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Would anyone believe a healthy human couldn’t smell the difference between well-worn golf socks and a rose? Between a rock concert porta-potty and a bathroom at the Ritz? Between an overfilled dumpster and a pan full of chicken and dumplings?
Only in the corridors of power – big business and big government - where the stakes routinely exceed a normal citizen's comprehension is the answer yes. The few who actually play in this arena, not always ethically or honestly, possess an outsized arrogance based on the ability to buy influence, subvert the facts, and justify activities that would discredit if not imprison an ordinary man.
How else to explain the response to the Enron disaster by Arthur Andersen, Enron’s most senior executives, and a number of our highest elected officials including the President and his Vice President? If it looks, feels, and smells like a dog turd, it almost always is.
Having spent almost 30 years as an executive in three publicly traded companies, 11 of them as C.E.O., I empathize with the need for business leaders to properly serve multiple constituencies not always with the same goals. Management, organized labor, financial analysts, administrative personnel, institutional investors, rank and file shareholders, local communities, environmental groups, boards of directors – each expecting their interests to be served well and fairly.
As Wall Street worships consistent performance, the art/science of accrual accounting made it possible with the help of the big six accounting firms to help C.E.O’s legally manage earnings by creating reserves to smooth out inevitable peaks and valleys, all in all a good practice within narrow and visible limits.
Does anyone believe that Arthur Andersen, whose former partners occupy many of the top financial jobs at Enron, didn’t recognize the patent illegality of book cooking designed to understate debt, overstate earnings, and provide huge fees to those same insiders for managing limited partnerships that provided material non-public information to a few? In order for this to happen the board had to suspend conflict of interest policies.
During this period, as Enron was actually collapsing, Andersen Consulting collected $60 million in fees over and above normal audit charges and 29 Enron insiders took over a billion dollars in profits from the sale of their artificially inflated stock. At the same time Chief Executive Ken Lay actively encouraged his employees to invest most or all of their 401(K) pension money in company stock which they could not sell as he sold aggressively. He assured them in a letter that the prospects for the company had never looked better.
In India, it became evident that Enron’s multibillion dollar investment in a power plant, funded heavily by U.S. taxpayers through the World Bank and vocally supported by both the Clinton and Bush administrations, was emitting the some odor as the parent. It promised huge profits based on overcharging the public, resulted in human rights abuses by police on the Enron payroll, and collapsed under its own weight. Same team – different arena.
Lobbying is an accepted and in most cases appropriate process for large interest groups like organized religion, labor unions, industry associations, large corporations, arts organizations, health care providers, and special interest groups like the N.R.A., National Organization for Women, Right to Life and Planned Parenthood, to influence legislators and legislation favorable to their cause.
Does anyone believe that Ken Lay didn’t try to call in markers as he saw most of Enron’s 100 billion dollar market cap evaporate? Particularly with a heavily supported Texas oil guy in the White House and a former Haliburton C.E.O. next in command, and charged with developing a comprehensive national energy policy, a forum in which he and his associates were asked to participate. Is it possible he failed to take up his cause during these meetings?
Executive privilege is a cornerstone in the concept of checks and balances which preserves the sovereignty of all three branches of government. No one believes that a sitting president should be denied the right to candid conversation and opinion seeking free of congressional eavesdropping.
In the aftermath of the Enron Stinkbomb, however, does anyone believe that Bush, Cheney and Mary Matalin’s refusal to reveal the substance of discussions with Lay and others has anything to do with executive privilege? Does anyone believe the responsibility for shredding and continuing to shred truckloads of documents was the unilateral action of a low-level Andersen employee?
I don’t personally believe that either Bush or Cheney would compromise themselves or their offices by yielding to any amount of pressure from a very powerful and supportive crony. Clearly, though, there exist political ramifications which are serious enough to initiate a cover-up from the same group that spent seven years and millions of dollars attempting to bring down a sitting President over a small investment in a failed land deal. Whitewater is to Enron as the Delorean was to General Motors.
The bigger the lie the easier it is to sell. How else to explain Argentina's debt, a dot-com created 5000 NASDAQ, the size of state lottery revenue, the willingness of terrorists to blow themselves up for an eternity of virgins, every politician's pledge to protect the little guy?
Enron was just a bigger lie with bigger liars, unlike most of the unsophisticated dot-com entrepreneurs who really didn’t know any better. When Jeb Bush feigned incredulity that his state’s pension fund lost $330 million on its Enron investments, 50 times that of any other state, it raises questions. Not about his integrity but the willingness of the funds trustees to continue buying the stock after it had cratered. Someone had been persuaded to listen to the liars.
The biggest bankruptcy in U.S. history really smells bad. Everyone in both parties owes it to the public, who place their faith and the security of their families in what their business and political leaders tell them, to gather the facts and come clean.
There are no guarantees in life, but when the menu promises chicken salad no one expects to be served chickenshit!
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