Please send as far and wide as possible.
Editor, The Konformist
Beast of the Month - September 2002
Enrongate, Titanic Business & Political Scandal
"I yam an anti-Christ..."
John Lydon (aka Johnny Rotten) of The Sex Pistols, "Anarchy in the UK"
"In the corporate world, sometimes things aren't exactly black and white when
it comes to accounting procedures."
George W. Bush, on his sleazy dealings involving Harken Oil, suddenly
discovering moral relativism.
WorldCom. Global Crossing. Tyco. Martha Stewart. The level of sleazy
corruption surrounding the world of Wall Street has sunk to a low not seen (at
least) since the Reagan-Bush years. Nearly every week this summer, a brand
new scandal seemed to hit the papers about yet another korporate giant
engaging in insider trading, "creative" accounting schemes or some other
Yet, with all due respect to the other nominees (most notably WorldCom, the
largest bankruptcy in US history) the scandal surrounding Enron is the most
important of all. For in Enrongate (The Konformist Beast of the Month) the
level of the bogus accounting and the payoffs to well-placed politicians
combined to a startling new low. The end result is a monolith that used its
political connection to commit mass larceny on the largest state in the country,
and yet despite its grotesque gouging still managed to go quickly belly up,
leaving its workers in a pit of economic oblivion. And like Watergate was
about more than a mere second-rate burglary gone awry, Enrongate is a code
word for the scandal of using political capital for private profit - a scandal that
surrounds the slimy BushMob with a rotten stench.
Enrongate is such a Beastly affair, where does one start in exposing it and
giving Beastly credit? Let's go straight to the top of the Houston, Texas
company for beginners - though the scandal does reach to even higher
echelons of power:
* KENNETH LAY - Chairman and CEO. In 2001, sold nearly 500,000 of
Enron for over $16.1 million, while giving speeches about the supposed great
future of the company.
* LINDA LAY - Kenny Boy's wife. Did an incredible impersonation of Marie
Antoinette by feigning victimhood over the whole scandal, then opening a
thrift shop called "Jus' Stuff" to sell their luxury items.
* JEFF SKILLING - President and CEO of the company whose resignation in
August 2001 previewed Enron's collapse. Managed to unload stock worth
over $15.5 million.
* ANDREW FASTOW - Chief Financial Officer. He is the alleged mastermind
of the web of off-balance sheet partnerships to hide Enron's losses and
* RICHARD CAUSEY - Chief Accounting Officer. In the first of many conflicts
of interest, previously was a senior manager of Arthur Andersen in Houston
(the accounting firm for Enron) who worked on the Enron account.
* THOMAS WHITE - High-ranking executive who headed Enron Energy
Services, the division behind the looting of the California energy market.
Became Shrub's Army Secretary on May 31, 2001.
* WENDY GRAMM - As George H. W. Bush's lame-duck chairwoman of the
Commodity Futures Trading Commission, she exempted the company's
energy-swap operation from government oversight. Soon after, she resigned
her post and joined Enron's board of directors, serving (suspiciously enough)
on the company's audit committee, where had access to the company's
* PHIL GRAMM - Though not officially a member of Enron, for all practical
purposes he might as well have been. Besides the money going to his wife
Wendy (see above) he is the second highest recipient of Enron's funds in
campaign contributions at $97,350. (The highest was his fellow Texan Kay
Bailey Hutchinson at $99,500.) In December 2000, attached a stealth rider to
an appropriations bill that exempted energy commodity trading from
government regulation and public disclosure.
* ED GILLESPIE - Former Republican National Committee communications
director and a top campaign aide for Shrub's losing presidential election
campaign. Became a top lobbyist for Enron.
* ROBERT BENNETT - Washington-based insider lawyer for Enron.
Previously known for being Slick Willie's lawyer in the Peckergate fiasco.
The first signs of mass kreepiness by the Enron crowd came in late 2000,
when the ultimate wet dream of Enron's influence peddling - "deregulation" of
the energy market - came into full effect in California. Immediately, contrary to
the claims of those who promoted the scheme in the first place, prices for
electricity skyrocketed (with costs increasing up to 40 times more than before
the market change.) Widespread blackouts also occurred, along with the
bankruptcy of PG&E (California's largest utility company) and the decimation
of budget planning in the nation's largest state. At the time, while much of the
korporate media blamed the crisis on a lack of power plants in California (due
to supposed radical environmentalism, according to the most reactionary
voices), alternative media outlets (including The Konformist) smelled a rat and
saw evidence of collusion and price-fixing to swindle customers. The
suspicion has since been proven correct, as in the aftermath of the Enron
bankruptcy, a list of clever names have been uncovered for strategies to
manipulate California energy markets: Fat Boy, Death Star, Get Shorty,
Ricochet and Load Shift.
Of course, they weren't alone in their manipulation (though certainly the
largest player going) as it seems nearly every major company involved in the
California market was playing scam games for millions. Most notably are five
companies with headquarters in Houston right next to Enron, all of which are
now facing their own SEC investigations in price collusion and/or weasel
THE HOUSTON ENERGY SWINDLE GANG
* CMS ENERGY
* DUKE ENERGY
* EL PASO
* RELIANT ENERGY
The fixation on cute nicknames by Enron didn't begin or end in California:
Raptor, JEDI, Chewco and LJM are among the names associated with the
various partnerships used to hide profits and losses. Such schemes were
known about and vouched for by Arthur Andersen, the giant accounting firm
that had its reputation decimated by the entire affair:
TEAM ARTHUR ANDERSEN
* JOSEPH BERARDINO - CEO of the firm through the entire scandalous
* DAVID DUNCAN - Auditor of the Enron books, plead guilty to shredding
documents related to the case.
* NANCY TEMPLE - Andersen attorney who "reminded" the Enron audit team
in October 2001 of the policy to destroy all "extraneous" papers and e-mails.
Shredding of documents began eleven days later.
The woes of Arthur Andersen have deservedly received a lot of coverage -
though in many ways it has helped give Enron and members of the Bush
team breathing room. But less has been said of the Wall Street investment
banks that have been snared in Enrongate:
TEAM WALL STREET
* CITIGROUP & JP MORGAN CHASE - The two firms loaned Enron $5.3
billion, then attempted to disguise the loans as commodities transactions and
derivative swaps to hide the fact Enron was desperate for cash.
* MERRILL LYNCH - Fresh off of settling a conflict-of-interest lawsuit with the
New York Attorney General's office for $100 million (in private emails, shares
given a "buy" recommendation were described as a "piece of shit") it was
alleged - among other Beastliness - an analyst was ousted from the firm
because of skeptical views on Enron. Enron informed Merrill Lynch they lost
a $750 million stock offering because of his reports.
AND NOW, A WORD FROM OUR KORPORATE SPONSORS...
If only Enron didn't exist, the following korporate scandals would deserve
headlining Beastly status in their own right. Unfortunately, each of these non-
Enrongate scandals can merely share honorable mention in this climate. The
10. XEROX - Had to restate $6.4 billion in revenues and $2 billion in earnings
since 1997. Ho hum.
9. KMART - Attention Kmart shoppers! The first major bankruptcy in the post-
Enron world, it was a sign that things were much worse than most believed.
As their debt was reduced to junk status and their stock value imploded, mass
layoffs ensued - but not before an $11.5 million giveaway to the CEO who got
them in the mess in the first place.
8. QWEST - Under the reign of CEO Joseph Nacchio, has been saddled in
$26 billion of debt and overstated revenue by $1 billion. According to Fortune
Magazine, director Phil Anschutz was the greediest executive of them all,
having pocketed over $1.5 billion in stock sales.
7. ADELPHIA - John Rigas and family turned Adelphia Communications into
a personal piggy bank, bankrupting the company after taking loans worth $3
billion. To placate those who found Shrub's handling of Enrongate so limp-
wristed, the elderly Rigas was taken away in handcuffs last month.
6. TYCO - The worldwide conglomerate has had $80 billion in market value
wiped out this year. Meanwhile, CEO Dennis Kozlowski (who made $112.5
million in salary and compensation last year and has cashed out at over $258
million) has been indicted for tax evasion charges.
5. GLOBAL CROSSING - The fifth largest bankruptcy ever, Chairman and
founder Gary Winnick pocketed $734 million in stock value that suspiciously
looks like insider trading while saddling the korp in $12.4 billion in debt.
Having invested heavily in George H. W. Bush, Winnick and co. have
strangely remain unprosecuted for their deeds.
4. IMCLONE/MARTHA STEWART - ImClone CEO Sam Waksal was indicted
on fraud, perjury, obstruction of justice and conspiracy charges after allegedly
attempting to sell his company stock the day before the FDA announced it
wouldn't approve a cancer drug developed by the firm. Meanwhile, the ever-
annoying Stewart did manage to sell hers, which may have been due to a tip-
off by her "good friend" Waskal or their shared broker from the fine folks at
Merrill Lynch. Bonus points for wondering what kind of interior decoration tips
Ms. Stewart will have for her possible future fellow cellmates.
3. WORLDCOM - At any other time, the largest bankruptcy in history would
win hands down as the Beastliest of all Korporate scandals, especially as
Bernie Ebbers left the company $30 billion in debt while personally
"borrowing" over $400 million. Sadly, this only qualifies as number three (and
that's while excluding Enron and Arthur Andersen from the list) because of...
2. HALLIBURTON - In these times, the overstatement of "merely" $445 million
in profits and the golden parachute to Dresser Industries (a firm hampered
with asbestos lawsuits that, coincidentally, first hired George H. W. Bush in
1948 when he started his career in Texas oil) wouldn't seem like a big deal.
But when the korp behind it was run by vice "president" Richard "Donkey
Dick" Cheney at the time (and gave him a $30 million golden parachute in his
own right for his time destroying shareholder value and laying off 10,000
workers in 1999) the hypocrisy of White House finger wagging over korporate
wrongdoing seems to reach an unbelievable low. A low, that is, until...
1. HARKEN OIL - True, Harken was relatively a small fry operation, and little
things like fraudulently overstating profits or insider trading by board of
directors for nearly $850,000 is pretty much expected in the oil industry. But
in this case, the board director of this failed company was "president" George
W. Bush. The accounting scams pulled by Harken seem like textbook
examples handed to Enron and WorldCom, and for his blatantly criminal
behavior, Shrub received a pass from the SEC thanks to his daddy being
Which leads us naturally back to the BushMob. Ever since the 2000
Votescam, it seems every dirty scandal goes back to this slimy bunch. But the
inbreeding between the Bush Team and Enron is too transparent to ignore...
* MARC RACICOT - The GOP Chairman was a lobbyist for Enron.
* ROBERT ZOELLICK - The US Trade Representative was an Enron
consultant on the advisory board before joining the Shrub Administration.
* LAWRENCE LINDSEY - The Bush Team's Chief Economic Advisor was a
board director at Enron.
* KARL ROVE - Shrub's chief political advisor owned up to $250,000 in Enron
stock while he influenced the administration's energy policy, keeping Ken Lay
personally updated by phone.
* JOHN ASHCROFT - The Attorney General has received $57,000 in
campaign contributions from Enron and its employees. Forced to personally
recuse himself from the Enron criminal investigation due to conflict of interest.
* SPENCER ABRAHAM - Energy Secretary also received campaign
contributions from Enron, and used Lay as a prominent advisor early in his
* DONALD EVANS - Commerce Secretary received phone calls from Lay in
October 2001 of impending Enron doom. Claims he never informed Shrub of
this fact, though he was Dubya's campaign manager in 2000.
* PAUL O'NEILL - Treasury Secretary also received two phone calls from Lay
as Enron collapsed, yet claims he too told nothing about this to Bush Jr.
* PAT WOOD III - In one of the more swine-line connections, the Federal
Energy Regulatory Commission (FERC) Chairman was personally
recommended by Lay himself. In his role as FERC head, blocked attempts to
stop the California energy crisis and allowed Enron to continue its swindle.
* HARVEY PITT - Not to be outdone in the Conflict-Of-Interest Championship
Sweepstakes, the Securities and Exchange Commissioner was the lawyer
representing the big five accounting firms, including Arthur Andersen.
Pushed for the laissez faire attitude on regulation that aided the accounting
scandals to happen in the first place.
* GEORGE HERBERT WALKER BUSH - A power player still lurking in the
shadows, Poppy Bush is a longtime friend of Ken Lay, having received
campaign contributions and $50 grand for the George Bush Presidential
* RICHARD "DONKEY DICK" CHENEY - Texas oilman Cheney met with
Enron executives four times during the formulation of Energy Policy in 2001.
In a kreepy move echoing Tricky Dick's, has thus far refused to release to the
General Accounting Office (GAO) documents relating to the White House
Energy Task Force, citing "executive privilege."
* GEORGE W. BUSH - Last but not least, the business relationship between
Dubya and "Kenny Boy" is so well documented it hardly needs to be brought
up. So much for "restoring integrity to the White House."
How will it all end? It depends on what is investigated. For one thing, while
most of the focus in the Enron scandal has been on using offshore accounts
to hide company losses, less has been made of the secret partnerships to
siphon profits. What are the names on the partnerships? Does it go higher
than Kenny Boy? It is likely that former Enron Vice Chairman and Chief
Strategy Officer Clifford Baxter had an idea what the names were.
Unfortunately, Baxter supposedly committed suicide before he could
cooperate with any investigators.
Curiously, the last major economic looting of the USA, the S&L Crisis, also
had major ties to the Bush family and Texas. As noted by journalist Peter
Brewton in The Mafia, CIA and George Bush, the connection between
economic swindling and the Bush family was no accident: the entire S&L
scandal had such ties to the CIA it appears to have been promoted by the
intelligence community. Coincidentally, as noted by Tom Flocco at
Rense.com, Enron's top security team included four "former" CIA agents,
including Director of Business Analysis David M. Cromley. Altogether, Enron
had at least 20 CIA agents on its payroll over the years, who allegedly used
"info gleaned from a satellite project called 'Echelon,'" which is run by the
NSA. How they received top secret intelligence can best be explained by the
idea that they were there on-loan by the CIA: supposedly, the operatives were
allowed to return to CIA payroll before the Enron collapse.
Suddenly, Clifford Baxter is looking a lot like Vince Foster
But rather than ask how it will end, a better question is how it should end. And
that answer appears to be simple: the incarceration of Lay and his cronies
should be a given, not to mention the incarceration and impeachment of
Donkey Dick and Dubya over their similar crimes at Halliburton and Harken.
As was said four years ago during the Peckergate scandal, for the sake of rule
of law, justice demands nothing less.
In any case, we salute Enrongate (and all those involved in it) as Beast of the
Month. Congratulations, and keep up the great work, dudes!!!
Special thanks to Yahoo Full Coverage:
The Guardian UK
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