no threads about white house and GOP links to Enron?!??

I am a financial analyst and the head of a Houston financial company and have spoken to Jeff Skilling and Andrew Fastow many times and attended analyst meetings with less than 20 people to discuss earnings, growth outlook and other business prospects and this is my opinion about the matter.

First of all, I don't believe Bush and others did anything wrong. If almost all senior management at Enron did not know about the "fuzzy" accounting and partnerships used to funnel debt off their balance sheet, do you honestly believe Bush ( aka the accounting/financial genius ) knew what was going on?
I myself relinquished a position in Enron in March and April of this year because of dificulty in understanding the web of financial mazes that comprise not only its debt, but how it counts future earnings in today's receivables. Also disheartening was their arrogance and vision that the broadband network was worth
" OVER 36 BILLION DOLLARS " - Jeff Skilling. I see Skilling and Fastow as the main architects behind the scheme's to hide debt to maintain a stronger balance sheet to have a subsequent higher rating by Moody's, Standard and Poor's etc of their debt.
Because much of their debt was tied to their rating and their liquidity, they manifested these partnerships to fuel Enron's growth by assuming the losses in India and the Broadband division would turn around. Simply stated, Ken Lay, I don't feel had the financial savvy to implement this scheme. I feel he found out later on and tried to rectify the situation, but was more guilty of not coming public earlier. Though he is the CEO and it is his responsibility to know what is happening, I feel he was in the dark for quite some time and when he realized what was happening had to make a decision much like the Captian of the Titanic to try to steer to the side essentially ripping the company apart. Because the strategy over the last decade has been to become a liquid, service-oriented company with little or no physical assets to decrease efficiency, this also led Enron to having few assets that could be sold off as a base to which Enron could not plunge below.

With Enron being the leader in the new deregulated energy markets, "THE" pioneer in the field, and 7th in the US in Revenues produced in 2000 (allegedly) of course the Energy Secretary and others will take personal calls from them. They were consulted when deciding Energy policy simply because they were the best. They created a model of efficiency that has been duplicated and will be a standard for deregulation for decades to come. Enron, Lay and others gave significant monetary donations to anyone from Texas, because of their roots and very similar to many large corporations. I see this as a Bi-partisan witch hunt more than anything. Many prominent people in Texas served on the board of these companies and especially with Bush's family background in the Texas/Houston Oil families.

I think more questionable is the Democrats receiving funds from China and military communication equipment going into the wrong hands....

 

What worries me is not the improprieties that may have occurred. The speculation, I think, will prove false. I think it's pretty obvious that Enron found out that campaign donations will only buy you access, not action.

What worries me is that Enron's executives might be able to manuever their way out of the appropriate punishment. Those bastards-- Skilling, Lay, the whole lot of them-- need to serve hard time in a federal pound-me-in-the-ass prison for what they've done to their employees' retirement savings.

I know, I know-- it's the investor's duty to be informed, and you're not supposed to put all your eggs in one basket. A lot of people claim this is a case study as to why those things are true. I disagree, because I don't think even the most informed investor (short of Enron's senior leadership) can be expected to know when laws are being broken and fraud is occurring behind the scenes.

If there were something like that going on at my place of employment, I'd be insulted to be told I "should have known". Bull****. I work for a huge company. I know as much about what we do as I can, but that requires me to take our reports as being true. If our financials were being reported fraudulently, I would have no way of knowing that.

Enron's leadership ruined the lives of thousands of employees. Imagine being 55 years old and having nothing saved up for retirement. Imagine having nothing because the arrogance and dishonesty of the people you work for.

I sympathize with those people. I want anyone who was culpable to ****ing swing.

By their balls.

 

Amen.

 

The criticism has been a little hard to follow-- it's been very inconsistent:

Did Enron contact the Bush Administration before declaring bankrupcty? Well, they shouldn't have had that kind of access, and shouldn't have been able to request special treatment. The administration shouldn't have allowed them contact.

If the administration did anything, it's unethical and probably illegal-- this is a scandal.

The administration took no action. Well, they should have done something to prevent the bankruptcy, and should have gone public and informed investors.

So we have a situation where the adminstration should not have had any contact or done anything for Enron, but also should have had intimate knowledge of Enron's troubles and taken corrective measures to prevent the bankruptcy.

Some of these people sound like anti-Clintonites pursuing Whitewater. Proof of Clinton's wrong-doing was provided by the very fact that nothing could be proven-- how suspicious!

Did anyone read the Fortune magazine article on Enron? I think it was in the December issue (I don't normally read Fortune, since I don't have one. I don't read Field and Stream or Penthouse, either). Very informative take.

 

RM95:

I guess I'll just have to assume that anything you post has no implications whatsoever, since what you write does not appear to ever match what you mean. I just take statements like "I'll give the administration the benefit of the doubt, until the special prosecuter's report comes out showing that Bush sodomized Lay with a cigar." as being a bit anti-Bush. It's kind of confusing when you say you'll give them the benefit of the doubt, and in the same sentence imply sodomy... Don't know why.

I guess I'll just have to assume from now on that you never imply anything. Opinions without implications seem a bit odd to me, but... Guess I'll give you the benefit of the doubt from now on, and just assume that your opinions don't actually mean anything.

 

By no means am I trying to absolve any of them of the Blame, it was only my opinion that the more deserving culprits were Skilling and Fastow.

Anderson has been playing their Auditor-Consulting games for way too long. If anyone remembers another company that had big inconsistencies and had to restate earnings was another Houston company, Waste Management that was audited by Anderson. Anderson paid close to $7 million dollars to the SEC for that debacle, yet obviously did not learn their lesson.

I believe you should treat upper level execs that commit crime, the way you would treat a convenient store robber. Actually they should be treated worse because they steal much, much more and steal from many people including employees, investors etc.

Throw them in Huntsville, those guys would love their cushy little a$$es in there.

 

<B>So we have a situation where the adminstration should not have had any contact or done anything for Enron, but also should have had intimate knowledge of Enron's troubles and taken corrective measures to prevent the bankruptcy. </B>

As far as everything we've learned <I>so far</I>, I don't think the administration did anything wrong. Enron, like all super-corporations, should be in contact with the administration, especially the Energy Dept in this case.

The question will come from whether the Administration knew about any of the <I>illegal</I> things going on there. To figure that out, we have to first figure out what illegal things occurred. After that, if they did know about illegal activities, there are two issues: One, did the Administration have an ethical (if not legal) responsibility to intervene (through the SEC or what-not). Two, did the Administration assist Enron in any way in their malpractice.

Those questions, however (in my opinion), should be handled by legal experts - cops, FBI, Justice Dept, etc -- not Congressional inquiries. The messed-up problem is that the Justice Dept has a bias, of course, as they did in the various Clinton scandals. That's why some are arguing for the independent "prosecutor" (which really should be an investigator).

My beef with the Clinton scandals was not that they were investigated -- they definitely should have been, or we'd never know if anyone did things wrong -- but that they were done so publicly and politically (for example, finding nothing done wrong in Whitewater by Clinton but accusing him anyway), and with accusations being made before the investigations even started in many instances. Get an independent investigator, investigate, and tell us if anything illegal occurred and what it is. That's all, though. No daily press briefings telling us incomplete stories and allegations, etc.

 

I'm sorry that you couldn't recognize a joke without the smilies (cursed smilies, the worst thing to happen to the BBS outside of me). I was simply referring to the Starr report that discussed such matters of national interest as Clinton using a cigar in a sexual manner. I simply used the term sodomy because, as far as I know, Kenneth Lay doesn't have a vagina (even though that may be something that comes out, I don't know). Looking back, I should've added a , a , a , or a period, new sentence.

Things that are posted by me, or anyone else, don't necessarily have to have an opinion on anything important. I simply found the U.S. News thing funny...I'd have thought the same thing had it been the other way around. There shouldn't be any implications to my opinion on the Enron scandal, especially since I stated I didn't really have one. The only opinion with any implications I may have shared is the one about the nature of the scandal and the public's reaction to it. Simply put, the American public would rather read or concern themselves with sexual misconduct than business misconduct that most of us (me included) probably aren't that familiar with. I'm sorry you took that to be anti-Bush, but just because I consider myself a liberal and a Democrat, not everything I post is anti-Bush.

 

A point that I have is that if a SENIOR Level Executive noticed improprioties in accounting and financial reporting in AUGUST,
how is the Bush administration supposed to know about it when many top executives didn't.

 

<B>A point that I have is that if a SENIOR Level Executive noticed improprioties in accounting and financial reporting in AUGUST,
how is the Bush administration supposed to know about it when many top executives didn't.</B>

First off, we don't know who knew what and when. Three days ago, we didn't know much of what we know today, and who knows what else we have yet to learn.

Second, Andersen had an internal memo in February discussing possible improprieties. While this is unrelated, it demonstrates there was at least some concern out there nearly a year in advance.

The Senior Executive memo in August was provided to Enron Senior Leadership (I'm not sure exactly who it went to). At that point, at least a portion of the leadership knew about it. Enron had senior level meetings & discussions with the Administration multiple times after that, up until 6 days before the December collapse -- there are 4 months there.

The point is that we don't know what happened. While there's no evidence of impropriety at this point, that doesn't mean it was not possible.

 

from what we know so far, the administration looks golden.

they were called by enron to bail them out of all this...the administration declined. if they had used their power to bail enron out, then we'd have a problem.

i am hearing conflicting reports of whether or not employees were actually "trapped" into their 401(k)'s.

 

I have heard that they were, but even if they weren't I think there's grounds for legal action if the loss of stock value was caused by willful negligence. I think people should be forced to bear the risk of stock's losing values due to market conditions or even bad management at the top. But when the stocks lose value due to willful fraud at the top there is clear liabilty in my mind. Course I'm not a lawyer so what the hell do I know...

 

it just seems like there's an entirely different culpability level evident if they were somehow "trapped" in their plans.

agreed, that if they knew what was going on and only worked to save their own butts, there's trouble ahead for them. i think that's likely unavoidable.

a friend of mine told me that those people who were "trapped" in were trapped only because of the procedural rules about being able to withdraw money within a certain period of time from when it was put in...or some administrative rule that applies across the board which only affected a handful of people there. i don't know.

 

You cannot exactly make the case that Democrats are just as vulnerable because, according to publicly filed campaign finance documents, since 1989, Enron (as a company) has given just under $6 million to political campaigns and 74% has gone to Republicans (according to OpenSecrets.org).

In addition, donations from individuals working for Enron (including Lay and Skilling) total over $2 million since 1989 with ONLY $175,699 of that going to democrats. That's only 9% of the total!!! Put together, the dems got just under 22% (or approximately $1.736 million since 1989) of the total funds Enron or its primary employees gave to political candidates or parties.

I know that, in Houston, Enron and its head people have been heavily involved in support of local political causes (including the arena last year), most of which are Republican races. The Harris County and State GOP leadership have been close buds with Lay and many others in and around Enron.

Many of these guys are friends. Bush Sr. is a friend of Lay's as is Bush Jr. No big shock. Now, whether or not the influence peddling that obviously happened here (it happens everywhere) had a direct impact on government remains to be seen. But, it does bear noting that it was only after high-level meetings with Lay and others from Enron that Cheney released his report on what should be done about energy in America and it was no surprise that conservation and alternate energy research was at the bottom of the list while more drilling for and selling of American energy products was highly recommended, which, of course, would heavily profit Enron.

 

A couple other things to note on Enron...

First, their influence over jobs was/is huge. One publicity person told me the other day that it was the first time she could remember that she was actually glad Enron WASN'T on her resume and that many of her friends would conveinently remove it from theirs.

Second, the amount of money Enron and its board members gave to political causes only represents a percentage of how much money individuals got as a result of their involvement. Lay and Enron influenced others to give their money (in HUGE numbers) and others, seeing the Enron donations, often matched so as not to be outdone.

Here's a bit from the New York Times about how Enron didn't pay any taxes for the past four years. This is one of the primary reasons I don't want to give any more tax breaks to corporations. They have enough as it is.

<i>Enron paid no taxes for 4 years
By DAVID CAY JOHNSTON
New York Times


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 from the Treasury.

The company used strategies common among businesses to avoid taxes. It also used some unusual methods -- including the creation of 881 subsidiaries abroad, including 692 in the Cayman Islands, 119 in the Turks and Caicos, 43 in Mauritius and eight in Bermuda.

Two Enron subsidiaries have been accused by a group of insurers of engaging in sham transactions in a tax haven, according to court papers in a New York lawsuit.

Enron is by no means alone in not paying income taxes. A small but growing percentage of large companies pay no income taxes, a study by Citizens for Tax Justice showed in October 2000. The study of half the Fortune 500 companies found that 24 owed no tax in 1998, up from 13 in 1997 and 16 in 1996.

While it is common for American companies to create subsidiaries in tax havens abroad, Enron had far more than most other companies, tax experts said.

Dynegy, a Houston competitor of Enron in the energy trading business, said on Wednesday that it had no subsidiaries in tax havens. In disclosure reports, Chevron lists three subsidiaries in tax havens and Exxon Mobil lists six.

The tax haven subsidiaries enabled Enron to create partnerships to eliminate taxes using techniques that came under attack from the Treasury Department and the Internal Revenue Service during the Clinton administration.

The basic technique involves having profits go to a partner not subject to American income taxes, such as a bank in a country that is a tax haven. The partner, after taking its fee, then returns the profits in a form that is recognized as not taxable by American law.

Enron avoided taxes for another big reason: deductions for stock options. When executives exercise stock options the company takes a deduction on its corporate income tax return equal to the profit realized by the executive, even though it is not required to show an expense on its profit-and-loss statement to shareholders. The benefits to the company can be great.

It is not clear from Enron's financial reports how much the tax haven operations reduced the company's taxes. But Enron did disclose that deduction for stock options alone turned what would have been a tax bill of $112 million in 2000 into a refund of $287 million.

Indeed, the company paid taxes in only one of the years between 1996 and 2000, while the government paid the company hundreds of millions of dollars in refunds.

The analysis of Enron's tax payments was performed by Citizens for Tax Justice.

Mark Palmer, an Enron spokesman, said on Wednesday that he was unable to comment on the tax issues.</i>