Enron, Halliburton have pet foxes guarding the henhouse
Sun Jul 11, 2004 at 11:49:04 AM PDT
A recent piece in
The American Prospect magazine entitled "These Dogs Don't Hunt" discusses how Halliburton has managed to put its own foxes in charge of the "Pentagon watchdog's" henhouse. While this story of collusion (there's a long list of as yet unindicted co-conspirators) to defraud the American taxpayer is troubling and should be made common knowledge, it also reveals some interesting similarities between the business practices of Halliburton and Enron.
Billmon, evidently referring to information from Kevin Phillips' American Dynasty, mentions the notorious case of one Texan:
the case of Wendy Gramm, wife of Senator Phil Gramm (R-Pork), who received a seat on the Enron board shortly after delivering a critical regulatory exemption in her previous role as chair of the Commodity Futures Trading Commission.
But Gramm is not exactly an isolated case. In 2002
The Nation, based on recently released reports from the Center for Public Integrity, revealed that Enron had donated to republicans in general, Texas republicans in particular, and that the current Chairman of the GOP was still a highly paid Enron lobbyist (It's worth noting here that other GOP chairmen
Ed Gillespie and
Halley Barbour were also Enron lobbyists):
Enron has also sprinkled campaign contributions across nearly three-fourths of the Senate and nearly half of the House. Of the $5.8 million Enron has given to campaigns in the past decade, 73 percent of it went to Republicans. Among the biggest winners in the Senate have been the Texas Republican Senators Phil Gramm ($97,350) and Kay Bailey Hutchinson ($99,500). The Gramms also gained personally because Wendy Gramm, Phil's wife, was hired to the Enron board. With just six days left in her tenure as chair of the Commodity Futures Trading Commission, Gramm rammed through a surprising decision that Enron had asked her for: a surrender of the commission's authority over regulating Enron's energy futures contracts. Five weeks later, after leaving the commission, Gramm was working for Enron.
In the House, Enron has also favored Texas Republicans, notably majority whip Tom DeLay. In addition to the $28,900 Enron or its executives has contributed directly to DeLay's career, the company has hired as lobbyists Ed Buckham, who is DeLay's former chief of staff, and Karl Gallant, the former director of Americans for a Republican Majority, DeLay's political action committee. Today Gallant also runs the Republican Majority Issues Committee, another DeLay-tied fundraising vehicle, and since 1995, Enron and its executives have given these DeLay-friendly organizations nearly $133,000.
And then there is the special case of Marc Racicot, who until three weeks ago was a registered lobbyist for Enron. Racicot is now the national chairman of the Republican Party, and not so long ago he was saying he intended to continue working as a lobbyist while running the party. Certainly, the two posts seem almost indistinguishable. But that was perhaps too open an admission. So Racicot has cleared things up by explaining he won't actively lobby--but he will still get his lobbyist's six-figure paycheck while the GOP pays him $1 a year. Which makes things much clearer.
But the most egregious example of Enron handpicking the fox/ref that would oversee it on the Federal Energy Regulatory Commission (FERC). As Billmon pointed out, the current FERC chairman is the same chairman that Governor George Bush had previously allowed them to place on the Texas Public Utility Commission:
But Lay got something even better - his own pet chairman of the Texas Public Utility Commission, a man named Patrick Wood III. Actually, according to the Ft. Worth Star Telegram, Enron got the
entire commission:
Lay also sent a June 16, 1999, letter to Bush recommending the reappointment of Judy Walsh to the Public Utility Commission. The three-member PUC at one time consisted entirely of appointees with Enron connections. The company recommended Wood and Walsh, and the third commissioner, Brett Perlman, worked as a consultant for the firm in 1996.
Wood's name is the one worth remembering, though, because when Bush moved into the White House in 2001, he nominated Lay's man to the Federal Energy Regulatory Commission (FERC), and a few months later promoted him to chairman. (It was the least Bush could do, given that Lay and what Michael Moore likes to call "the good people of Enron" were collectively the GOP's largest single corporate donor in the 2000 campaign.)
It's a job Wood holds to this day, and one where he's been extremely effective at stonewalling efforts to get to the bottom of the Great California Power Scam - a caper which may, if the full truth ever gets out, be remembered as one of the most brazenly successful heists in history of unarmed robbery.
At the time, as you may recall, the administration - in the shape of Dick "Go Fuck Yourself" Cheney - blamed the Golden State's soaring power bills on either crazy environmental wackos or high marginal tax rates (depending on the day of the week or what particular piece of pork barrel legislation he was trying to sell).
These theories, no doubt, were the topic of many interesting discussions on Cheney's Energy Task Force, of which Kenneth Lay was a star member (after having served on Bush's Energy Department transition team.)
The Center for American Progress had this:
BUSH APPOINTED LAY'S RECOMMENDATIONS TO FERC: According to Lay, shortly after Bush became president, he "had
two or three meetings with various people in the White House on the whole issue of energy policy." On one of those visits Lay says he "presented a list...which, in fact, had some recommendations as to people that we thought would be good commissioners [on the Federal Energy Regulatory Commission (FERC)]." The commission is an extraordinarily powerful agency that controls regulation of the nation's energy industry. Subsequently, Lay was called upon to conduct phone interviews with potential nominees to FERC. The White House has confirmed that "two people on Ken Lay's list - Pat Wood and Nora Brown - were in fact picked by President Bush for seats on the [five member] FERC."
FERC COMMISSIONER CLASHES WITH LAY, IS REPLACED BY BUSH: In the first months of Bush's presidency, Lay called then-Chairman of FERC Curt Hebert and asked him to force companies to grant Enron access to the electrical grid. According to Hebert, he was not "willing to do what [Lay] wanted me to do." PBS was told Lay threatened to withdraw political support from Hebert if he didn't comply with Lay's request. By May, Vice President Cheney was already referring to Pat Wood - one of the commissioners recommended by Lay who supported opening up the electrical grid - as the new Chairman of FERC. In August, President Bush replaced Hebert with Wood. Wood subsequently approved Lay's request that Hebert had rejected as bad policy.
I also covered this in a previous diary
here (with
this as a primary source). This is the where the rubber meets the road:
During the California energy crisis, with the support of Bush and Vice President Cheney, Wood resisted for months calls to cap wholesale energy prices to give consumers in the Golden State some relief. The utilities demanded and received another rate hike. Lay had been allowed by the Bush administration to handpick his own regulator, a personal friend who was favorable to deregulation. Can you say "fox in charge of the henhouse"?
But as Billmon notes, this is also not just history but an ongoing scam with plenty of current co-conspirators to put on an indictment list if we somehow get the chance:
The more damning evidence of justice obstruction, actually, can be found at the FERC, which continues to throw every obstacle it can in the way of a full accounting for the California power rip offs.
That the crisis was almost completely fraudulant - and had nothing to do with Cheney's imaginary supply crisis - is no longer in any real doubt:
According to a February 2002 study of the California power markets by economists Paul Joskow and Edward Kahn of Harvard and MIT, respectively, wholesale electricity prices during the summer of 2000 were 500% higher than they were during the previous two summers. A significant proportion of the spike resulted from manipulation of the deregulated electricity market by power-trading companies and energy providers, the study concluded.
And yet, when it came to light last month that traders from Enron and other companies participating in the scam had been caught on tape discussing their handiwork (using the kind of languagethat makes Dick Cheney feel like a man again instead of a walking pacemaker) it also came out that both the FERC and the Justice Department had been sitting on those same tapes for months - but hadn't even listened to them, much less used them as evidence against the companies involved. And when a tiny public utility district in Washington State finally moved to release transcripts of the tapes, FERC tried to block it. Wood's explanation:
Gloating over something happening "is not the same as pulling a trigger," Wood told reporters after a monthly FERC meeting. "It's odious and probably very offensive, but is it something that we remedy here under the Federal Power Act? I guess that's the question."
It's a question FERC and the Justice Department lawyers will be pondering for a long, long time, if the administration gets its way. Smart Money.com has already documented FERC's efforts to shield some of the companies involved from enforcement action - while at the same time stalling California's efforts to obtain refunds for the billions in overcharges made possible by the scam. Indeed, at the moment the FERC is insisting the state pay almost $300 million to the companies (including Enron's bankrupt shell) that caused the crisis in the first place!
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