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Capitol Hill Shop Steward

After September 11
Legal Crimes

As featured in
Labor Party Press

’I’d like to make a prediction about this scandal: Despite all the congressional investigations, many of Enron’s real crimes will never be exposed or prosecuted. But the biggest problem is that many of Enron’s real crimes were legal.’

If you have ever taken the time to dig around in a good old-fashioned used bookstore, you might have come across a dusty 1907 hardback, a gem entitled History of the Great American Fortunes.

Authored by the low-profile and almost-forgotten Gustavus Myers, this 732-page volume compiles an astonishing record of crimes, swindles, robberies, briberies, and assorted chicaneries that surrounded the accumulation of many of the early U.S. family fortunes. Myers revealed that the rapid and immense growth of the super-rich was more often than not the result of highly questionable business practices and frequently wholesale lawbreaking and corruption. Myers spared no detail, and his research was impeccable. Two of my favorite chapters are entitled "Laws Drafted for Plunder" and "Selling Stock to Employees—a Huge Gambling Mart."

Those headings would work quite well in an expose about the unfolding Enron debacle – and if Gustavus Myers was alive today, he would probably already be hard at work on it. I’m not going to regale you with the Enron story here, because I’m no Gustavus Myers. And at the rate this story is developing, it would be old news by the time it reached you anyway.

Instead I’d like to make a prediction about this scandal: Despite all the congressional investigations, many of Enron’s real crimes will never be exposed or prosecuted. A handful of scapegoats are already on their way to the pokey, and a bunch of corporate types will be stewed alive in front of Congress and the media. But the problem is that many of Enron’s real crimes were legal.

Deregulation Crimes

Enron was able to become a vast parasitic organ in the first place by systematically bribing lawmakers in state after state to get them to enact natural gas deregulation. These bribes, officially called "campaign contributions," were handed out to Republicans and Democrats alike back in the 1980s. From there, Enron expanded to bribing state lawmakers to deregulate electricity as well. By the 1990s, Enron was up to pushing energy deregulation on the national level. The real story here was Enron’s ability to buy the political muscle it needed to open up energy "trading." Other companies and interests were after the same goal and were using the same corrupt methods, but Enron led by example.

Our state and national patchwork "system" of energy regulation—inadequate as it was—was destroyed in just a few short years. Energy prices are now higher than ever, our electrical power system is failing miserably, and utility workers’ wages and working conditions have tanked. Hard to believe that most state legislatures voted overwhelmingly to open up our energy system to the Enrons of the world. In California, now a notorious example of the deregulation fiasco, the state legislature passed electrical deregulation with not a single dissenting vote! It just took outfits like Enron, lubricating the state legislative process with handfuls of cash. It’s safe to conclude that the real crime of wrecking our energy system will never be investigated.

Parasitic Crimes

Exactly what was Enron in business to do, and how did they grow into the (supposedly) seventh biggest company in the U.S.? While Enron owned a handful of tangible assets such as gas pipelines, an electrical company, and a few power plants, its main job was skimming a percentage of the value of all the "energy" that it was "trading." In other words, they invested money in politicians who then deregulated energy so Enron could skim a percentage. Enron was a parasite that was profiting from its political investments. So long as those profits poured in (or appeared to pour in), nobody cared. On one recent talk show, Clinton’s Secretary of Labor Alexis Herman even described the pre-bankruptcy Enron as a "model company"! But when the whole enterprise came crashing down like a rotten tree, everyone was flabbergasted. It’s safe to conclude that the real crime of this money-for-nothing parasitic scheme will never be investigated.

Tax Crimes

Enron paid virtually no taxes on the billions of dollars in skimmed "profits" that it raked in. Enron paid federal taxes in just one of the years between 1996 and 2000, while receiving hundreds of millions of dollars in tax refunds from the government. Enron accomplished this, in part, by setting up more than 900 phony offshore "subsidiaries" to escape U.S. taxes. It’s safe to conclude that the real crime of evading taxes and cashing refund checks will never be investigated.

Collusion Crimes

Everyone wants to jump on poor old Arthur Andersen, the Enron auditor, and blame them for not keeping a better eye on the store. But why would Andersen rock the boat, especially when they were taking in lucrative consulting fees at the same time they were supposed to be looking for signs of trouble? The accounting, auditing, and consulting profession is largely self-regulated, not governed by federal legal statute. This has led, as in Enron, to book-cooking, asset-shifting and concealing, tax evasion, and money laundering on a grand scale throughout the U.S. corporate culture. But while Andersen will be thrown to the wolves, it is safe to conclude that the real crime of company-auditor collusion and book-cooking will never be investigated.

401-K Crimes

Last, as you have no doubt seen on television, thousands of Enron employees and investors have been fleeced because of the Enron fraud. Saddest of all, it is safe to conclude that the real crime of the 401K ripoff will never be investigated.

I dedicate this column to Gus Myers and his belief that the telling of truth about out-of-control corporate shenanigans is a must if a democracy is to survive, and to the ordinary workers and investors who have been swindled by Enron, with help from Democrats and Republicans. And in honor of this king of all swindles, I’m going to recruit someone to join the Labor Party. What else is there to do?

Chris Townsend is political action director of the United Electrical, Radio, and Machine Workers of America (UE).

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