Bill Press: Who's to blame for Enron?
By Bill Press
WASHINGTON (Tribune Media services) -- In the wake of every national calamity, we rush to point the finger of blame. Sometimes it's easy. Sometimes it's not.
After Sept. 11, it was easy to point to Osama bin Laden. He helped plan the attacks, he funded them, he trained the terrorists. He's the one responsible. Go get him.
After the collapse of Enron, it's not so easy. There were so many players, at so many levels. There does not seem to be any one person responsible. But there are many who share the blame.
First and foremost: Enron's top executives. With skill and daring, they created a highly successful company. Then, by diverting funds into phony investments and cashing in their own stock, they bled it to death -- all the while, assuring employees and investors their company was still sound.
On Aug. 14, 2001, for example, Chairman Kenneth Lay sent an e-mail to all employees, telling them the company had "never been stronger" and its future growth "has never been more certain." One week later, he promised "a significantly higher stock price."
What makes Lay's actions so reprehensible, if not criminal, is that while conning employees into holding onto company stock, Lay and others did just the opposite.
From October 1999 to November 2001, Lay sold a total 1.8 million shares for $101 million. President Lou Pai sold 5 million shares for $353 million. Altogether, 29 Enron officers pocketed $1.1 billion from selling Enron shares, while unsuspecting employees went broke.
What's the proper punishment for Ken Lay and fellow Enron executives?
Ohio's colorful congressman, James Traficant, comes close: "Here's the bottom line: the little guy in America gets the shaft and the people at the top seem to get the elevator and a big ride. They should be handcuffed to a chain-link fence, flogged and jailed."
Also responsible: The giant accounting firm of Arthur Andersen. In theory, companies can't get away with cooking their books because honest, independent accounting firms are looking over their shoulders, protecting the public. What happens when the accounting firms are in cahoots with company crooks? We just found out.
Last Oct. 12, four days before Enron reported a staggering loss of $618 million for the third quarter of 2001, one of Andersen's top lawyers sent out a memo ordering his staff to shred all Enron-related audit documents. There goes the evidence.
And this is not the first time Andersen was caught playing games. In May 2001, the SEC accused the firm of conspiring with Sunbeam Corp. to inflate profits. In June, it paid a fine for filing incorrect audits of Waste Management Corp. Three strikes and you're out. Arthur Andersen should be drummed out of business.
Next under fire: politicians of both parties who took Enron's money and did Enron's bidding. In the Senate, they include Republican Kay Bailey Hutchinson and Democrat Chuck Schumer. In the House, they include Republican Tom DeLay and Democrat Sheila Jackson Lee. By rights, politicians should return every penny of Enron's tainted money. If there were ever a compelling argument for campaign finance reform, this is it. Big time.
Final finger of blame: the Bush White House. No matter how hard he tries to distance himself from Enron, President Bush can't. The ties are too many and too close. Bush was the number one recipient of Enron's campaign largesse. He filled his administration with former Enron consultants, lawyers, advisers, officers and shareholders. And he provided Enron unprecedented access to the highest-levels of decision-making.
That, in the end, is why Enron is such a political problem for President Bush. It's not that he, or any member of his administration, is necessarily guilty of criminal conduct. Most likely, they're not.
It's because, while Bush enjoys high ratings for his war agenda, Enron illustrates what's wrong with his domestic agenda. As governor and president, he helped pave the way for Enron's rise and fall.
Time and time again, when Enron came calling, Bush delivered. On economic policy, Enron wanted complete deregulation with no government interference. They got it. On energy policy, Enron wanted no caps on electricity prices in California. They got it. On tax policy, Enron wanted elimination of the corporate alternative minimum tax. They got it. Enron was Bush's best friend. Bush was Enron's best friend -- and look what happened.
That's why the White House can't escape part of the blame for Enron. Enron is the poster child for the Bush economy.
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