The Enron collapse:
another neo-liberal disaster

by Mark, Detroit

(From Communist Voice, vol. 8, #2, issue #29, June 20, 2002)


Enron's political clout
Republicans/Democrats deregulate energy for Enron
Enron demands freedom for financial swindling
How the Bush's businesses profited from political connections and swindles
Enron's financial collapse
Enron and the anarchy of the market
Financial swindling
Wall St. financiers' involvement
Puny efforts at re-regulation of the financiers
Arthur Andersen
The executives cash in as Enron collapses
Global Crossing and other recent financial swindles
Russian capitalists + American accounting firms = fraud
Lenin on the "holding system" and financial swindling
Enron and the pension crisis
Enron's collapse ruins employees
Enron and the general pension crisis
Enron and the imperialist agenda of neo-liberalism
Enron bullies Mozambique
Privatizing in Western Europe
Enron's rampage in India
Enron and capitalism today

. Enron was supposed to represent the bright future of U. S. capitalism. Only months before its collapse, the business publication Fortune hailed its "innovative management" while last year Business Week gushed about now-former Enron CEO Jeffrey Skilling's "derring-do" combined with (ahem) "his intense focus on risk controls. " The innovations that made Enron the darling of big business--rolling back government-regulated capitalism and creating opportunities for unbridled speculation in energy markets and other fields--were the fulfillment of the doctrine of the neo-liberal bourgeoisie that the ideal economy is the pure free-market. Indeed, Enron's rise from being an insignificant company to being a corporate giant in a little more than a decade coincided with its conversion from a company that mainly produced energy to one relying largely on speculative trading. Its "genius" was not what or how it could produce, but that it showed new ways to profiteer when it produced nothing at all. Skilling's rise to Enron CEO was based on the fact that as head of Enron's trading operations, he produced higher profit rates than were coming from Enron power plants.

. Now, only a few years after rising from an insignificant company to the seventh largest U. S. corporation, Enron has gone bankrupt. Its top execs and other corporate insiders, who knew the company was about to go down in flames, made a fortune selling off their stock before its value plummeted to nothing, while the ordinary employees lost their jobs and their pensions, which the company insisted be invested in now-worthless Enron stock.

. Enron's bankruptcy marks another disaster of neo-liberalism. In the last couple of decades, neo-liberalism has become the fashionable trend of the world bourgeoisie, and around the world the masses have suffered dearly under it. Yesterday neo-liberalism fueled the East Asian economic crisis, ruined much of Russia's economic base and sent Mexico into a tailspin. Today, neo-liberalism has helped create the economic collapse in Argentina. While other countries are suffering the most, the neo-liberal crisis is brewing in the U. S. , too. Energy deregulation in California and other states, the shredding of the social welfare safety nets, the growing gap between rich and poor, growing unemployment and job insecurity, and the collapse of companies like Enron are signs that the chickens are coming home to roost here as well.

. The Enron collapse and the other economic disasters do not merely discredit neo-liberalism, but raise issues about capitalism in general. While today the bourgeoisie mainly champions free-market ideology, in the past it has seen the need for regulated capitalism as a means to stave off imminent disasters or the possibility of revolutionary change. This policy mitigated some of the rough edges of capitalism and for a time brought relative stability to some economic sectors. But the laws of capitalism remained, and thus there were crises under regulated capitalism as well. Neo-liberalism claimed it would solve all the problems that arose under regulated capitalism. But by stamping out any limitations on the market, neo-liberalism insured that capitalism would manifest itself in the most virulent forms and helped accelerate and broaden the scope of crises. Thus, while particular neo-liberal features like deregulation opened up new vistas for Enron's swindling and ultimately hastened its demise, the roots of its collapse are in the very nature of capitalism itself. The real scandal is not merely or mainly the particular dirty tricks of the Enron executives. It's the neo-liberal doctrine and capitalism which gave rise to them.

Republicans/Democrats deregulate energy for Enron

. Enron itself has been a pioneer of the corporate campaign for deregulation. In fact one major feature of the Enron scandal is that it has called attention to the truth that the government is simply the tool of the big corporate players. Enron not only had close personal ties to the Bush family and administration, but had bribed its way into the hearts of the Clinton administration and hundreds of members of the U. S. congress, Republicans and Democrats alike. In its home state of Texas, Enron's clout reached deep into every branch of government.

. Yet when the Enron scandal broke, Bush tried to pretend he hardly knew Enron founder Kenneth Lay, although "Kenny Boy" as Bush himself used to refer to Lay, was an old pal of the Bush family. But of course Lay and the Enron execs had long ago thrown their financial support to G. W. Bush, beginning when he was governor and continuing as key fundraisers for G. W. 's presidential campaign. The Bush administration denied it was doing anything to help out Enron since it refused requests from the company to bail it out. (1)

. Eventually they admitted they often met with Enron execs, but claimed it had no influence on government policy. But in fact Enron got a great return on their investment in politicians. There has been an unbroken thread of important measures that favored Enron's vision of unregulated energy markets, running from the presidency of Bush, the father, through the Clinton administration, and on through G. W. 's presidency. As a matter of fact, G. W. Bush was doing favors for Enron as early as 1988 when he pressured the Argentine government to allow Enron to build a pipeline project there.

. Enron's deregulation campaign aimed to break up the government-regulated energy system. In general, the old system consisted of each state having a few regulated private power monopolies and maybe some city-owned power producing agencies. This system had a series of problems but at least it was fairly dependable in providing energy, there were some limits on profits, albeit very generous limits, and its operations were subject to some public scrutiny. Promising to bring competition and lower prices, Enron and other energy companies pushed for measures fostering the deregulation of the power-producing plants, both through allowing the regulated public utilities to spin off their plants as separate entities and allowing new private producers to sell energy to the utilities and other customers. This new system of private energy producers would not be subject to restrictions on their profits like the old government-regulated monopolies nor would they be subjected to much oversight of any kind.

. The breakup of the old regulated system was facilitated by a series of new laws and rulings. Under the reign of Papa Bush, the Energy Policy Act of 1992 freed private energy firms entering the wholesale energy markets from regulations that the regulated utilities were subject to. It also permitted these companies to use the transmission lines owned by the utilities. Clinton furthered energy deregulation by having FERC (the Federal Energy Regulatory Commission) order utilities to treat their transmission capacity and their power plants as separate entities and to allow private energy producers to be charged the same rate for use of their transmission lines as applied to the utilities' own generating plants.

. Enron's influence is also shown by the fact that Bush's energy plan supports nearly every recommendation made by Ken Lay, during a meeting on April 17, 2001, to Vice President Cheney . Not surprisingly, the Bush administration has tried to stonewall attempts to make public the discussions of his energy task force. But the contents of Lay's demands were brought to light in a Lay memo that was released by the San Francisco Chronicle this January 30th. The next day a fact sheet prepared by the minority staff of the Committee on Government Reform of the U. S. House of Representatives compared Lay's memo to what wound up in Bush's infamous energy report. In total, Enron officials had six meetings with the White House energy task force, four of which were before release of the final report last year.

. According to the minority staff's fact sheet, Lay's recommendations included measures to increase the federal jurisdiction over transmission lines so as to further insure Enron and other private energy producers have access to them. This would include lines owned by investor-owned public utilities and state and municipal utilities. As well, Lay called for reforming the role of federal electric utilities so as to allow Enron and others access to their transmission lines and to allow Enron and similar energy companies to sell electricity in the region served by the federal Tennessee Valley Authority. The Enron plan would also allow the TVA to market its electricity outside the area it is supposed to serve, with such sales being subject only to FERC oversight, i. e. , subject to virtually no regulation. Ken Lay's memo also encouraged the administration to "reject any attempt to re-regulate wholesale power markets by adopting price caps or returning to archaic methods of determining the cost-based wholesale power. " In other words, Enron should be allowed to jack up prices as high as possible. The Enron wish list goes on to propose that the federal government have the right to overrule state authorities which fail to grant permits for Enron and others to build new generating plants and transmission lines.

. In sum, Enron advanced a plan to replace a series of state-wide monopolies held by government-regulated utilities, with a nation-wide cartel of a few private energy producers free from any responsibility except fattening their profit margins. The House committee's minority staff's fact sheet verifies with quotes directly from Bush's energy task force report that the White House followed "Kenny Boy's" plan down the line.

. Meanwhile, Enron was instrumental in getting deregulation measures passed at the state level. For instance, in Texas, energy deregulation was pushed through by then-governor Bush in the mid-90s. In 1994, Bush, at "Kenny Boy's" request, appointed Pat Wood the chairman of the state's Public Utilities Commission. Wood stated in a newspaper interview that he was told by Bush to "get us to a market" in energy. (2) Wood obeyed his orders. In June of 2001, Bush made Enron's boy, Pat Wood, the chairman of FERC. Thus, a champion of deregulation was made head of national energy regulation.

. While energy deregulation proceeded in Texas, California was embarking upon its own free-market energy plan. Of course it was in California that Enron's promises that unregulated markets would provide cheap and plentiful energy crashed and burned. Only two years ago, Enron and other unregulated energy producers engineered blackouts in California, drove prices out of sight, bankrupted a giant public utility, and emptied the state treasury which paid off the bills for the utilities. FERC, which has powers to control prices, for months refused all requests to stop the unbelievable price-gouging. Meanwhile, deregulation has led to soaring heating and electric bills in state after state.

Enron demands freedom for financial swindling

. Enron not only pushed for free access to the energy markets, but it wanted to be free of any regulatory oversight of its bookkeeping, accounting and financial practices. As we shall see in a later section of this article, this helped allow Enron to undertake outrageous financial and accounting swindles of all kinds. But here we shall mention some of the deregulation that helped Enron run wild.

. The more Enron grew, the more its emphasis shifted from things like the pipeline transport of natural gas and selling energy produced in its power plants to becoming a commodities trader, mainly in energy, but also in other fields. They conducted thousands of such transactions a day, speculating on the rise and fall of these commodities. Enron also engaged in "risk management" contracts in which Enron was compensated for assuming one or another type of financial risk for another company.

. Derivatives are a type of risk-shifting device, and Enron had reportedly become the fifth-largest commodity derivatives dealer in the U. S. (3) Under Papa Bush, the Futures Trading Practices Act of 1992 swept through Congress. It authorized the Commodity Futures Trading Commission (CFTC) to exempt certain types of contracts from oversight. Enron, smelling blood in the water, immediately petitioned for an exemption for energy derivative contracts. The Chairwoman of the CFTC, Wendy Gramm, wife of Republican Senator Phil Gramm, rammed through an expedited approval of Enron's request. Mrs. Gramm was named to the Enron board of directors in 1993 soon after stepping down from her CFTC post.

. In light of the near-collapse of the hedge fund Long-Term Capital Management in 1998, there was some push to have a bit more regulation of derivatives trading. Enron helped lead the charge against this and achieved victory with the Commodity Futures Modernization Act of 2000, which further weakened CFTC oversight of energy trading and derivatives contracts. Helping push this legislation through was none other than Senator Phil Gramm, whom Enron had lavished with campaign funds and other family favors.

. Another area vital to Enron's swindling was crawling out from the oversight applied to public utility holding companies. In the 1930s, the bourgeoisie was forced to reign in the holding companies in the electricity industry who through Enron-style swindling managed to jeopardize electric supplies for whole regions of the country. The 1935 Public Utility Holding Company Act (PUHCA) made the energy companies keep certain records subject to Securities and Exchange Commission (SEC) review and required the holding companies to obtain SEC approval before issuing or purchasing securities. Mergers and diversification plans were also subject to SEC regulation. But in 1994, the SEC exempted Enron's power marketing division from the PUHCA. In 1997, Enron was given an exemption from laws which require divulging information about virtually all aspects of its foreign holdings. The fact that Enron first hired the now ex-boss of the SEC staffer who would grant the exemption was evidently another Wendy Gramm-type coincidence!

. Enron also benefited from corporate lobbying campaigns designed to defeat crackdowns on specific abuses. As well, the fact that the accounting industry is essentially self-policing meant that firms like Arthur Andersen, which is implicated in the Enron scandal, have no hesitation to manufacture a completely deceptive financial picture for the benefit of their corporate clients. Accounting firms that do a good job of "cooking the books" stand to make a lot of additional money in so-called "consulting" services in addition to the normal auditing fees. Arthur Andersen, for example, was paid $27 million for consulting service by Enron in addition to $25 million for auditing services in 2000.

. A few years ago the SEC meekly tried to limit consultation fees of accounting firms which were also auditing the same company's books. But the accounting industry's Congressional lobbyists brought pressure to bear on the SEC, and the rules that were finally adopted were actually devised by the accounting industry itself. In the wake of the Enron scandal, there's been a new outcry to toughen up on the accounting industry. But the SEC has responded with an empty proposal. This is not surprising given that the present chairman of the SEC is Harvey Pitt, whose background is as a lawyer for the "Big Five" accounting firms and the industry's main trade association and lobbying group. Indeed Pitt was the point man for the accounting industry getting a 1995 law passed weakening the ability of shareholders to sue companies for their fraudulent financial practices and reducing the potential liability of accounting firms involved.

How the Bush's businesses profited from political connections and swindles

. The fact that Enron could so readily shape the political landscape to suit itself is not some unfortunate episode. The fact that the economy is dominated by a handful of super-rich corporations who have concentrated wealth and resources in their hands allows them to dominate the political structures, too. This domination of politics by the capitalists is not a corruption of the political system, but the essence of our "dollar democracy. " Not only do the capitalists have all the resources to push through their political agenda, but there is a revolving door between the corporate boardroom and the government posts. Thus, if the government regulatory agencies turn a blind eye to sleazy business deals, that's because the fox is guarding the henhouse.

. Look at the Bush family itself. Enron crony G. W. Bush put on a big show of concern over Enron's practices. But Bush himself behaved just like the Enron executives when he had the chance. During his father's presidency, G. W. was a major shareholder in a failing oil venture called "Spectrum 7". A company called Harken Energy Corporation bailed the company out, and in the process G. W. traded his stake in Spectrum 7 for about $500,000 in Harken stock. Bush became a consultant with Harken and was privy to information that the company was sinking and that ordinary stockholders would be hurt. In June 1990, two months before Harken stock declined by 25%, Bush sold two-thirds of his stock, netting a profit of about $318,000 in the process. Harken stock continued to plummet further. Thus, while Bush expressed dismay at the behavior of "Kenny Boy" Lay for using his insider status to profit as the ordinary shareholder got screwed, G. W. did the same thing. (4)

. While Enron was a master of using political connections, the first president Bush takes a back seat to no one here. Papa Bush is employed by a shady investment company called the Carlyle Group. The head of Carlyle is Frank Carlucci, a former Secretary of Defense under Reagan. (Until a few months ago, the Saudi billionaire family of Osama bin Laden was an investor. ) Carlyle is well-known for buying up failing defense contracting firms and then using its political connections to get fat government contracts. Such ties between the capitalist businesses and the bipartisan political establishment are so commonplace, that the bourgeoisie takes it for granted that such things should go on. Thus, there is reportedly nothing illegal in this whole scam.

. Recently the Carlyle group and its political ties were in the news because of the controversy surrounding the Crusader artillery system. A Carlyle subsidiary, United Defense Industries, has had the contract for this project. According to Department of Defense figures, over the years some $2. 8 billion has been poured into the system as of 2001. (5) But eventually the Pentagon brass soured on the Crusader. So while the Bush budget for 2003 actually allocates another $475 million for it, Secretary of Defense Donald Rumsfeld has discussing pulling the plug on it and the Army has been directed to find some other deadly use for the money. Enter the Secretary of the Army, and former Enron executive, Thomas White, another Bush appointee. He has campaigned to save the Crusader. But whether or not Crusader is killed, UDI still has many lucrative contacts. For instance, it produces the primary armored vehicle for U. S. forces, the Bradley Fighting Vehicle.

. Before leaving the subject of job-hopping between the executive suite and government posts, it's worth noting a bit more about the Secretary of the Army. It just so happens that White was the vice chairman of Enron Energy Services division (EES) just before his appointment. EES was a corporate cesspool which used every trick in the book in order to report great profits while it was actually suffering over half a billion dollars in losses. EES management's deals failed, but they made bonuses just for signing the deals and made out well even as the company crumbled. White himself did quite nicely. In addition to his salary of $5. 5 million plus bonuses in one year, he had about $50 million in Enron stock.

Enron and the anarchy of the market

. The market, unencumbered by regulation, was what Enron wanted and got. It took advantage of this to quickly run up huge profits and expand into a corporate giant. Its fantastic rise rested on the premise that it could guarantee long-term stability of prices for its customers while there were no restrictions on the volatile fluctuations in the markets it dealt in. Supposedly its armies of experts in energy and in projecting economic trends would allow Enron itself to make endless profits while avoiding the pitfalls of the market that its customers would not be able to. But things turned out otherwise. It did rather well when it could engineer super-high energy prices. But overall its speculation in energy and other markets fairly quickly led to a series of fatal failures. Enron could sign its corporate and institutional customers to long-term contracts promising cheap energy, but it could only guess at such things as the rise and fall of energy prices, which are subject to big swings. The promise implicit in Enron's scheme, that with enough knowledge about the markets, the anarchic nature of the capitalist economy could be tamed, proved to be a myth. The Enron scandal shows that as long as capitalism exists, even the wisest army of experts can not overcome its anarchic nature. Its financial trickery was in part a last-ditch effort to hide its losses and buy itself more time. But in the end, it was the same free-market forces which the Enron execs worshipped which overwhelmed the company and brought it to its knees.

. Enron's involvement in the California energy crisis illustrates how Enron's speculation led to a rapid increase in revenue followed by huge losses. As noted earlier, California's energy deregulation law opened up the wholesale marketing of electricity to unregulated private producers who sold power to the regulated utilities who then marketed this power to the public. The unregulated producers could charge whatever the market would bear. Enron did not have any energy-producing plants in California, but nevertheless made a fast fortune from the California energy crisis. How? Enron had an unregulated energy auction subsidiary, EnronOnline, through which it controlled a large share of the California energy supply. It got control by contracting for much of the available energy. The producers were already charging high prices for this energy, and Enron insured they zoomed much higher by helping to create artificial shortages. Enron also bid up the price by buying and selling energy between its different divisions. In turn, Enron charged as much as eight times the normal rate for energy at that time. They got away with it because they had cornered enough of the energy supply to charge monopoly prices.

. In May, federal regulators made public an internal document by Enron lawyers which reveals some of the company's tricks to drive up prices. In one scheme, Enron falsely claimed it encountered congestion on energy transmission lines in order to get paid by the state of California for relieving the supposedly clogged lines. The memo also reveals how Enron avoided price caps on energy produced and sold within California by sending power out of state and them reselling it back to the California market. The Enron memo also confirms other swindles such as the practice of bidding up prices by trading energy between Enron affiliates.

. This process was assisted by the aforementioned December 2000 federal law which exempted energy-trading from the usual commodity-trading regulations. Reportedly this allowed Enron to manipulate the market more than it could have in a regulated trading auction. In the six-month period following the passage of this legislation, there were 38 "rolling blackouts" in California compared to only one in the previous year. So much for Enron's promised competition and lower prices.

. Using this blackmail, Enron (and other energy traders) demanded their ransom and got it. The six-month Enron feeding frenzy came to a halt when FERC finally decided to institute some regulation over the energy market in California and several other Western states. Of course by then California had been bled dry, and the state budget continues to groan under the weight of long-term energy contracts it made when prices were high. As for Enron, the six-month period was a bonanza. Enron's "Wholesale Services" revenues reflected this, zooming to $97 billion, an increase of revenues of 350% for the first six months of 2001 compared to the same period a year earlier. (6)

. It should be noted that this naked robbery has not yet made FERC reconsider deregulation overall. Despite eventually releasing some embarrassing Enron documents and eventually establishing price caps, FERC chairman Pat Wood still reportedly favors eventually lifting the price caps.

. But with the imposition of some price controls, Enron's fortunes nose-dived. Enron had contracted for billions of dollars in energy, not worrying about paying high prices because they assumed they could use their position in the market to sell them at even higher prices. But now the market had changed, albeit with some government intervention. Enron was therefore forced to sell its contracts at a big loss.

. Overall, Enron's energy speculative ventures were not going well. Enron Energy Services was rapidly losing money and having difficulties providing the services it promised its customers. But Enron management went on as if EES had money to burn. At one point they paid Eli Lilly $50 million up front in return for a 15-year, $1. 3 billion contract. Other problems were coming up, too. A much-vaunted deal with Blockbuster to provide on-demand video service collapsed. A Canadian bank had invested $115 million in the venture, and Enron had guaranteed the bank's money even if the venture failed. Enron's "broadband" division reported losses of $137 million in August 2001. In another case, Enron used its "Raptor" subsidiary to invest in stock in two other companies, both of which collapsed, with losses to Raptor of over $200 million. Enron also had some major overseas debacles. On October 16, Enron admitted losses of $618 million for the third quarter and announced a decrease of $1. 2 billion in the company's shareholder equity. Enron stock was now plummeting.

. On December 2, Enron filed for bankruptcy. It reported it had lost some $38 billion in assets in the previous two months, leaving it with $24 billion in assets along with $13. 1 billion in liabilities.

Financial swindling

. The Enron scandal shows how financial swindling assumes great proportions in modern capitalism. Large businesses commonly use a system of holding companies composed of "parent companies" and their nominally independent subsidiaries under the parent company's control. Among other things, this enables the big firms to conduct all sorts of legal and illegal financial transactions between the different parts of the parent company, making it hard for all but the top company officials to know what the company's overall financial situation actually is. The holding company system is well-suited to hiding debt and presenting a false picture to attract investors. It allows the top executives to secretly siphon off company funds to themselves. Shifting assets around between different "partner" firms, as Enron called them, also is a convenient tool for tax evasion.

. If Enron's management had any genius, it was for presenting a false picture of their company. For this purpose they created a maze of nearly 3,000 "partnerships". Among the countless tricks were:

. * Enron used so-called "Special Purpose Entities" (SPEs) in order to hide debts. In this scheme, Enron would create a supposedly independent company that was controlled by Enron. If Enron wanted an infusion of cash, they would give the SPE Enron stock to use as collateral for a loan from an outside financial institution. With this loan money, the subsidiary would then buy Enron plants, or other companies' stock held by Enron, at a price determined by Enron. When the transaction was recorded on Enron's books, it looked like they simply made income by selling assets.

. Enron could create profits out of thin air by selling assets to a "partner" company. For instance, it sold a basically worthless fiber optic cable to a subsidiary, reporting a $53 million profit and then reporting another $14 million in profit from the same deal the next quarter.

. * Enron used "derivative contracts" with its subsidiaries to hide losses in bad investments and inflate its profits. In one case, an Enron subsidiary invested in an outfit called New Rhythms Net Connections. This venture failed. One would think this would have been considered a financial loss for Enron. But Enron had a derivatives contract with the subsidiary whereby the value of Enron's contract would rise as the value of New Rhythm stock fell. If the stock rose, Enron would report the profits of its subsidiary. If the stock fell, Enron would also report profits, this time because it made money from the derivative contract. Heads I win, tails you lose! Of course to pull off this trick, Enron neglected to report the lose of its subsidiary. This trick was used to cover many of the failed internet investments Enron made through Raptor.

. * Enron reported liabilities as profits. Previously, it was mentioned that Enron had guaranteed to pay back, if the deal went bad, the $115 million invested by a Canadian bank in a joint project between Enron and Blockbuster, The bank had invested in an Enron subsidiary called Project Braveheart, which promised the bank a decade's worth of future earning from the Blockbuster deal. Enron recorded this $115 million as a profit, although Enron had the obligation to pay it back when the deal collapsed.

. * Enron used its "partnerships" to water-down the value of stocks. Enron gave a subsidiary 3. 7 million shares of common stock, and they reported receiving an IOU from this subsidiary for $1. 2 billion. Enron gave the false impression that this $1. 2 billion was really new investment in the company. They didn't make it clear that the stock was issued merely for an IOU that was actually from themselves.

. * Enron used its subsidiaries to funnel funds into tax havens. Some 874 subsidiaries were located in the Cayman Islands and other places with few if any bank disclosure regulations. Enron had an enormous number of tax havens, but it was merely following a well-established pattern in corporate America. It's estimated that about $800 billion is deposited in accounts in the Cayman Islands alone, an amount equal to 20 percent of deposits in all U. S. banks. By hiding assets and benefiting from deductions like the cost of stock options for its executives, Enron paid no income taxes in four of the last five years. Indeed, it got tax rebates of $382 million. Meanwhile, Bush's economic stimulus package (for capitalists) would provide Enron with $254 million in tax rebates.

. * Enron sometimes reported as earnings the total value of a deal it arranged rather than what they earned on the deal. It also resorted to recording as profits what it projected it would earn in the future in highly-speculative long-term deals.

Wall St. financiers' involvement

. Enron's financial manipulations were carried out with the connivance of some major banks and brokerage houses. They had a big stake in its fortunes being the creditors behind billion-dollar loans to Enron and marketers of its stock and that of its subsidiaries. According to one estimate, debt and stock issues handled by the financiers totalled about $10 billion from 1996-2001. (7) Citigroup and J. P. Morgan Chase & Co. (partly through Morgan's affiliate called Mahonia) are both major creditors of Enron, with over $3. 5 billion in loans between them. Naturally this gives them an interest in Enron doing well, or at least appearing to do well.

. For instance, we mentioned in footnote 1 the efforts of Citigroup boss Robert Rubin lobbying the Bush administration to help rescue Enron. Rubin wanted Bush to help keep Enron's credit-rating up even as the company was floundering. It also appears that Morgan Stanley was involved in helping Enron's deception. Its Mahonia subsidiary is embroiled in a lawsuit against its insurers who are refusing to pay Mahonia because the insurers claim it misrepresented loans to Enron as mere oil and gas trades. It would not at all be surprising if that was the case since Enron constantly sought to disguise its debt, and Morgan Stanley would also have an interest in seeing Enron paint a rosy financial picture.

. But the interest of the financiers in Enron was not confined to loans. They were also marketing the securities of Enron and its affiliates, buying up Enron offerings and reselling them for a profit. Merrill Lynch marketed the notorious LJM2 partnership run by head Enron financial officer and big-time crook, Andrew Fastow. According to Enron's own internal investigation, LJM2 used shady deals to overstate company profits over a 15-month period by nearly $1 billion. Merrill Lynch raised about $260 million in investments in LJM2. Yet, while Lynch was assuring investors that LJM2 was something to put their money in, they claim they hadn't the slightest idea of what sort of trickery Enron was carrying out. Right. Meanwhile there are reports that Morgan Stanley and Citigroup executives were regularly meeting with Enron to deal with its financial woes. They too had invested their own money in Enron, enticed by promises of unbelievable returns of 1000% or more. (8)

. The fact of the matter is that since the financial houses make a lot of money marketing the offerings of Enron and other companies, there is a built-in financial incentive to lie about the health of these companies. The analysts who recommend where to invest are not independent players, but work for the same Wall St. outfits that want to land big deals with corporate players. As a long-time Wall St. executive put it, "who are you going to give investment banking business to, the guy who says 'sell' or the guy who says 'you're geniuses, we love your company'?"(9)

Puny efforts at re-regulation of the financiers

. Deregulation of the banking industry contributed to this situation. In 1999 Congress legalized mergers between investment and commercial banks. This overturned a 70-year old law enacted after a wave of banking swindles similar to those going on today. Now a section of bourgeois officials feels obliged to again call for more oversight of the financial houses. But don't expect much. According to the establishment press, one of the "toughest" crackdowns was supposed to be carried out by New York Attorney General Eliot Spitzer. Among Spitzer's targets was Merrill Lynch. Lynch and Spitzer reached an agreement whereby Lynch was fined $100 million for misleading investors about the health of companies which hired Lynch to market their businesses to investors. $100 million sounds like a huge fine, but it's actually less than a month's profit for the Merrill Lynch.

. The settlement also is supposed to stop Merrill's investment advisors from being compensated directly for attracting investment in companies that deal with Lynch. However, some handlers of major investment funds have remarked that this wouldn't do much. After all, even without direct compensation for pushing companies that Lynch was working for, a Lynch employee who failed to tow the line on these companies could, for instance, be fired.

. Adding insult to injury, evidently part of the agreement was that Lynch was not required to admit any wrongdoing. Presumably this will help Merrill Lynch stave off lawsuits by investors they duped. Thus, this "crackdown" is really a light tap on the wrist. It creates the false impression that Wall St. is really being tamed by the government, while the bourgeois regulators' real concern is the health of the finance capitalist, not their victims.

Arthur Andersen

. The Enron scandal has also shown the inbred nature of the relationship between the accounting industry and the big corporations like Enron. David Duncan, who managed the Enron account for the Arthur Andersen accounting firm, confessed to congressional investigators that Andersen was well aware of the accounting tricks that were being employed at Enron, saying they posed "a significant risk". (10) In fact, in February 2001, Andersen even discussed dropping Enron as a client because of such things as the losses piling up on the "off-the-books" Enron partnership with LJM. But the $52 million they were getting to lie on Enron's behalf convinced Andersen's top officials that it was worth the risk of eventually getting found out. Moreover, in return for "cooking the books" for Enron, Andersen management not only made tons of money, but landed lucrative jobs with Enron. Enron's current chief financial officer, Jeff McMann, and its chief accounting officer both came from Andersen.

. By October, as it became apparent that Enron charade was coming to an end, Andersen tried to cover its tracks by shredding documents before investigators could examine them. Shredding the books -- that's the latest fashion in capitalist bookkeeping methods!

. Clearly, the Enron scandal is not just the case of a few unscrupulous Enron officials pulling the wool over everyone's eyes. Rather, it's a glaring example of how big business operates today. The banks, the Wall St. analysts, the accounting firms all worked together to gorge themselves with profits by scamming the public. That's the morality of the capitalists who never tire of lecturing the workers on the virtues of an honest days' work! Andersen is not some oddity though. Other major accounting firms have their own scandals. The corruption throughout the industry can also be seen by the fact that the "self-policing" of the industry never finds any wrongdoing. Indeed, just before Andersen started shredding it was given a clean bill of health in a peer review.

The executives cash in as Enron collapses

. One of the disgusting features of the Enron debacle was that company executives ran off with a fortune while running the company into the ground. According to Bush's Treasury Secretary, Paul O'Neill, the Enron collapse showed that "part of the genius of capitalism is people get to make good decisions or bad decisions, and they get to pay the consequences or enjoy the fruits of their decisions. " Actually, Enron showed how capitalism rewards the corporate bosses no matter how bad they screw up. In fact, the trickery that is possible with a complex web of "partners" belonging to the same parent company is an impetus for the company's management to undertake risky ventures since even if they fail, the main owners and company officials will be able to cash out their stock in a timely manner and leave the consequences of the collapse on the little investors who aren't in the know.

. While its ordinary employees lost everything, Enron top execs cashed in over $1 billion in stock while it still had value. Last year Ken Lay sold $70 million of stock back to Enron to pay off loans he had gotten from the company. This was on top of $30 million he sold on the open market. In August alone, when Enron executive Sherron Watkins warned Lay of accounting irregularities, Lay cashed out over $16 million. That same month, CEO Jeffrey Skilling quit the company and cashed out his shares for $15. 5 million. Meanwhile, the chief financial officer, Andrew Fastow, who masterminded the "partnerships", wound up milking some $30 million from his investments in these failed ventures. When an Enron partnership fell, Enron executives who invested in it made sure to give themselves fat profits on these investments anyway.

Global Crossing and other recent financial swindles

. As rotten as Enron's management was, there is a whole pattern of financial swindling among the big capitalists as has been revealed in a number of recent scandals. While Enron is the largest bankruptcy in U. S. history, the collapse of Global Crossing early this year is the fourth largest. Global Crossing was part of the crash affecting a number of fiber optics companies. Its employees lost $450 million invested in company stock. Just like in the Enron case, however, the top company officials ran off with a fortune. Executives sold off $1. 3 billion worth of stock in the three years before Global Crossing folded, with Chairman Gary Winnick pocketed $730 million, while CEO John Legere, who spent only two years with the company, got $15 million in compensation. Global Crossing has been under investigation by the FBI and the SEC for inflating its revenues and other financial chicanery.

. Arthur Andersen itself has been involved in three other recent corporate financial scandals besides Enron. Andersen cooked the books for Sunbeam, which went into bankruptcy. Andersen eventually reached a $110 million settlement with its shareholders in May 2001. The next month Andersen paid a $7 million SEC fine for inflating the earnings of the Waste Management company. And as the Enron plot was unfolding, Andersen was implicated in the Global Crossing debacle.

. Prior to its involvement in shredding documents to cover up the Enron scandal, Andersen had only been slapped on the wrist by the alleged government watchdog, the SEC. But then again, Andersen has a lot of friends in high places, like former lawyer for Andersen, Harvey Pitt, the present head of the SEC. This time, however, with Andersen publically exposed shredding Enron documents, there apparently was no saving Andersen. They were recently convicted of obstruction of justice and this likely will mean they are barred from auditing publicly traded companies. Moreover, even before the conviction, Anderson was losing many of its corporate customers.

. There's plenty more companies whose "creative bookkeeping" has already come to light and the trend is growing. The number of firms that had to restate their earnings was 156, up from an average of 49 per year between 1990 and 1997. (11) No doubt there are many more corporations who have yet to have been found out.

. Indeed, in May several other companies involved in energy trading were racked by scandal. Two executives of Reliant Resources Inc. were forced to resign in the midst of revelations that dubious transactions had inflated the companies revenues by 10%. Another energy company, CMS, which owns Consumers Energy, supplier of energy to 3. 2 million customers in Michigan, was forced to admit it had inflated its revenues by about $5 billion. It did this by having its energy trading division sell energy to other companies and then buy the energy back, while booking the transaction as real sales. The CEO of CMS and the head of the energy trading division have quit in disgrace. One of Enron's chief energy-trading competitors, Dynergy, was one of the other parties in CMS's energy-trading scheme and its CEO has also now resigned.

Russian capitalists + American accounting firms = fraud

. That corporate financial swindling is a universal feature of capitalism can also be seen by recent revelations in Russia. With the collapse of the old Soviet state-capitalist system, market capitalism has become triumphant. In the 1990s, Western bourgeois analysts complained about the problem of lack of "transparency" in Russian capitalist companies. Prestigious U. S. accounting firms would go to Russia to lecture on the need for accounting reform. Now, it turns out, the "Big Five" U. S. accounting firms are knee-deep in financial scandals there. UPI Senior Business Correspondent Sam Vaknin reports on this in an April 24 article entitled "The Enrons of the East. " This article explains that Price-Waterhouse is being sued for falsifying audits of the Russian energy giant Gazprom. Price-Waterhouse helped Gazprom carry off shady deals resulting in billions of dollars in losses and plummeting share prices. Price-Waterhouse also is involved in an accounting scandal with the Auto VAZ company. Auto VAZ shipped $1 billion worth of cars to shadowy dealers who then disappeared without paying for them. Price-Waterhouse hid these losses for several years.

. Russian capitalists, the article notes, know that if they have trouble with one accounting firm, they can always find another who will play ball with them. The article quotes a former employee of Ernst and Young in Moscow admitting that

. "A big client is God. You do what they want and tell you to do. You can play straight-laced and try to be upright and protect your reputation with minor clients, but you can't do it with the big guys. If you lose that account, no matter how justified you are, that's the end of a career. "

. The article illustrates this by relating how a Russian company replaced Price-Waterhouse in 1998 when it revealed some questionable activity. New accountants were brought in, none other than Arthur Andersen.

Lenin on the "holding system" and financial swindling

. In fact, big-time financial scandals are as old as the "holding system" itself. In his work Imperialism, the highest stage of capitalism, Lenin wrote about the financial swindles at the end of the 19th century and the beginning of the 20th century. Though the tricks have been "improved" over the years, an example Lenin writes about has all the basics of our modern financial scandals. In his work, Lenin excerpted from the German review, Die Bank of May 1914, the following:

. "'The Spring Steel Company of Kassel was regarded some years ago as being one of the most profitable enterprises in Germany. Through bad management its dividends fell from 15 per cent to nil. It appears that the Board, without consulting the shareholders, had loaned six million marks to one of its 'daughter companies', the Hassia Company, which had a nominal capital of only some hundreds of thousands of marks. This commitment, amounting to nearly treble the capital of the 'mother company', was never mentioned in its balance-sheets. This omission was quite legal and could be hushed up for two whole years because it did not violate any point of company law. The chairman of the Supervisory Board, who as the responsible head had signed the false balance-sheets, was, and still is, the president of the Kassel Chamber of Commerce. The shareholders only heard of the loans to the Hassia Company long afterwards, when it had been proved to be a mistake' . . . (the writer should put this word in inverted commas)' . . . and when Spring Steel shares dropped nearly 100 per cent, because those in the know were getting rid of them. . . .
. "'This typical example of balance-sheet jugglery, quite common in joint stock companies, explains why their Boards of Directors are willing to undertake risky transactions with a far lighter heart than individual businessmen. Modern methods of drawing up balance-sheets not only make it possible to conceal doubtful undertakings from the ordinary shareholder, but also allow the people most concerned to escape the consequences of unsuccessful speculation by selling their shares in time when the individual businessman risks his own skin in everything he does . . . '" (12)

. Lenin goes on to point out that the system of using holding companies became common as capitalism developed into its imperialist stage where giant companies dominate the economy. Lenin's work also goes on to call attention to the fact that all the "rules of control" over the companies that are supposed to prevent financial swindles fail to do so because under capitalism "private property is sacred, and no one can be prohibited from buying, selling, exchanging or hypothecating [pledging or trading--ed. ] shares, etc. (Ibid. )

Enron's collapse ruins employees

. While the top Enron executives escaped with a billion dollars, the ordinary employees were devastated. Thousands lost their jobs. Enron was supposed to be as promising as any company around. But after a few short years of riding high, it lay in ruins. This shows that the workers' livelihood is always in jeopardy under capitalism. Enron is symptomatic of series of corporate failures amidst a growing economic crisis that has swelled unemployment to 5. 7% even by grossly understated government figures.

. Making matters worse, the Enron employees' pensions, which were invested in now-worthless Enron stock, were wiped out. While the price of Enron shares tumbled, and while Lay and other bosses were cashing out, as late as September 26, Lay was still giving pep talks to employees to invest in Enron because "our financial liquidity has never been stronger. "(13) Three weeks later, Enron had to announce giant losses. Employees who wanted to get out of Enron stock were prevented by the company from doing so in this period with the excuse that the company was switching pension plan administrators.

Enron and the general pension crisis

. Enron's collapse also had repercussions on working people's pension plans that held Enron stock. For example, the Florida public workers' pension fund lost $334 million. Pension funds for state employees in Georgia, Washington, Ohio and Alabama lost a combined $416 million. Several major California pension plans were also took a hit. These Enron-related losses alone may not necessarily cause a crisis in these pension plans. Nevertheless, the large amount of financial swindling at Enron and other companies exposes the unsoundness of the entire retirement system set up by the capitalists.

. There are instances where companies have the pensions invested mainly in their own company, such as Enron or Xerox or Lucent. When these companies had problems, their pensions immediately faced a crisis. Some reformers in Congress propose to fix this by allowing no more than 20% of an employees pension to be invested in their company's own stock. But this would do little to solve the pensions crisis. This is part of the more general problem that the capitalists in general have replaced retirement plans with pre-determined payment schedules that are supposed to be guaranteed by the company, with employee-funded investment accounts like 401Ks, where the consequences of the ups and downs of the market are born entirely by the individual employee. Escaping responsibility for the employees' retirement is obviously a great boon to the corporate bottom line. This is why guaranteed pensions are becoming a thing of the past. While in 1985, there were 114,000 companies that provided guaranteed plans, there were only 38,000 who did so in 2000. (14)

. In addition, there's a major push among the neo-liberal bourgeoisie to undermine the federal social security system by allowing funds to be siphoned off into individual retirement accounts. In the extended boom prior to the recent recession, all sorts of illusions were created that retirement security could be provided by an ever-rising stock market. But with the recent downswing in the economy many people have had their retirement investments depleted.

. While guaranteed plans are better than individual employee-funded investment accounts, the risks of the market also affect pension plans with guaranteed benefits. Here the company is supposed to provide retirement payments regardless of what happens on the market. The company assumes the risk of the pension fund investment rather than each employee. But companies have been allowed to underfund these pension funds on the grounds that the rate of return on pension fund investments will suffice to keep the pension fund solvent. Thus, even the guaranteed pension funds are playing with fire. As well, there are cases where companies simply find a way to cheat the workers out of their "guaranteed" retirement benefits. The neo-liberal worship of the market has thus placed the whole pension system in jeopardy.

Enron and the imperialist agenda of neo-liberalism

. Enron's world-wide operations were also considered a model by the neo-liberal bourgeoisie. The big capitalist corporation of today is an international exploiter, and Enron was no doubt a model in this regard. Wherever capitalism has become highly developed, the small entrepreneur operating in relatively local markets has been subjugated by the giant corporations which dominate the entire domestic and world economy. Monopoly capitalism has always been inseparable from an imperialist foreign policy because the corporate monsters are forever in a frantic race for new markets, resources, and "cheap labor" overseas. The present neo-liberalism, which worshipped Enron, has its own particular imperialist economic agenda. It seeks to force on every society the decimation of government regulation whether it be labor laws, health and safety regulations, or environmental measures. It wants to privatize the public sector from water supplies to education. The free market is supposed to replace all these "outdated" concepts. But this free market will allow little real competition as it is monopoly corporations who are being unleashed.

. Just as we have seen how Enron shaped domestic political policy, so Enron and the powerful corporations determine the overall direction of U. S. foreign policy. It bribed various governments around the world. Enron also worked hard to put its imprint on the international capitalist agencies, which are themselves pushing a neo-liberal policy. For example, it worked on formulating certain policies adopted by the WTO and the General Agreement on Trade in Services which helped open new markets Enron was interested in exploiting.

Enron bullies Mozambique

. With the new deregulated climate around the world, Enron's international operations grew very rapidly. Revenue from foreign operations tripled from 1998 to 2001 to $22. 9 billion, or 23% of total revenues. A brief look at a few of Enron's numerous overseas ventures provides some snapshots of the havoc caused by the neo-liberal globalization crusade.

. Mozambique was the scene of one of Enron's crimes. Enron enlisted the Clinton administration to strong-arm the Mozambican government to allow Enron to build a pipeline to South Africa. The Clinton government convinced officials in Mozambique to accept a deal they did not like by threatening to cut off development aid to the country. The former resources minister of Mozambique reported that the way the U. S. embassy deputy chief talked "It was as if he was working for Enron. "(15)

Privatizing in Western Europe

. Enron not only bullied weaker states into submission but took advantage of the privatization trends among stronger capitalist powers. In Great Britain, Enron threw money to Tony Blair and his Labor party. Blair was moving to privatization anyway, but this helped insure Enron would be able to take advantage. Thus, Enron took over the privatized water utility, Wessex Water. As well, it seems Blair lifted a moratorium on energy plants using natural gas, which, by coincidence, is the type of plant Enron builds. Enron also moved to quickly take advantage of deregulated energy markets in Germany.

Enron's rampage in India

. But the biggest overseas scandal for Enron occured in India. In 1992, the government of Maharashtra state was privatizing its energy sector and brought in Enron to do the job. Enron, through a subsidiary known as Dabhol Power Corporation (DPC), was to build the largest electrical generating plant in the world. U. S. corporate titans GE and Bechtel held a minority interest in DPC, and eventually the state government brought a 30% share.

. The project met with widespread opposition from the Indian masses because the plant jeopardized the livelihoods of peasants in the area and threatened environmental disasters. In fact, because of the controversy over the construction of the plant, when the BJP-Shiv Sena alliance government replaced the Congress Party regime in Maharashtra in 1995, it suspended the project.

. Enron was not deterred, however. Soon the U. S. ambassador was denouncing the annulment on behalf of Enron. Enron also admitted to spending some $20 million on "educational gifts" to Indian officials. According to the BJP-Shiv Sena alliance, a lot of this money went to the Congress Party to get the original deal. But evidently there was considerable bribe money left over because in 1996 the cancellation was itself effectively cancelled by a short-lived BJP-led government which had taken power nationally in May 1996. The local BJP-Shiv Sena government soon renegotiated a new contract even worse than the one agreed to by the Congress Party.

. The deal was an enormous windfall for Enron and a disaster for Indian citizens. The state was obligated to pay Enron some $30 billion for its power and it's estimated that Enron would make as much as $14 billion in profits. In return for getting what amounted to 70% of the state electricity board's revenue, the state was to get an 18% increase in electric power capacity. But as it turned out, the power produced at the Enron plants was so expensive that in May 2000 the Maharashtra Electricity Regulatory Committee put a halt to buying power from Enron. Indeed, Enron's price was several times that of some competitors. Enron now provided no power. Yet, under the terms of its deal, the Indian authorities were still obligated to pay Enron at least $4. 4 billion over the next 20 years for maintenance and administration of the plant! The state government, which by then was back in Congress Party hands, said it couldn't meet the payments. So Enron and the Bush administration began pressuring Indian officials to pay up. In June 2001, the Dabhol Power Corporation collapsed altogether.

. While Enron attempted to loot India of billions of dollars, its Indian project also involves corporate welfare from the U. S. government. It seems that while Enron was denouncing government interference in the market, it had its hand out to Uncle Sam to finance its Dabhol project. Enron has gotten loans in the billions of dollars from two federal agencies, the Overseas Private Investment Corporation (OPIC) and the Export-Import Bank. Around $400 million of these loans went to finance the Dabhol power plant. (Incidentally, these loans were made during the Clinton administration. ) Since the Dabhol project collapsed, Enron now wants OPIC to pay up on a "risk insurance policy" for the Indian project to the tune of $200 million.

. But the crimes of Enron in India do not end with financial plunder. According to the group Human Rights Watch, Enron financed a brutal crackdown on opponents of the Dabhol project. In a summary of their report entitled "The Enron corporation: corporate complicity in human rights violations" they state that Enron "paid the abusive state forces for the security they provided to the company" and hired contractors who "engaged in a pattern of harassment, intimidation and attacks on individuals opposed to the Dabhol power project. "(16) The report adds that despite the peaceful nature of the protests, "protesters have been beaten with canes (lathis) or otherwise assaulted by police, in some cases sustaining severe injuries. " Police also "tear-gassed peaceful demonstrations" and "have frequently used laws providing for preventative detention" to lock up dissidents.


. Enron provides us with an excellent example of capitalism at the end of the 20th century and the beginning of the 21st. This is the heyday of neo-liberalism, and Enron was its poster boy. Enron promised that deregulating markets would provide competition, but instead it lead to private monopolies running wild. It promised the market would provide cheap and plentiful energy. It produced unaffordable prices, blackouts and idled power plants. It denounced government interference, but relied on the politicians it helped install, took corporate welfare, and when the victims of Enron in India revolted, Enron relied on the repressive state apparatus there to beat them down. Eventually it lost interest in producing anything as financial swindling led to fast fortunes for corporate executives while jeopardizing the company itself. The Enron scandal illustrates that massive financial swindling is rooted in capitalism. It's not just a few dishonest Enron officials, but a system of crooks including the top financial capitalists and the bourgeois political establishment.

. Enron was supposed to be the invincible flagship of the so-called "new economy" which supposedly was immune from the crisis-ridden capitalism of the past. Instead Enron has proved that capitalism is inseparable from crisis, and from enriching a handful at the expense of the working people. <>


(1) Interestingly, requests to save Enron also came from a well-known Democrat, former Clinton treasury secretary Robert Rubin. Rubin is now head of Citigroup, which had over a billion dollars in loans tied up in Enron which Enron's collapse would jeopardize. So Rubin asked that Bush officials encourage credit-rating agencies to go easy on Enron. (Return to text)

(2) The Nation, March 4, 2002, "A naked emperor disrobed: Or, how Enron did Texas", Nate Blakeslee, p. 16. (Text)

(3) Report by the minority staff of the Committee on Government Reform of the U. S. House of Representatives entitled "Fact sheet: How lax regulation and inadequate oversight contributed to the Enron collapse", p. 2. URL: http://www. house. gov/reform/min/pdfs/pdf_inves/pdf_admin_enron_lax_fact_sheet2. pdf. (Text)

(4) The Spectrum 7/Harken scandal is mentioned in the book Shrub: the short but happy political life of George W. Bush, by Molly Ivins and Lou Dubose, pp. 27-33. (Text)

(5) See Center for Defense Information web page entitled "Program costs to date for selected weapons systems" at http://www. cdi. org/issues/budget/ProgramsToDate. html. It takes its figures from the Dept. of Defense document "Procurement programs and program acquisition costs by weapons system, fiscal years 1982-2001". (Text)

(6) See the Public Citizen report "Blind faith: how deregulation and Enron's influence over government looted billions from Americans", p. 13. URL: http://www. citizen. org/print_article. cfm?ID=7104. (Text)

(7) "The Enron nine: how banks played a role in Enron's 'Ponzi scheme'" by William Greider in The Nation. Available at URL: http://workingforchange. com/printitem. cfm?itemid=13260 (Text)

(8) Ibid. (Text)

(9) Quote from Peter Siris in the January 25, 2002 Online NewsHour report "Silent watchdogs". URL: http://www. pbs. org/newhour/bb/business/jan-june02/watchdogs_1-25. html. (Text)

(10) Time, Jan. 28, 2002, "What did they know and . . . when did they know it?", p. 19. (Text)

(11) Ibid. , p. 28. (Text)

(12) Section III, "Finance capital and the financial oligarchy". (Text)

(13) Time, Jan. 28, 2002, p. 21. (Text)

(14) Ibid. , p. 26. (Text)

(15) The Nation, March 3, 2002, "Enron's global crusade" by John Nichols, p. 14. (Text)

(16) URL: http://hrw. org/reports/1999/enron/. (Text)

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