Feb. 4, 2002
Enron's Run Around
By J. Barlow Herget
RALEIGH - Despite spousal pleadings and corporate finger-pointing, Enron, the bankrupt Texas energy company, has become part of the American lexicon to mean corruption at the top at the expense of those at the bottom.
The executives lied to their employees, their shareholders, and probably to themselves in thinking they could hide huge company losses while they cashed in their inflated stocks for huge, personal profits.
The taint of the Enron scandal is prompting more side-stepping. Even President Bush, despite unprecedented public approval ratings, felt compelled to say, in the words of Doonesbury, "I did not have political relations with that man!"
Yet, it is on record that Bush and many other politicians (71 of the 100-member U.S. Senate) did, because that is how our political campaign finance system works today. That is the scandal outside the Enron business scandal. Sadly, what should be political scandal is mostly legal scandal, given current campaign finance rules. These rules increasingly make money the political grease for access to government officials and for influence over legislation and appointments.
Kenneth Lay may have agreed with Bush’s politics and liked the President as a man, but Lay was equally interested in energy policy and commodity sales regulations. The accounting and consulting firm of Arthur Andersen was no different.
Enron employees in the 2000 Election gave $1.7 million to Republican candidates and $683,000 to Democratic candidates. Lay himself was among Bush’s largest contributors. His investment helped make it possible for him to ask for and receive a private meeting with Vice President Dick Cheney when Cheney led the formulation of the new Administration’s energy policy last year.
When the policy was revealed to the public, it was judged to be very favorable to energy companies such as Enron. Similarly, Lay supported the appointment of Thomas White, a former vice chairman of Enron Energy Services for appointment as Secretary of the Army. After White took office, he became a strong advocate for privatizing energy utilities that supply the armed forces. Enron wanted the same thing.
Another Lay nominee, Texan Pat Wood, is also a good friend of energy companies and champion of deregulation of those companies. Where did Wood find a job in the Bush Administration? He’s the chairman of the Federal Energy Regulatory Commission. (Enron was interested in North Carolina electricity deregulation, too. In 1999-2000, during meetings of the Study Commission on the Future of Electric Service, Enron hired two registered lobbyists to follow the Commission’s work, according to The High Point Enterprise’s Paul Johnson.)
Arthur Andersen and other large accounting firms, like Enron, were generous contributors to political campaigns for the same reasons as Enron. They want rules and regulations of their industry that are not restrictive. Sen. Joseph Lieberman, D-Conn., will be one of those examining the role of Andersen in the Enron investigations; he has received $11,500 in contributions from Andersen in the past.
Arthur Levitt, former chairman of the Securities and Exchange Commission, tried unsuccessfully to persuade Congress to prevent large accounting firms from providing consulting services to the same clients they also audit. Such arrangements scream conflict of interest. But consulting has become a large revenue source for these major accounting firms, and they have resisted any change in the system.
Andersen, for example, reportedly earned $27 million in consulting fees from Enron while Andersen was simultaneously auditing its own consultants’ business practices.
Congress didn’t listen to Levitt. Sen. Robert Torricelli, D-N.J., no stranger to questionable campaign gifts, admitted in January to Levitt, "We were wrong. You were right."
Torricelli’s comment and the public’s awakening to Enron’s political dealings have defenders of the current campaign finance system worried. Julian Borger, writing for The Guardian, observed: “The whole point of the Enron affair is that it discredits the rules of the game. It exposes the institutionalized corruption at the heart of U.S. politics.”
This is why you will hear the cynics say, "It’s no big deal," or worse, "Everybody does it."
They, like Torricelli’s Congress, are wrong. It is a big deal and everybody doesn’t do it. How many of you reading this column can gave hundreds of thousands of dollars to a presidential campaign? And how many of you have asked for and received a private meeting with the Vice President to lobby for government policies that will make you richer?
Mr. Dooley reputedly also said, "Politics ain’t beanbag." In today’s system, politics is for moneybags.
Barlow Herget is a writer and former member of the Raleigh City Council.
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