| The Enron scandal and bankruptcy will lead to demands for more federal and global regulation of the financial markets, leading to increasing pressure for a global tax on currency transactions. |
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Enron Scandal Could Tar and Feather the Conservative Movement
Financial and other links by major conservative think tanks and personalities to the bankrupt Enron Corp. could badly hurt the conservative movement. It will cause a backlash to energy deregulation and cast aspersions on conservatives associated with the company.
Writing in The Nation magazine about the "Enron conservatives," Robert Borosage, a leading thinker on the left associated with Big Labor, contends that they "fly the flag of free markets but actually use political and financial clout to free themselves from accountability, rig the market and then use their position to ravage consumers, investors and employees. "
The irony is that these conservatives were duped by the "deregulation" rhetoric and that Enron was, in reality, a liberal-left "green" company working in close collaboration with the Clinton Administration toward adoption of the United Nations' global warming treaty. Enron saw the treaty as benefiting its business. It subsidized and was honored by environmentalist groups because it invested in solar and wind power. At the same time, Enron was pursuing development of Communist China's coal resources.
Nevertheless, Andrew Sullivan reports that Bill Kristol of The Weekly Standard got $100,000, and National Review columnist Larry Kudlow admits receiving $50,000 from Enron. In the September 24, 1998 Washington Post, conservative columnist James J. Glassman described Enron as a company that would "win big." Glassman, DeWitt Wallace Fellow at the American Enterprise Institute, recommended in an August 16, 1998 column in the Post that readers buy Enron. A Glassman column on how Michael Milken financed Enron and other companies was headlined, "Thank you American Businessmen."
Kenneth Lay, CEO and chairman of Enron, was a member of the board of the American Enterprise Institute. He participated in events sponsored by the Club for Growth, and his officials appeared at the Cato Institute. Enron subsidized the Reason Foundation and the George Mason University Mercatus Center, run by Wendy Gramm. Robert L. Bradley, Jr., who served as director of public policy analysis at Enron, claims affiliations with the Cato Institute, Texas Public Policy Foundation, Heritage Foundation, American Sound Science Coalition, the Free Enterprise Institute, and Institute for Humane Studies at George Mason University.
| In terms of policy, the scandal will have global implications that few conservatives grasp at this time. Enron, now bankrupt, paid no income taxes in four of the past five years, using almost 900 subsidiaries in tax-haven countries. The Enron scandal and bankruptcy will lead to demands for more federal and global regulation of the financial markets, leading to increasing pressure for a global tax on currency transactions. The New Republic noted that, "Lawrence Summers, the previous Treasury secretary, sought to crack down on tax shelters but was stymied by congressional Republicans. His successor Paul O'Neill has renounced even the modest steps to discourage tax havens proposed by the Organization for Economic Co-operation and Development." The OECD plan goes hand-in-hand with demands for a global tax. |
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SOME CONSERVATIVES QUESTION POSSIBLE JAILTERM FOR WENDY GRAMM, WIFE OF SENATOR PHIL GRAMM. HERE'S THE BACKGROUND FOR THE CHARGE THAT SHE FACES PRIS0N TIME FOR HER ALLEGED INVOLVEMENT:
| AFP January 18 :President George W. Bush backs a full investigation into the widening Enron-Arthur Andersen scandal, including prison sentences for those found guilty of wrongdoing, the White House said on Wednesday.'The President thinks that it is vital for the Department of Justice to pursue this wherever it goes, to whoever it goes and to do whatever it takes to investigate any criminal wrongdoing,' White House spokesman Ari Fleischer said. |
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BBC News on line January 12
The US Justice Department has named the head of its fraud section, Joshua Hochberg, as acting attorney overseeing the criminal investigation into the failed energy giant Enron. ….Along with Mr Hochberg, the US Justice Department announced that Leslie Caldwell - a San Francisco crime prosecutor - was to head a national task force investigating the company.
…The inquiry centers on whether investors and employees were misled about the company's financial strength and whether Enron's contributions to the Bush campaign assured it preferential treatment by the US administration….
Jan. 17, 2002, 2:43PM
Judge doesn't rule in Enron stock sale hearing
By KRISTEN HAYS
Associated Press
A federal judge heard but did not rule on a request made today by a New York bank that she freeze more than $1 billion allegedly gained by top Enron Corp. officials who sold millions of shares before the former energy giant collapsed.
U.S. District Judge Lee Rosenthal gave lawyers for the defendants a week to respond. No date was set for any followup court action.
Amalgamated Bank has sued 29 current and former Enron executives and board members, including Chairman Ken Lay and Texas Sen. Phil Gramm's wife, Wendy Gramm, an Enron board member. She is also the former chairwoman of the Commodity Futures Trading Commission, a federal agency that oversees commodity and options trading to protect markets from fraud and manipulation.
The lawsuit, filed in federal court in Houston, alleges that the named executives and board members engaged in a three-year pattern of fraud and deception that caused Enron share prices to fall from a high of about $90 a year ago to less than a dollar.
The suit claims that during that time, the defendants sold $1.1 billion in stock, all the while hiding the company's true financial condition.
An Enron director, Ms Wendy L. Gramm, the wife of US Senator Mr Phil Gramm, a Texas Republican who sits on the Senate Banking and Finance Committees, sold 10,256 shares for $US276,912, according to the suit. |
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Ms Gramm is a former chairwoman of the US Commodity Futures Trading Commission.
The US Department of Justice has launched a criminal investigation into Enron, both The New York Times and The Wall Street Journal have reported.
The Securities and Exchange Commission is investigating the company's collapse and congressional investigators are looking into whether Enron manipulated accounting statements, as well as the effect of the company's failure on energy markets. |
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Enron's Board May Have Had Role in Dealings
January 19, New York Times
Excerpts
By REED ABELSON
There is increasing evidence that Enron (news/quote)'s board, composed of many prominent and financially sophisticated people, was actively involved in crucial decisions that may have led to the company's downfall… the directors appear to have played a significant role in overseeing the partnerships at the center of Enron's collapse.
The board - which includes Wendy L. Gramm, a former government regulator and the wife of Senator Phil Gramm, Republican of Texas…even went so far as to suspend Enron's code of ethics to approve the creation of the partnerships between Enron and its chief financial officer, according to the report of a preliminary investigation conducted at Enron's request by the law firm of Vinson & Elkins. ..
The partnerships kept significant debt off Enron's books and masked much of what was really going on at the company. Criminal and civil investigations begun since the company filed for Chapter 11 bankruptcy protection last month are focusing intensely on Enron's transactions with these partnerships.
While outsiders have had few glimpses of what actually happened between Enron executives and its directors, the report's disclosures leave little doubt that the board was intimately involved in approving them. Questions have already been raised about the independence of the board, and many corporate governance experts say the directors appear to share substantial responsibility for what happened at Enron.
"The factual evidence we have at this point is that the board was fully informed," said Patrick McGurn, an executive with Institutional Shareholder Services, which advises large investors on corporate governance issues. None of the directors have said publicly that the board was misled by the company, he added…
List of the 29 former and current Enron executives and board members named as defendants in a federal lawsuit and proceeds totalling $1.1 billion that plaintiffs' lawyers say each made by selling Enron stock between October 1998 and November 2001:
- Wendy L. Gramm, director and audit committee member: Sold 10,256 shares for $276,912.
By The Associated Press; Source: Milberg Weiss Bershad Hynes & Lerach LLP |
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