President Bush Sr. helped get BILLIONS of Dollars to get Enron to where it was. Enron would not have happened without the help of President Bush. They emphasized how truthful, honest and moral everyone involved with the company was, whenever they talked about it.
But the story of corporations giving huge money ‘donations’ to politicians is nothing new. Every major politician takes money from huge corporations, and they cannot get to that position unless they do that.
Corporations these days have taken over the politics to the point where they dominate what happens, including determining who is elected most of the time. The campaign that gets the most cash usually and most often wins. Since corporations have the most money, this means corporate funded candidates win most often. Click on the following links to learn more about this in detail.
The problem with Enron, was that it focused solely on money, rather than on ethics, morals and legality. This same problem exists in all large corporations though, and is not limited to Enron.
Enron sought and got approval on mark to marketing accounting treatment, which eventually spelled the downfall of the company. This meant that any contracts signed were assigned as if they were income, even if the income NEVER came in. Of course, this accounting method was manipulated, because anyone could sign a fake contract and put it on the books.
The whole Enron upper management team thought this accounting gimmick was a great idea.. They believed money was the ONLY thing that motivated people. To make this part of the corporate culture, they put in performance review systems, where only the top 10% money earners were promoted, and the bottom 15% were fired, each year. Again, most corporations act the same way. It is mostly about money and the bottom line this quarter, not about the effect that making this money for the short term will have seven future generations, the environment, communities and employees.
The top financial money earners got HUGE bonuses, such as $5,000,000, each year. Of course, the only people who ended up being in this top echelon were people who took huge risks, stomped on other people or stabbed them in the back and threw a hand grenade or flaming gasoline on them after that (financially speaking of course).
Skilling was brilliant, but he also gambled huge amounts of money, and took wild risks on the market. He surrounded himself with people who were like himself.
To boost the stock price, despite losing 1 Billion, a game was played on Wall Street by Enron. The game was called pump and dump. Since executives see most of their income coming in through their stock options, they made sure that stock prices would keep going up,. They would keep the investment analysts fooled about earnings of the company. The company would beat expectations every quarter as far as ‘earnings’. They said that they were smart, inventive and cutting edge, as well as devoted to public service.
The top management sold the corporation as being a place that stock owners and investors would earn 10-15% or more each year, year in and year out. To accomplish this, they had to do wildly risky things,. Many of these wild ideas and projects would lose massive amounts of money, but that was all hidden.
As the company was starting wild projects that had no hope of success, they were booking these doomed projects as wild financial success stories, via the mark to market accounting gimmicks.
They used employee special stock buying program to boost stock buying by employees and affiliates. The analysts all had strong buy ratings on Enron, because of the fake earnings reports Enron was putting out, verified by a corrupt accounting firm. Everyone trusted the accountant and management. Skilling was the person who answered all concerns and questions.
When they went into the deregulated energy market, they booked profits by projecting future energy sales, Internet video services, weather options, broadband options and more. The problem was that none of them were making money. They were mostly all LOSING money ventures.
Meanwhile, the executives were selling their stock like crazy. As the stock prices kept rising wildly, sometimes 35% in a few days, the upper management would pump and dump their stock. In the year 2000, the stock went up 90%. Enron could do no wrong. It was voted as being the most innovative company in the world, and it was the darling of the whole investment community. Everyone was in love with Enron. Everyone jumped in and drove the stock price up and up.
No one knew where the earnings came from, but the numbers were always believed. Eventually, one reporter from Fortune Magazine asked a simple question; “How does Enron make it’s money?” She asked accountant types of questions. Skilling attacked her, instead of answering the question. She never got an answer, and Skilling said the whole answer was in a ‘black box’, with no definite answer about how it makes money.
This is another element of larger bubbles. All economic bubbles and corporate monopolies that drive the bubbles into getting larger are by their nature based on greed and hubris. What is behind all of these bubbles is deception, greed and gambling others money via leverage (another name for gambling/huge risks). The Great Depression was due to these two factors. Enron had these same factors at work. The global great financial collapse also had these same common denominators. The scary part of this is that laws were passed after the Great Depression to prevent a repeat. The financial companies dismantled these laws, and they have not been put in place again. No CEO was ever charged after the financial collapse, despite the losses of 50% of all retirement accounts globally (TRILLIONS of Dollars).
Fortune Magazine and this one reporter had the courage to say that the emperor had no clothes on, but she was only ONE person saying it to start with. The managers had to cheat a little bit at the beginning, but the cheating and lies got larger and larger.
In the same way, our current global bubble is being built on fake money and fake values. The bubble is growing on a pile of debt that keeps getting larger and larger. Of course, the lies supporting this bubble have to keep growing and covering up more and more of what is going wrong underneath, just as Enron had to ‘game’ and lie to the public to keep itself going.
Enron created a large number of partner and subsidiary companies, to absorb the HUGE debt and losses that were coming out of the parent company. They buried debt and losses in affiliated companies with names of Star Wars characters. This process created personal wealth such as 45 million dollars for just one executive.
Of course, this same process is happening on a global scale, with many other corporations and even governments that are MUCH larger than Enron, but all of the losses are being hidden away, tucked out of sight in dark corners where few dare to look.
Enron through Andrew Fastow went out to financial companies and huge banks. He sold them on creating funds that would invest in Enron, but nothing else. He offered huge returns on the order of 2,000%. A large number of them put up 25 Million Dollars each. They were motivated by pure greed, and did not mind that Fastow was both CFO and the owner of the investment fund at the same time, on both ends of the transaction.
Meanwhile, Arthur Anderson as the accountant was getting up to 1 million dollars per week, in order to sign off on the process of getting cash, showing it as ‘income’, while it was really a loan.
An investor asked Skilling for a balance sheet or a cash flow statement, but instead of producing it, Skilling called the investor an ‘asshole’, and then thanked him.
In 1996, the California energy market was deregulated. Enron gamed this system to make huge profits. Tim Beldon believed in free markets. He found loopholes that would make the company money.
Traders inside Enron had contempt for any community, rules or legality. They were only interested in making money at any cost. Traders would export energy out of state, to create an artificial shortage, and then import it back in, at a much higher price.
They overbooked transmission lines, and then extorted money for those wanting power after this developed into shortages. They also shut down 30% of power plants which would push energy prices even higher, and they booked huge profits on this artificial shortage. They created an energy market that looked more like a casino gambling on much higher energy prices.
They were selling energy commodities that normally trade for $30, and forcing that price up to $1,000 or more, they raped California. They made huge amounts of money for Enron by creating forced shortages. The traders were laughing at the suffering they created.
Again, this behaviour is encouraged and people get promoted in corporations for doing the same thing that Enron did. In the 1960s, a researcher by the name of Milgren set up an experiment to study ‘evil’ people.
He asked people to give strangers electric shocks to assist them in learning a task, while under the direction of a ‘supervisor’ or boss. The number and severity of shocks increased as they test subjects got more answers wrong. The amazing thing was that the experimenters kept increasing the voltage and suffering, just like Enron kept increasing the suffering via blackouts in California, just because some CEO or upper management person said it was ‘ok’.
The scary part of this experiment was that around 50% of subjects would keep shocking their test humans subjects to DEATH, as long as they got ‘permission’ from one person to keep on doing it. In the end, the traders ran Enron into the ground, as they were in control of the lunatic asylum, and doing insane things.
FERC was responsible for overseeing energy markets in California, by law. The problem was that Ken Lay recommended a person (Pat Wood) to manage this agency and President Bush then approved that person. This was like putting the fox in charge of the hen house. Ken Lay knew that Pat would do nothing in terms of legal investigations, prosecutions or checking into Enron to fix any ‘gaming’ of the energy system.
When things went bad, President Bush also refused to help California with it’s problem, even though in public he kept talking about helping the situation. The only thing that the Republicans had to do to kill a Democratic Governor and replace him with a Republican was to do nothing, and not investigate Enron. The Republican President Bush refused to help on the federal side, because he said it was all about a ‘free market’, with no federal government help. The fox was let loose inside the hen house, with Republican permission, support and help.
Federal law said that the federal government regulated and controlled the energy market in California, but it took no action. Scharzeneger was elected governor due to the complaints about the energy market, replacing Gray Davis.
About this time, Skilling resigned. Sharon Watkins was hired to work for Fastow. She found out that there was massive fraud involved in Enron. Cliff Baxter was trying to make the fraud public and fighting against the corruption. Within six weeks, Enron spun out of control. The Wall Street Journal published a critical article, and the SEC did an informal inquiry.
Meanwhile, Arthur Anderson was shredding over one ton of paperwork on it’s side of things, all related to Enron. A Congressional hearing was held where Sharon disclosed the fraud. Shortly after that, Fastow was blamed for everything and fired shortly after that. The top executives all claimed absolutely no knowledge of the massive fraud, blaming it all on Fastow and some rogue traders.
Key Lay made public announcements that he was entirely innocent, and had no responsibility. They even blamed the public by saying it was a ‘run on the bank’ and the failure of the company was purely due to public panic and fear, but nothing else.
Enron was like the Titanic at this point. The few lifeboats had left the ship, and tens of thousands of people were still left on the ship.
Then Enron declared bankruptcy. All of the employees and everyone else who had invested in Enron lost everything. Employees were frozen out of their 401K accounts, and could not sell any of their stock, while management sold over 1 BILLION of their stock.
It is possible to lose your soul in the corporate world. Enron is an example of how easy it is for politicians and large corporations to gain the whole world, but lose the most valuable thing in the process. Tyco, Global Crossing, WorldCom, AIG, and major financial companies all went down for the same reason. Enron thought it could game the system, and it did, for awhile.
Enron was not an exception to the rule. Enron involved the whole system in it’s system of corruption for profit. This process is easy to do, easy to maintain and easy to hold for long periods of time.
Could it be that other monopolistic industries are involved in ‘gaming’ the system, in the same way that Enron was doing, before it got caught? Maybe Enron was just the tip of the iceberg?
If one were to start looking for this same kind of corruption, greed and hubris, where would one start to search? It would make sense, that where ever there large amounts of money to be found in one concentrated area, that would be the best place to start looking.
Could it be that other large monopolistic industries are also involved in gaming the system, with profit as the motive?
Cancer – The Forbidden Cures; via A Green Road