|Subj:||Enron: not the only bad apple|
|Date:||2/2/02 4:32:53 PM Pacific Standard Time|
|From: APFN@apfn.org (American Patriot Friends
To: firstname.lastname@example.org (APFN Yahoogroups)
Enron: not the only bad apple
Guardian (London) Special Report
Friday, February 1, 2002
by Greg Palast - email@example.com
I guess I'm not a nice guy. But when I heard that
Enron's former vice-chairman Cliff Baxter had shunted
his mortal coil, I shed no tears.
One tabloid even called Baxter a "hero" who
courageously raised the alarm about his company's
Maybe I'm missing something here, but this is the
Baxter who last year quietly crawled out of Enron like
a cockroach from a rotting log - then dumped his
stock on unsuspecting buyers, thereby pocketing a
reported $35m (£25m). You can just imagine Baxter
chuckling to himself in January last year as Enron's
office staff gathered their pennies for his retirement
gift while he's thinking, "So long, suckers!" - knowing
they are about to lose their jobs and life savings.
There have been a lot of misplaced tears in the Affair
Enron. The employees were shafted, no doubt about
it. But the shareholders?
I didn't hear any of them moan when Enron stock shot
up through the roof when the company, joined by a
half dozen other power pirates, manipulated,
monopolised and muscled the California electricity
market a year ago.
All together, Enron and half a dozen others skinned
purchasers for more than $12bn in excess charges.
That's the calculation of Calfornia's utility watchdog as
presented to federal regulators in a damning petition
Here's an example of how Enron's po' widdle
stockholders, hero Baxter and chairman Ken Lay
made their loot.
Soon after California dumbly deregulated its power
markets, Enron sold 500 megawatts of power to the
state for delivery over a 15-megawatt line. Very cute,
that: the company knew darn well the juice couldn't
make it over the line, causing panic in the state -
customers would then pay 10 times the normal cost to
keep the lights on and traders could cash in.
The federal regulator caught that one. Within weeks of
taking office, George Bush demoted the troublesome
official. Lay boasted to one candidate expected to
replace the sacked regulator that President Bush had
given Enron veto over the government appointment.
Nor did Enron's stockholders object to their profitable
business of trading politicians like bags of sugar. From
Texas to Argentina to Britain, Enron used legal but
sick-making use of political donations, consultancies
and lobbying to twist contracts, rules and regulations
to their liking.
You want to cry for a power industry exec who came
to an early, violent, end? Then let me suggest to you
Jake Horton, late senior vice-president of Gulf power,
a subsidiary of Southern Company. (Southern is one
of Enron's cohort in that fixed casino called the US
Horton apparently knew about some of his company's
less-than-kosher accounting practices; and he had no
doubt about its illegal campaign contributions to
Florida politicans - he'd made the payments himself.
But unlike Baxter, who took the money and ran, in
April 1989, Horton decided to blow the whistle,
confront his bosses and go to state officials.
He demanded and received use of the company's jet
to go and confront Southern's board of directors. Ten
minutes after take-off, the jet exploded.
While the investigation into the plane crash was
inconclusive, the company's CEO believed his death
was suicide. He told the BBC: "I guess poor Jake saw
no other way out."
Ultimately, Southern pleaded guilty to the charges
related to the illegal payments.
Jake and Baxter are the beginning and end of the
story of deregulation. I was part of a team
investigating Southern's finances after Jake's plane
went down, just after a grand jury voted to charge his
company with criminal racketeering for manipulating
Millions of dollars were charged to customers of
Southern's subsidiary, Georgia Power, for spare parts
that were not used.
The internal revenue service recommended
indictment, but George Bush Sr's justice department
put the kibosh on the prosecution (their legal
prerogative) - in great part because the fancy
financials had been blessed by the company's auditor:
The company denied any wrongdoing.
But while Southern Company didn't face criminal
charges, regulators ordered it to pay back millions to
And that's the big connection to Enron. Because it was
in those years of investigation that Southern Company
led the fight to "deregulate" the power industry.
Rather than conform to the rules, they lobbied to get
rid of the rules.
Southern and its buddies in the power industry were
successful beyond imagination. Industry lobbyists and
lawyers eviscerated America's Public Utilities Holding
Company's Act, and made mincemeat of the rules
which once barred power companies from making
donations to political campaigns.
Crucially, in the newly deregulated power markets,
the companies were relieved of the requirement to
follow the strict government-designed Uniform System
Enron, founded in 1986, was the Rosemary's Baby of
this satanic coupling of free-market ideological hoodoo
and electricity industry greed.
Enron played it faster and looser than the others, but
it is wrong and dangerous to say Enron was one bad
It's the whole wormy tree of public services
deregulation mania which is rotten, root and branch.
More information on this topic can be found in Greg's
latest books, The Best Democracy Money Can Buy
and Democracy and Regulation, both of which will be
published in April
Greg Palast is an investigative journalist who writes a
column called "Inside Corporate America" for the
Observer, Britain's most respected Sunday
newspaper. View all of Greg's columns at
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