Silencing the Alarm
" In a letter to Mr. Lay, Mr. Waxman noted, "By the time of the second
e-mail, when the stock price was $37, you had already
sold $40 million of Enron stock during 2001 and over
$100 million since October 1998."
January 14, 2002
The New York Times
By BOB HERBERT
The e-mails are chilling.
Last Aug. 14, the day Jeffrey
Skilling mysteriously resigned
after just six months as Enron's
chief executive, the company's
chairman, Kenneth L. Lay, sent
an e-mail to all employees in
which he said, "I want to assure
you that I have never felt better about the prospects for
the company."
By then Enron's prospects were as hopeless as those of a
sand castle at high tide. Mr. Skilling and Mr. Lay had
already cashed in more than $160 million worth of Enron
stock. On Dec. 2 Enron would go into the record books as
the largest corporate collapse in the nation's history.
But unsuspecting Enron employees - who, by the
thousands, were about to lose their jobs, their retirement
nest eggs, their entire life savings - could read in Mr.
Lay's e-mail: "Our performance has never been stronger;
our business model has never been more robust; our
growth has never been more certain."
On Aug. 27 Mr. Lay sent employees another e-mail, this
time asserting, "One of my highest priorities is to restore
investor confidence in Enron. This should result in a
significantly higher stock price."
The e-mails were released over the weekend by
Representative Henry Waxman, a California Democrat
whose office is investigating the Enron collapse. In a letter
to Mr. Lay, Mr. Waxman noted, "By the time of the second
e-mail, when the stock price was $37, you had already
sold $40 million of Enron stock during 2001 and over
$100 million since October 1998."
Two months after his encouraging e-mails to employees,
Mr. Lay was on the phone with the secretary of the
Treasury, Paul O'Neill, telling him about the perilous state
of Enron's affairs. He also called Commerce Secretary
Donald Evans. And he was in frequent touch with a
Treasury undersecretary, Peter Fisher. So the BUSH
administration knew that Enron's situation was dire.
But did anyone sound the alarm with the company's
employees, or with the millions of Enron shareholders
from coast to coast? Not only were the employees
deliberately left in the dark, but Enron had many of them
locked into rules that prohibited them from selling their
stakes in the company, thus assuring their financial ruin.
If any of this was a matter of concern to the Bush
administration, we haven't heard about it. Treasury
Secretary O'Neill was on television yesterday blithely
stating, "I didn't think this was worthy of me running
across the street and telling the president."
Enron's collapse may have been a devastating financial
blow to tens of thousands of hard-working families, but
Mr. O'Neill, during an appearance on "Fox News Sunday,"
made it clear that he was unperturbed. "Companies come
and go," he said.
He added that "part of the genius of capitalism" is that
"people get to make good decisions or bad decisions. And
they get to pay the consequences or to enjoy the fruits of
their decisions. That's the way the system works."
I guess it was Mr. Lay, Mr. Skilling and other top Enron
executives who made the good decisions, because they
sure reaped the benefits. You might say they made out
like bandits. And it must have been the rank-and-file
employees and the ordinary investors who made the bad
decisions, because they're the ones paying the
consequences.
Bush administration officials are making a big deal out of
the fact that calls from Mr. Lay did not result in a bailout
or, presumably, any other assistance to Enron.
The truth is that Enron had already gotten just about everything it
wanted from the federal government. It walked right into
the heart of the Bush administration and helped shape its
national energy policy, even as consumer representatives
and environmental advocates were largely frozen out.
And by systematically flooding public officials -
Republicans and Democrats alike - with enormous
quantities of campaign cash and lots of other booty, it got
the people who should have been looking out for the
public's interest to look the other way.
The amount of looting at Enron was astonishing, maybe
unprecedented. "It's so huge it's hard to get your arms
around it," said Philip Schiliro, Representative Waxman's
chief of staff.
Enron was the best-connected company in Washington,
not just with the White House but also with the movers
and shakers on Capitol Hill. What it wanted was to be able
to operate in the dark, and it got what it wanted. And
that's how the few at the top were able to milk the
company of so much cash.
nytimes.com |
