Gramm's bill, dealing with an obscure financial instrument called over-the-counter derivatives, was contrary to the recommendations of a Presidential Commission which included Treasury Secretary Robert Rubin and Federal Reserve Chairman Alan Greenspan. Enron lobbied on behalf of the bill so heavily that Washington insiders called it "the Enron point." It had been stalled in the Senate when Gramm renamed it and tacked it to a must-sign bill in December 2000. Few noticed the new provision, which "took the buying and selling of electricity off the books," Slocum says. Energy trading migrated to Enrononline's secret exchange, where high prices were concealed from the Federal Energy Regulatory Commission (FERC).
FERC had just recently announced that California electric prices were not "just and reasonable," key wording meant to signal the price gougers that the reluctant agency might cap electric prices. The newly invisible trades were thus beyond the scrutiny of FERC, and Enron's revenues quadrupled in the next quarter.
But FERC imposed a price cap in June, leaving Enron with futures contracts that cost it money. So the corporation concealed those losses with fancy bookkeeping. But the profits Enron made before that had to go somewhere, and the offshore accounts are the most likely place to look.
Slocum notes that Enron's Byzantine corporate structure is anything but typical. Dynergy, a rival energy trader which backed out of a merger agreement with Enron last month, has just 12 subsidiaries, all registered in the United States, he says. ExxonMobil, with 147 separate subsidiaries, has fewer than a dozen domiciled in tax havens.
Slocum admits he could be wrong. "I don't know all the facts because I can't get to it -- but we need Congress to investigate," he says. "There were key members of congress and the Bush administration that assisted Enron in its ability to do this. We need them to tell us what they know. And it starts with Wendy Gramm."
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