Pay Heed
On July 12, 2006, Sterling D. Allan wrote:
Billed as the largest bankruptcy ever, the Enron demise is something to which our generation must pay heed. Surely Enron is not the only company in our day engaged in the kind of greed-driven and unethical practices that brought about Enron’s demise. They were focused on money, not service nor enduring principles. Anything to increase earnings, no matter how many people got hurt in the process.
They manipulated California’s power for an entire year, creating shortages where there were no actual infrastructure reasons, driving up the price, and reaping the benefits.
How it all started:
On December 15, 2000, Gramm slipped in a 262-page measure called the Commodity Futures Modernization Act. Written with the help of financial industry lobbyists, containing a provision – lobbied for by Enron, a generous contributor to Gramm – that exempted energy trading from regulatory oversight, allowing Enron to run rampant, wreck the California electricity market, and cost consumers billions before it collapsed. (For Gramm, Enron was a family affair. Eight years earlier, his wife, Wendy Gramm, as cftc chairwoman, had pushed through a rule excluding Enron’s energy futures contracts from government oversight. Wendy later joined the Houston-based company’s board, and in the following years her Enron salary and stock income brought between $915,000 and $1.8 million into the Gramm household.)
V.P. Cheney knew what was going on and refused to stop it.
Vice President Dick Cheney cleared his calendar for an April 17 private meeting with Lay regarding what aides described as “energy policy matters” and “the energy crisis in California.” At the meeting Lay handed Cheney a memo that read in part: “The administration should reject any attempt to re-regulate wholesale power markets by adopting price caps….” [ the only way to stop them]
The day after he met with Lay, Cheney gave a rare phone interview to the Los Angeles Times that had one recurrent theme: Price caps were out of the question. Dismissing the strategy as “short-term political relief for the politicians,” Cheney bluntly declared, “I don’t see that as a possibility.”
Pres. Bush chimes in:
“We will not take any action that makes California’s problems worse and that’s why I oppose price caps,” said Mr. Bush on May 29, 2001.
Bush has turned down repeated requests by consumer groups for the Federal Trade Commission to investigate price gouging by oil and gas companies, despite a March 2001 FTC finding that companies hoarded gasoline to drive up prices and boost profits, costing consumers billions of dollars.
CRIMES AGAINST NATURE by ROBERT F. KENNEDY, JR., page 35
Cheney’s [and Bush’s] prognosis was flawed; within days, the Federal Energy Regulatory Commission agreed to price caps and the markets calmed down. But Cheney was undeterred in his drive to deliver for Enron. The Houston-based firm enjoyed a level of vice-presidential attention during the Bush/Cheney team’s first year that included explicit support of Enron’s choices for key regulatory positions, [see the massive breakdown in accountability: Greasing the Deal: A Royal(ty) Scam] intervention in the affairs of a foreign government and the structuring of an energy policy task force to allow Enron and other corporations to effectively set policy. Indeed, so close was the Cheney-Enron relationship that it is entirely reasonable to ask whether ethical and legal lines were crossed. That possibility offers the most realistic explanation for Cheney’s refusal to disclose details of his Enron contacts to Congress. “Cheney says he is refusing to provide information to the Congress as a matter of principle. He told the Today show that he wants to ‘protect the ability of the President and the Vice President to get unvarnished information advice from any source we want,'” notes former White House counsel John Dean. “That sounds all too familiar to me. I worked for Richard Nixon.”
George Bush even wanted Ken Lay to serve as the U.S. Energy Secretary!
[Enron] which owned power-generating plants could effectively hold the State hostage by shutting down their plants for “maintenance” in order to manipulate supply. These critical shutdowns often occurred for no other reason than to force California’s electricity grid managers into a position where they would be forced to purchase electricity from other [Enron] suppliers who could charge astronomical rates.
Timothy Belden, one of Enron’s former top traders, pleaded guilty in October 2002 to federal conspiracy charges that he manipulated California’s electricity market to drive up prices and maximize profit for Enron.
Enron eventually went bankrupt, and signed a $1.52 billion settlement with a group of California agencies and private utilities on July 16, 2005. However, due to its other bankruptcy obligations, only $202 million of this was expected to be paid. Ken Lay was convicted of multiple criminal charges unrelated to the California energy crisis on May 25, 2006, but he died due to a massive heart attack on July 5 of that year before he could be sentenced.
CBS, Feb 3, 2005
“The new tapes confirm that Enron secretly shut power plants down so they could cause, and then cash in on, the crisis.”
The CBS article below gives the text of tape recordings of Enron traders laughing at the misery they caused in California.
The public was convinced that there was a severe power shortage in California, all the while Enron insiders were arranging to shut down a major plant and ship desperately needed energy out of the state, so that they could rake in massive profits. ABC also posted a long, revealing AP article with the subtitle “New Evidence Shows Enron’s Power Scams Began Years Before 2000-01 West Coast Energy Crunch.”
A New York Times article on the Enron manipulations states “Company officials had long denied that they illegally shut down plants to create artificial shortages. In March 2001 – two months after the recording showed how the Nevada plant was shut down – [Enron CEO Kenneth] Lay called any claims of market manipulation ‘conspiracy theories.'”
The new tapes – routinely recorded by Enron to protect their own deals and later obtained by this small utility in Washington state – confirm what CBS News has been reporting for four years: That Enron secretly shut power plants down so they could cause, and then cash in on, the crisis.
“Ah, we want you guys to get a little creative…” one voice says on the tape.
“OK,” a plant operator replies.
“and come up with a reason to go down,” the first man finishes his sentence.
Plant operators were coached on how to lie to officials.
“Just call ’em, Hey guys; we’re coming down,” one Enron trader says. The plant operator replies, “OK, so we’re just comin’ down for some maintenance, like a forced outage type thing?”
“Right,” the trader says.
“And that’s cool?” the plant operator asks.
“Hopefully,” the trader responds, to which the men are heard laughing.