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Bush Crew and Enron: Conflict Of Interest and Reality
by John Hoefle
Under energy deregulation, Texas and the South have become the most notorious
havens for pirates since the Barbary Coast, home to energy companies which
charge obscene prices for natural gas and electricity, and which get
downright obnoxious whenever anyone dares to challenge their right to loot.
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Bush Crew and Enron: Conflict Of Interest, and Reality
By: John Hoefle
Under energy deregulation, Texas and the South have become the most notorious
havens for pirates since the Barbary Coast, home to energy companies which
charge obscene prices for natural gas and electricity, and which get
downright obnoxious whenever anyone dares to challenge their right to loot.
The worst case may be Houston's Reliant Energy, on whose board sits Bush
family consigliere, former Bush Administration Secretary of State and current
lawyer for the robber barons, James A. Baker III. Reliant had the nerve to
charge the State of California $1,900 per megawatt-hour for electricity in
May, power which the state urgently needed to avoid blackouts. When
California Gov. Gray Davis (D) publicly criticized Reliant--by name--for
price gouging, a shill for Reliant amazingly replied that California had set
the company up by accepting their bid, to embarrass poor innocent Reliant.
Then there is Charlottem, North Carolina's Duke Energy, which charged
California a whopping $3,880 per megawatt-hour in late January and early
February, a price which would correspond to monthly residential electricity
bills of $1,940 a month! Duke justified its action by claiming that it
charged a $3,000 credit premium for the power, just in case it didn't get
paid in full. Imagine that: charging $3,880 for something that cost just $30
two years ago, because you are worried that you won't get paid. Doesn't your
heart go out to poor Duke?
In portraying themselves as victims, these pirates reflect an amorality, even
pathology, that harks back to the feudal days of yore, when the noble princes
and dukes would complain that their impoverished peasants were having trouble
paying their taxes. Their response, then as now, is to raise the rates.
"We're getting Third World conditions at Beverly Hills prices,'' one outraged
California resident complained to the California Public Utilities Commission,
at one of several public meetings held by the Commission in May. That comment
pretty well sums up the nature of deregulation, and the nature of the
companies which use deregulation for a level of looting which would make J.P.
Morgan a proud papa indeed.
The Bush-Enron Partnership
The involvement of Houston scion Baker with the energy pirates is but one of
a plethora of incestuous connections between the Bush family, the Bush
Administration, and the energy cartel. Enron, a company close to both the
Bush hearts and the Bush pocketbooks (is there a difference?), has served as
a virtual home away from home for members of the previous and current Bush
administrations. When the one-term President George|I went down to a
well-deserved defeat, several top-level officials went to work for Enron,
either as officers or consultants--including Reliant's Baker--and George
himself collected numerous, lucrative speaking fees from the company. Enron
has also provided employment for a number of officials in the Bush II
Administration, in addition to being the single largest financial contributor
to the political career of President "Duh-bya.'' The relationship between
Enron and the Bushes has been long, and profitable. As Vice President under
Ronald Reagan, George Bush (George|I) headed a task force which pushed
deregulation in both finance and energy, including advocating the repeal of
the Public Utility Holding Company Act of 1935 (PUHCA), the law passed by
Franklin Roosevelt to bust up the Morgan electricity cartel. While the PUHCA
is still on the books, it has been substantially outflanked, in much the same
way that the banks ignored Glass-Steagall--the FDR law which broke up the
House of Morgan into J.P. Morgan and Morgan Stanley--prior to the repeal of
that act in November 1999.
Enron repaid the favor in February 1993, when it announced that two former
George|I Cabinet members, Secretary of State Baker and Secretary of Commerce
Robert Mosbacher, had agreed to help the company to secure natural gas
projects overseas. Both Baker and Mosbacher had previously been directors
(and Baker's family among the founders) of Houston's elite Texas Commerce
Bancshares, where Enron chairman Ken Lay was also a director.
Their international business experience and knowledge of governments around
the world, as well as their great understanding of the energy business, will
greatly enhance Enron's goal of becoming the world's first natural gas
major,'' Enron's Lay said in announcing what the company described as a joint
consulting and investing agreement with Baker and Mosbacher.
Bush Crew and Enron: Conflict Of Interest and Reality
by John Hoefle
Page 2
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Enron also added Lt. Gen. Thomas Kelly (ret.) to its board. Kelly had served
as director of operations for the Joint Chiefs of Staff during Bush's Persian
Gulf War. In 1993, according to journalist Seymour Hersh, Baker, Mosbacher,
and Kelly accompanied Sir George Bush on a trip to Kuwait, to help Enron
secure a contract to rebuild energy plants that had been destroyed during the
Gulf War. Enron also established close relations with Britain's Prince
Charles, through large contributions to his Prince of Wales Trust. Such
top-level influence-peddling opened doors for Enron around the world.
The Money Pours In The combination of its international contracts and the
domestic deregulation of natural gas and electricity has been enormously
profitable for Enron, which was ranked seventh by revenue on Fortune's 500
largest U.S. corporations in 2000, up from eighteenth in 1999. The firm
reported more than $100 billion in revenue in 2000, with electricity sales of
$34 billion and natural gas sales of $50 billion ({{Figure 1}}). Its
electricity revenues in 2000 alone, exceeded its total revenue in 1998, and
its natural gas revenues in 2000 exceeded its total revenues in 1999. Not bad
for a company which claims to be in the business of lowering consumers'
energy bills.
Over the years, Enron has transformed itself from a natural gas company into
an energy trader; though it still owns energy production and distribution
facilities, it has essentially become an investment bank, playing the energy
markets the way the Wall Street banks play the bond and currency markets.
Enron specializes in buying electricity and natural gas where prices are
cheap, and selling them where prices are dear. The company uses derivatives
to hedge its bets, and also sells them, going so far as to run television
commercials touting its weather derivatives business. (One such commercial
shows a business executive speaking before a group of investors or analysts,
attempting to explain away an apparent poor financial performance by blaming
bad weather. "You can't control the weather,'' the hapless executive claims,
only to have the voice-over assert that you can indeed protect yourself from
weather-related losses, by buying weather derivatives from Enron.)
Domestically, the company owns a 25,000-mile network of natural gas
pipelines, and physical natural gas delivery volumes increased 77% in 2000,
to 24.7 billion cubic feet per day. It also delivered 579 million
megawatt-hours of electricity, a 52% increase. Enron owns its own electric
utility, Portland General Electric of Oregon, which has 2,015|MW of
electricity-generating capacity, and another 4,000|MW of unregulated
generating capacity. It is attempting to sell Portland General to Sierra
Resources, since the profits from a regulated utility do not begin to compare
with the profits it can make in the unregulated markets.
Enron is also active internationally, building a natural gas and electricity
market in Europe. It owns all, or portions of 13 non-utility power plants
with 3,800|MW of capacity in Ibero-America (Brazil, the Dominican Republic,
Guatemala, Nicaragua, and Panama), as well as India, China, the Philippines,
Guam, and Turkey; 10,000 miles of natural gas pipelines in Argentina,
Bolivia, Brazil, and Colombia; and the Elektro electric utility in Brazil,
with its 51,000-mile electricity transmission grid.
The company's fastest-growing business is its Internet-based e@nhcommerce
website, EnronOnline, which the company established in November 1999. Last
year, some 548,000 transactions with a notional value of $336 billion were
conducted through EnronOnline. The company currently offers more than 1,200
"products'' through the website, which accounts for about half of its
business.
The combination of deregulation and globalization has made Enron one of the
world's premier money machines; the company, in turn, spreads that money
around liberally, in the United States and internationally, to push its
globalist, "free-market'' propaganda.
Joined at the Hip
If the connections between Enron and the administration of George|I were
tight, the connections between Enron and the "Duh-bya'' Administration are so
close that it is difficult to tell where one begins and the other ends. The
Bush Administration's two nominees to the Federal Energy Regulatory
Commission (FERC) were approved in advance by Enron; the pair, former Texas
Public Utilities Commissioner Pat Wood III, and former Pennsylvania Public
Utilities Commissioner Nora Mead Brownell, are both close to Enron. Wood, a
former Baker & Botts attorney, was appointed to his Texas position by
then-Gov. George W. Bush, while Brownell (who some prognosticators have
dubbed "Nora Mead Brownout'') helped Enron move into Pennsylvania. Needless
to say, both Texas and Pennsylvania are deregulated states. Wood has been
slated by the Bush Administration to become the next chairman of FERC,
replacing current chairman Curt Hebert. Hebert, a deregulation zealot and
prot�g� of Senate Minority Leader Trent Lott (R-Miss.), told the {New York
Times} that a few weeks after Bush had appointed him as FERC chairman, he
received a call from Enron's Lay, offering to support his chairmanship, if
Hebert would support Enron's campaign to further deregulate and force states
and utilities to open up their electricity transmission lines to Enron and
its fellow marketers. Ultimately, Enron swung its weight behind Wood, to
replace Hebert. (Behind the Wood-Hebert fight, according to rumor, is a
battle between Enron and Southern Co. over coal. Enron wants stricter
environmental regulations on coal, to boost its business selling
coal-pollution credits, while Southern, a big supporter of Lott, wants looser
coal regulations, to boost its generating profits. Southern, through its
Southern Energy/Mirant spin-off, is also a major player in the non-utility
electricity market.) Even without Wood and Brownell, FERC has proven to be a
disaster. Part of its mandate, from FDR's PUHCA, is to enforce "just and
reasonable rates'' for electricity, but FERC has been hard-pressed to find,
much less correct, any price gouging in California. After all, as Enron
President Jeffrey Skilling likes to ask, who's to say what "just and
reasonable'' means? Skilling asked that very question on the June 5 edition
of PBS's "Frontline,'' and then answered it by claiming that under the old
regulatory system rates were way too high, and that under deregulation, rates
would fall. Even more impressive, he said it with a straight face.
Owning the White House
Enron also had significant input into the administration's national energy
plan, including personal meetings between Lay and White House energy task
force head Vice President Dick Cheney. Lay and Cheney are old acquaintances.
While Cheney was CEO of Halliburton, his Houston-based Brown & Root
subsidiary built Enron's new baseball park in Houston, modestly named Enron
Field. Numerous other administration officials have either worked for Enron
or have owned Enron stock. Secretary of the Army Thomas E. White, a retired
brigadier general, was the vice chairman of Enron Energy Services, while
economic adviser Lawrence Lindsey had a $50,000-a-year consulting job with
the firm. U.S. Trade Representative Robert Zoellick served on Enron's
Advisory Board. Both White House Chief of Staff Karl Rove and the Vice
President's Chief of Staff Lewis "Scooter'' Libbey, owned significant amounts
of Enron stock.
Enron, as we indicated previously, has been the single largest financial
contributor to the political campaigns of President George W. Bush, with the
company and its executives providing more than $550,000. Enron, Lay, and
Skilling also gave $300,000 to the Bush-Cheney 2001 Presidential Inaugural
Committee.
Other energy-related companies and their executives have also contributed
heavily to Bush's political career. Brothers Sam and Charles Wyly, who run
both the giant Maverick Capital hedge fund and independent energy company
Green Mountain, have donated more than $220,000 to Bush's campaigns. Among
the Pioneers, a designation for those who raised more than $100,000 for
Dubya's Presidential bid, are the former head of Reliant Energy, Don Jordan,
its current head Steve Letbetter, Edison Electric Institute head Thomas Kuhn,
and, of course, Ken Lay.
National Security Adviser Condoleezza Rice hasn't gotten any money from
Enron, as far as we know, but she did sit on the board of San Francisco-based
oil giant Chevron, and owned between $250,000 and $500,000 worth of its
stock, according to her financial statements. Chevron, which is in the
process of buying Texaco, owns 29% of Dynegy, the Houston-based energy pirate
which has made a bundle off California's misery. Chevron is now threatening
that West Coast gasoline prices will go sky-high if its California refinery
does not get an exemption from power blackouts.
Clay Johnson, the director of personnel at the White House, owned between
$100,000 and $250,000 of stock in El Paso Corp,, the Houston-based energy
company accused by the State of California of manipulating the natural gas
market to jack up prices.
"Negawatts"
Faced with the spectacular failure of deregulation in California, and its
more discreet failure in Massachusetts and Pennsylvania, the deregulation
mafia has been working overtime to blame the population and government of
California for the crisis. The California crisis, Enron's Skilling insists,
occurred because the state refused to fully deregulate, by retaining caps on
what the consumers could be charged. The California deregulation bill was
indeed insane, but Skilling is demonstrating a well-developed sense of
hypocrisy, since, according to EIR's sources, Enron had a major hand in
writing the California law.
Now, Enron, Reliant, and others are pushing yet another insanity designed to
separate the public from its money. They are proposing to set up auctions in
which people can auction off their unused energy, similar to the way in which
the aluminum industry in the Pacific Northwest has shut down aluminum
production, selling the electricity they would have used in their smelters
for a tidy profit. The name for this "market-based conservation'' strategy is
"negawatts.''
The most interesting thing about this idiotic proposal is the mind-set of
those who propose it. They are absolutely determined to keep jacking up
energy prices, using first the lure of lower prices through deregulation, and
now the "negawatt'' scam, to convince people that deregulation will somehow
put money in their pockets. But the only ones getting rich are the energy
companies, their Wall Street and City of London controllers, and the
politicians in their pockets.
For the Bush Administration, it's not just a conflict of interest, it's a
conflict with reality. For the nation, it's a disaster, which must be
reversed immediately.
Reprinted with permission from
LiberalSlant.com
-----
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