith Haney
USNEWSLINK/December 13, 2001
The decline of Enron Corporation, formed in July 1985 as
a result of the merger of Houston Natural Gas and InterNorth of Omaha, Nebraska, is not
just another over-hyped story about entrepreneurial intentions gone bad.
The rise and fall of Enron is unique
to corporate America. Corporations rise and fall with the economic tides. Stockholders
lose money. But there is something different and compelling about Enron's story.
What renders the Enron story
irresistible reading is the manner in which the corporation's leaders regularly and
flagrantly bought and wielded political power and influence within the United States
government and the Texas state government.
And, of equal interest is what Enron
is doing now, post Chapter 11 petition, to avoid liability for its acts of harm to its
stockholders and former employees.
The watchful observer can gain clear
insight into Enron's well established reputation for unethical business standards and
practices by simply following the attendant lawsuits filed against it subsequent to its
filing a Chapter 11 petition for bankruptcy protection from its creditors and
In retrospect Enron's collapse should
and could have been predicted. The grandiose schemes conjured up by ambitious executives
and offered up to powerbrokers and politicians should have alerted mature observers to the
fact that Enron would need unprecedented amounts of capital to fund its proposed
acquisitions and fast-track expansion across the globe.
But as ridiculous and unrealistic as
its premature vision of global expansion was in lieu of having no cash to make it happen,
Enron executives were able to dodge and weave their way, undetected, into a position of
political influence among government officials by painting a less than honest picture of
Enron's capital resources and its available cash to fund growth. To sum it up, at a
certain juncture in Enron's history, a high profile confidence game was launched using
billions and billions of dollars belonging to Enron stockholders.
Those who needed Enron's money
bought, or pretended to buy, the story. Politicians hungry for donations to pay off
campaign debts wanted to believe Enron's plans for global expansion and Enron's vision of
breaking up smaller companies with grandiose merger schemes that never came to fruition.
Politicians on both sides of the isle
became so dependant upon Enron's cash to fund their campaigns that they were hamstrung to
stop the Enron train from careening out of control. At a certain point in mid-2000, those
in the Enron inner circle, like former Texas Senator Phil Gramm's wife, who is a current
Enron board member, simply stood by and watched the precarious dealings unfold.
It is no secret that between Jan.
1999 and Jan. 2001, George W. Bush, #43, depended heavily upon Kenneth L. Lay, Enron's
Chairman and CEO, for soft and hard money donations to his campaign for President.
Lay, as a member of Bush's elite group of fundraisers, the "Pioneers", was
expected to keep campaign coffers full. He did so in spades, raising an unprecedented
amount of campaign dollars on behalf of Bush within a short span of a year and a half.
The following is an excerpt from a
1999 biography of Kenneth
Lay, Chair & CEO, Enron Corp, whose 1999 salary & perks amounted to $42.4
"The $550,025 that the Enron Corp. gave Bush over the years makes it his No. 1 career
patron, according to the Center for Public Integrity. Virtually every
of Enrons operations is overseen by the federal government, a 96 Dallas
Morning News story noted.
Not surprisingly, this global natural
gas giant and its top executive are big political contributors who keep revolving doors
whirling. Lay hired President Bushs cabinet members James Baker and Robert Mosbacher
as they left office.
After President Bushs 93
Gulf War victory tour of Kuwait, Baker and other members of his entourage stayed on to
hustle Enron contracts.
The Clinton administration also
threatened to cut Mozambiques aid in 95 if the worlds poorest country
awarded a pipeline contract to a different company.
Enron got Bush to contact Texas
congressional delegation in 97 to promote a corporate welfare program in which U.S.
taxpayers finance political risk insurance for the foreign operations of corporations such
Enron plants around
Houstonwhich surpassed LA for the title to the nations worst airare
grandfathered air polluters that exploit a loophole in state law to avoid
installing modern pollution-control technologies.
Earlier this year the Houston Astros
inaugurated their new Enron Field, which was financed with $180 million in public tax
dollars and $100 million from Enron. In return, Enron landed tax breaks and a $200 million
contract to power the stadium.
Topping Enrons political wish
list in Texas was deregulation of the states electrical markets. Bush signed this
dream into law in 99."
Enron's relationship to Bush save it from further exposure to investigations and potential
Maybe. Consider this:
Enron has timed its filing for Chapter 11 bankruptcy protection precisely at a time when
it has in place a formidable defense team, i.e., the politically powerful
Cutler, who has family connections to the SEC's Enforcement Director as of
10/29/2001, one Stephen Cutler, (Cutler Named
SEC's Enforcement Director) who is a former partner in Lloyd Cutler's firm of Wilmer, Cutler &
Simultaneously with the appointment
of Stephen Cutler to the top enforcement position at the SEC, was the announcement of the
SEC's new policy that the commission may not take enforcement action against a
company it investigates -- if the company cooperates fully with the authorities.
Is it a mere coincidence that the SEC
has adopted its no-prosecution policy precisely at the time that Enron collapses, or that
Stephen Cutler is elevated to the position of Enforcement Director of the SEC a month
before Enron collapses? It is more likely part of a larger Bush administration plan to
protect Enron executives and board members from prosecution and financial ruin.
In lieu of these circumstances, it is
doubtful that an ongoing investigation by the SEC will yield meaningful results or
indictments of Enron and/or its various corporate leaders.
Ruling out the SEC taking remedial
action, stockholders victimized by the doings of Enron can next look to the pending
private lawsuits and pending congressional investigations to ferret out the truth about
what went wrong inside Enron. And this process will take years. Certainly long enough for
Enron to be dissolved and its assets distributed to its various debt-holders.
Notwithstanding the SEC's new flaccid
policy of not prosecuting violators and offending corporations, certain facts appear to
support the conclusion that various oversight roles were unexplainably ignored by Arthur
Anderson, the accounting firm responsible for auditing Enron's various subsidiaries; and,
Enron's past and present board of directors; and, its past and present corporate
executives, all of whom bore a fiduciary responsibility for identifying and remediating
areas of potential loss to Enron's stockholders. That all backup systems failed in concert
induces speculation of a conspiracy and cover-up of wrongdoing by those involved in the
company's operations. This theory is supported by Chuck Watson, CEO of Dynegy Corporation.
Watson pulled the plug on a cash infusing deal with Enron following
Enron's filing its 10-Q form with the SEC on 11/19/2001, which disclosed previously
undisclosed financial facts concerning the deteriorating condition of the company. During
its negotiations with Dynegy, Enron failed to disclose the company's real condition,
preferring to supply fraudulent financial statements and inflated values of assets to
Upon discovering the
real facts, Watson pulled out of the deal with Enron, but too late to recover Dynegy's
$1.5 Billion Dollars advanced to Enron mid-way through the negotiations.
In an effort to point
attention away from the company's questionable doings, and re-route adverse public opinion
toward an unwitting scapegoat, Enron filed suit against Dynegy, on the same day it filed
Chapter 11, claiming breach of contract. Meanwhile Enron has kept Dynegy's $1.5 Billion
Dollars AND the Northern Natural Gas Company.
circumstances surrounding Enron's desperate wooing of Dynegy in the 11th hour of its
financial collapse, coupled with its failure to disclose its true financial condition,
points to a conspiracy by and between desperate Enron executives charged with overseeing
the operation. These executives were in possession of evidence that the formidable Enron
ship was sinking and sinking fast but they hid it from Charles Watson and grabbed Dynegy's
$1.5 Billion Dollars like bandits in the night. According to Watson, within three weeks of
receiving the $1.5 Billion Dollars, Enron executives were unable to account for the
money's whereabouts or how the money was spent.
But, no matter how the case(s)
against Enron turns out, the truth will ultimately emerge. And when it does, the future(s)
of high profile political leaders who have thus far been untouchable in their associations
with Enron "could" be swept away by the same tide that swept away Enron.
And, henceforth and forever more, no
amount of Enron money will buy back Enron's prior position of global influence and prevent
ambitious politicians from distancing themselves from its high profile confidence games.
And then what will Enron have to show for its grandiose dealings? Only a trail of victims
left in the dust of illusions of power and dreams of global domination. What a waste of
political influence that was.
Traders Caught On Tape
When a forest fire shut down a major
transmission line into California, cutting power supplies and raising prices, Enron energy
traders celebrated, CBS News Correspondent Vince
"Burn, baby, burn. That's a beautiful thing," a trader sang about the massive
Four years after California's disastrous experiment with energy deregulation, Enron energy
traders can be heard on audiotapes obtained by CBS News gloating and praising each other
as they helped bring on, and cash-in on, the Western power crisis.
"He just f---s California,"
says one Enron employee. "He steals money from California to
the tune of about a million."
"Will you rephrase that?" asks a second employee.
"OK, he, um, he arbitrages the California market to the tune of a million bucks or
two a day," replies the first.
The tapes, from Enron's West Coast trading desk, also confirm what CBS reported years ago: that in secret deals with
power producers, traders deliberately drove up prices by ordering power plants shut down.
"If you took down the steamer, how long would it take to get it back up?" an
Enron worker is heard saying.
"Oh, it's not something you want to just be turning on and off every hour. Let's put
it that way," another says.
"Well, why don't you just go ahead and shut her down."
Officials with the Snohomish Public Utility District near Seattle
received the tapes from the Justice Department.
"This is the evidence we've all been waiting for. This proves they manipulated the
market," said Eric Christensen, a spokesman for the utility.
That utility, like many others, is trying to get its money back from Enron.
"They're f------g taking all the money back from you guys?" complains an Enron
employee on the tapes. "All the money you guys stole from those poor grandmothers in California?"
"Yeah, grandma Millie, man"
"Yeah, now she wants her f------g money back for all the power you've charged right
up, jammed right up her a------ for f------g $250 a megawatt hour."
And the tapes appear to link top Enron officials Ken Lay and Jeffrey Skilling to schemes
that fueled the crisis.
"Government Affairs has to prove how valuable it is to Ken Lay and Jeff
Skilling," says one trader.
"Do you know when you started over-scheduling load and making buckets of money on
Before the 2000 election, Enron employees pondered the possibilities of a Bush win.
"It'd be great. I'd love to see Ken Lay Secretary of Energy," says one Enron
That didn't happen, but they were sure President Bush would fight any limits on sky-high
"When this election comes Bush will f------g whack this s--t, man. He won't play this
Crude, but true.
"We will not take any action that makes California's
problems worse and that's why I oppose price caps," said Mr. Bush on May
Both the Justice Department and Enron tried to prevent the release of these tapes. Enron's
lawyers argued they merely prove "that people at Enron sometimes talked like Barnacle
Bill the Sailor."
The collapse of Enron: Timeline of events
Houston, We Have a Problem: More on the Enron Shakeup
Breaker: Enron Dumps CFO Amid Conflict Questions
Party Crashers? SEC Looking Into Possible Conflict on Interest at Enron
Names Beller New Corporate Finance Head
Amazing Disintegrating Firm
Official: Everyone Looking Into Enron Fiasco
S. FASTOW - ENRON CORP.
Washington-based Association for
Competitive Technology, confirmed it has been invited to file a friend of the
court brief on behalf of Microsoft. " Lloyd Cutler was a party to the brief on
behalf of Microsoft.
BACKGROUND ON ENRON: Enron, a
Houston, Texas-based wholesale power marketer, reported a third-quarter loss of $618-mil
Oct 16, and the US Securities and Exchange Commission subsequently announced an
investigation into Enron's dealings with two partnerships involving its ex-CFO Andrew
Fastow. In an announcement late Nov 9, Dynegy and Enron unveiled their $7.8-bil merger
agreement. Dynegy called off the merger Nov 28 after S&P's Enron rating eroded
confidence in Enron. Financially besieged Enron filed Dec 2 for Chapter 11 Bankruptcy Code
protection in the US.
Lawsuits filed in December, 2001, against
Enron and its corporate executives, by its former employees allege:
1. that the defendants issued false and misleading information that materially misstated
the companys condition and prospects to the investing public. Moreover, the suits
argue that the company failed to disclose material information necessary to make its prior
statements not misleading.
2. that Enron issued a series of statements
concerning its business, financial results, and operations which failed to disclose, among
3. that the company's Broadband Services Division
was experiencing declining demand for bandwidth, and the company's efforts to create a
trading market for bandwidth were not meeting with success, as many of the market
participants were not creditworthy.
4. that the company's operating results were
materially overstated, since Enron failed to write down in a timely fashion the value of
its investments with certain limited partnerships the partnerships that were
managed by Fastow.
5. that Enron failed to write down impaired assets
on a timely basis in accordance with GAAP.
SEC Commission File Number 1-12473 ENRON CAPITAL TRUST FORM 10-Q, November
12/3/01: Dynegy CEO Calls Enron Lawsuit "Frivolous and Disengenuous"
11/30/01: Dynegy Clarifies Northern Natural Gas Investment
11/28/01: Dynegy Terminates Merger With Enron
Information for Enron Alumni Affected by Chapter 11 Filing
Enron Chapter 11
ENRON ANNOUNCES INFORMATION REGARDING DIVIDEND PAYMENTS -12/11/2001
ENRON RECEIVES APPROVAL OF FIRST DAY ORDERS -12/03/2001
ENRON ARRANGES $1.5 BILLION OF DEBTOR-IN-POSSESSION FINANCING-12/03/2001
ENRON FILES VOLUNTARY PETITIONS FOR CHAPTER 11 REORGANIZATION; SUES DYNEGY
FOR BREACH OF CONTRACT, SEEKING DAMAGES OF AT LEAST $10 BILLION -12/02/2001
EOTT ENERGY PARTNERS, L.P. ANNOUNCES INTERIM CREDIT AGREEMENT -11/30/2001
NORTHERN BORDER PIPELINE COMPANY REASSURES STAKEHOLDERS REGARDING ENRON
NORTHERN BORDER PARTNERS REASSURES INVESTORS REGARDING ENRON EXPOSURE -11/29/2001
ENRON ANNOUNCES INFORMATION REGARDING DIVIDEND PAYMENTS -11/29/2001
ENRON ANNOUNCES NOTIFICATION BY DYNEGY OF MERGER TERMINATION; CREDIT
RATING DOWNGRADED; TAKES ACTION TO PRESERVE CORE FRANCHISE-11/28/2001
ENRON APPOINTS RAYMOND S. TROUBH TO BOARD-11/28/2001
ENRON ANNOUNCES PROGRESS IN EFFORTS TO BOOST LIQUIDITY; REAFFIRMS
COMMITMENT TO MERGER WITH DYNEGY; WORKING WITH MAJOR LENDERS TO RESTRUCTURE DEBT
ENRON FILES 10-Q WITH SEC; PROVIDES MORE INFORMATION ON -11/19/2001
Lies, damned lies, and Enron
|Enron is one of the world's leading
electricity, natural gas and communications companies. The company, with revenues of $40
billion in 1999 and $30 billion for the first six months of 2000, produces electricity and
natural gas, develops, constructs and operates energy facilities worldwide, delivers
physical commodities and financial and risk management services to customers around the
world, and is developing an intelligent network platform to facilitate online business. Fortune
magazine has named Enron "America's Most Innovative Company" for five
consecutive years, the top company for "Quality of Management" and the second
best company for "Employee Talent." In addition, Enron ranks in the top quarter
of Fortune's "Best 100 Companies to Work For in America." Enron's
Internet address is www.enron.com. The stock is traded under the ticker symbol ENE.
-- from an Enron press release, 4 October 2000
|"Enron paid no income taxes in four
of the last five years, using almost 900 subsidiaries in tax-haven countries and other
techniques, an analysis of its financial reports to shareholders shows. It was also
eligible for $382 million in tax refunds."
-- New York Times, 17 January 2002
This full-text search includes all
static pages on the PIR site, as well as 14 SEC reports from Enron (unfortunately, the
interesting material is already shredded). The first eight reports are split into two
because some search engines won't index large files.
1994 Enron DEF 14A [a]
1995 Enron DEF 14A [a]
1996 Enron DEF 14A [a]
1997 Enron DEF 14A [a]
1994 Enron DEF 14A [b]
1995 Enron DEF 14A [b]
1996 Enron DEF 14A [b]
1997 Enron DEF 14A [b]
1998 Enron DEF 14A [a]
1999 Enron DEF 14A [a]
2000 Enron DEF 14A [a]
2001 Enron DEF 14A [a]
1998 Enron DEF 14A [b]
1999 Enron DEF 14A [b]
2000 Enron DEF 14A [b]
2001 Enron DEF 14A [b]
Reports from Enron Oil & Gas,
1994 EnronOG DEF 14A
1995 EnronOG DEF 14A
1996 EnronOG DEF 14A
1997 EnronOG DEF 14A
1998 EnronOG DEF 14A
1999 EnronOG DEF 14A
Talking heads, wonks,
scribblers and wise men
Who got blood money from Enron in the war of words?
"Enron 'collected visible people' by
gathering up pundits, journalists and politicians and placing them on lucrative retainers.
For a couple days spent chatting about current events with executives at Enron's Houston
headquarters, advisers could walk away with five-figure payments."
-- Washington Post, 10 February 2002
Paul Krugman $50,000
Larry Kudlow $50,000
Lawrence Lindsay $50,000
Peggy Noonan over $25,000 for minor speechwriting
Irwin Stelzer $50,000
Robert Zoellick $50,000
This list below matches names from the above documents
(directors, some officers, and major shareholders) with names from NameBase. It appears
that unlike the BCCI scandal, there are no major spook connections with Enron. What we
have here, apparently, is an assortment of talented wheelin', dealin', cheatin' Texas oil
The absence of a spook connection is good
news. It means that Congressional investigators won't be derailed as easily as they were
with BCCI and Iran-Contra.
The names on the left are from the document, and the names on the right are matches, and
the number of pages cited, from NameBase.