Is the sleaze factor shocking enough, finally?
The brass at Enron may yet get its comeuppance, but the company's collapse is only the latest symptom of oil's
long grip on the White House and the accounting industry's cynical double-dipping.
By Mark Anderson
SNS Tech Trends
Cast your memory all the way back to last spring, and you may recall the California energy crisis. At the time,
state officials publicly expressed a desire to see Kenneth Lay, chief executive of Enron (ENE, news, msgs),
behind bars for his alleged role in thwarting the state’s poorly designed energy-trading system for his firm’s
extreme benefit.
Even though this issue vanished into thin air faster than you can say “market
manipulation,” it appears California may yet get its wish as several separate threads of
Enron’s misdeeds come unwound.
One of the leading public provocateurs so far is Rep. Henry Waxman, D-Calif., who has spent the past eight
months trying to figure out who created the Bush administration’s energy policy. Waxman got part of his answer
last week, as pressures mounted on Vice President Dick Cheney and others to acknowledge that Enron met at
least six times with Cheney and others in crafting this policy.
But there’s probably much more to this angle. One very interesting rumor goes like this: What if Ken Lay were the
whole advisory committee, hook, line and sinker? We know, from their own comments, that Lay and Cheney met
at least once without others to discuss the U.S. energy policy. What we don't know, yet, is whether Lay and
lieutenants were the only ones writing the law, other than Cheney, who used to run Halliburton (HAL, news,
msgs). Certainly, there is nothing in that policy for Enron to dislike.
Next up: There is only one reason why Enron accountant Arthur Andersen would intentionally destroy records (now
admitted to have been ordered prior to public release on Oct. 16 of Enron’s earnings and accounting problems). I
believe a decision was made that, if the truth got out, Andersen would be out of business.
I'll suggest that Andersen's future is over now. If the company survives at all, it will be damaged beyond recognition.
With Sunbeam, Waste Management and similar failures now pointing up a clear systemic ill, what was once the
best brand in accounting is now trash.
Ken Lay’s Enron has paid so many dollars to so many political folks that he may ultimately find some way to skip
jail time; if he is guilty, and I suspect he must be, this would be a shame. I expect that other top managers will not
be so lucky. And they will probably have the comfort of their Andersen account managers at their side, punching
out those license plates.
The Bush administration has taken some solace to date for not having responded to Enron's calls for last-minute
help. This is good, if it indeed stands, but keep in mind how long Enron has been giving money to the family (and
how much). If a wrapped-and-signed energy policy is not tit for tat, nothing is, and it won't take forever for the
bloodhounds to realize that a company operating illegally, paying money gotten through fraud to politicians for
major policy changes, is no better than getting phone calls made for loan renewal help at the last minute. In fact, in
the ways that really matter, it is much worse.
Selling the nation's energy future on Enron's terms will be a huge problem for George Bush and a much larger one
than it may seem today.
Some clever author is going to review the entire two-Bush legacy under the title “Selling Oil,” and every move, from
conduct of war to failure in domestic economics, will fit the model.
Finally, it would seem likely that this drives the last nail into the coffin of auditors being allowed to consult for their
clients. Although Andersen Consulting (now Accenture (ACN, news, msgs)) was spun out acrimoniously a few
years ago (the consulting partners were generating more revenue per partner than the tax and audit folks), the
parent continued to consult for fees, and this conflict of interest will hopefully lead to legal requirements that
auditors audit and nothing else. This hastening of a current trend will have dramatic restructuring effects in the
accounting world, but may help avoid those "happy conspiracies" that led to overvalued companies and markets.
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