The head of the Republican Party,
hand-picked by the president, is Marc
Racicot, who served as an Enron lobbyist as
recently as last fall. His Democratic
counterpart, Terry McAuliffe, is a former consultant to Gary Winnick, the
founder of Enron's twin in bankruptcy, Global Crossing, which is now under
investigation by the F.B.I. and the S.E.C. and will soon have its own
inquisition in Congress. For anyone left holding these companies' stock after
their executives and insiders cashed out, there is no gold, not even silver —
just handsome stock certificates that will brighten someone's day on eBay.
Democrats want to believe that Enron is the Republicans' Armageddon.
Republicans hope Global Crossing will prove the Democrats' comeuppance.
Dream on. Political cross- dressing is a distinguishing feature of this systemic
scandal, much of it entirely legal, in which the only currency that counts
comes in green, not the red and blue of the electoral map. As countless
Democrats have turned up on the lists of Enron and Arthur Andersen
campaign beneficiaries, so the former President Bush is among those who
joined Mr. McAuliffe in test-riding the Global Crossing gravy train.
Surveying the landscape this week, John McCain told Larry King that while
he'd like to believe Enron was merely a tale of corporate malfeasance, he
thought it would prove "a lot more than that" and "lead a lot of places that we
never thought it would." We'll soon need an Olympics-grade scorecard to
keep track.
For starters, keep your eye on two private lists of names that are being held
onto for dear life by their keepers. The first, of course, is the list of those
who met with the Cheney energy task force last year. Why is the vice
president risking a Congressional lawsuit to hide the identities of the Enron
executives and their cronies, even though a CNN/USA Today poll says that
Americans overwhelmingly support full disclosure? Every time this question
gains speed there seems to be another terror alert — a kind of "Wag the
Dog" scenario in which the dog never barks.
The second list is of the "individual investors" who joined Andrew Fastow
and other Enron executives at the trough of the 3,000 off-the-books
partnerships that turned nominal investments into fortunes overnight while
regular stockholders got stuck with the debt. Enron has told Congressional
investigators it can't provide the names, even though it usually owned 97
percent of each of these entities.
To get to the bottom of such mysteries, Congress has leaned heavily on the
Powers report — the in-house Enron investigation hyped by Democrats and
Republicans alike as (in the words of the North Dakota senator Byron
Dorgan) a "devastating indictment" of the company's misbehavior. But this
"devastating" document examined a grand total of 3 of those 3,000
partnerships and provided no names of the individual investors in those
either. Nor did it look into Enron Energy Services, a nearly defunct division
that may have overstated its profits while hemorrhaging cash under the
leadership of Thomas White, who is now the secretary of the Army,
entrusted with $81 billion of taxpayers' money during the biggest expansion
of the military budget since the Vietnam War. Mr. White, in fairness, was
only vice chairman of Enron Energy; the chairman was Lou Pai, who took
more out of the pre-bankrupt Enron than anyone ($270 million) and was last
seen trying to duck an ABC News reporter while denying that he had
brought dancers from "a top Houston strip club" into Enron headquarters.
What is most revealing about the Powers report is its provenance. One
author is Herbert Winokur Jr., an Enron outside director who was in the
fortunate position of having a big say in a report passing judgment on his own
questionable corporate citizenship. Appearing before the House Commerce
Committee with condescension in his voice and a flag pin in his lapel, he
contradicted himself so much under questioning that one member, Bart
Stupak of Michigan, told me he had "impeached his own testimony."
The Powers of the report, William Powers Jr., is the dean of the University
of Texas School of Law, an academic institution subsidized in part by Enron.
In his testimony before Congress, Mr. Powers conceded that the interview
with Ken Lay conducted for his investigation had not been transcribed and
that any notes from it had been discarded. This is "standard, accepted"
practice, he said — and presumably is taught as such in his school as Enron
101. Asked to explain other holes in his report, this law school dean
repeatedly asserted that he was "not an expert" on the relevant laws, or
apparently much else.
As for Global Crossing, keep your eye on Mr. McAuliffe. The story that he's
sticking to is that after making a brave early $100,000 investment he got out
in 1999 with a profit approaching $18 million (the exact figure remains
elusive) through sheer capitalistic ingenuity. "The company went from zero to
50 billion in market cap," he said on CNN late last month. "It's a great
success story." That great success story, which hit its peak of $64 a share in
the same year that Mr. McAuliffe cashed out, never turned a dime of profit,
ultimately lost $7 billion and has since traded for pennies.
As it happens, The Wall Street Journal reported last week that Global
Crossing executives and insiders also started unloading shares in 1999 —
hauling home $1.3 billion, even more than Ken Lay and company netted
when they dumped Enron stock while telling their employees to buy. Did
these brilliant capitalists — among them Mr. Winnick, who made off with
$735 million — know something that other Global Crossing shareholders
didn't? Did any of them tell Mr. McAuliffe? On Tuesday I asked the
Democratic National Committee merely for the dates of the party chief's
Global Crossing sales within 1999. The answer has been silence.
Then again, maybe Mr. McAuliffe doesn't remember. These days even
Democrats can go Skilling on you. Listen to the curious answer given by
Joseph Lieberman when asked by Don Imus about the $2,000 he received
from Enron in 1994: "I hadn't even remembered it because I hadn't had much
contact with people from Enron." True, no doubt, but more than a shade
Cheneyesque coming from one of the Senate's high Enron moralizers. It's
been widely reported that Mr. Lieberman's friend and former chief of staff,
Michael Lewan, arranged three meetings between Enron officials and
Lieberman aides while working as an Enron consultant last year.
Because Democrats, and not just Mr. Lieberman, are terrified both by
President Bush's poll numbers and the number of dollars they have
themselves received from Enron, Andersen and Global Crossing, they don't
have the guts to join the California congressman Henry Waxman in pursuing
former Enron executives like Thomas White into the current administration.
Granted, that's a full-time job — without Enron alumni, the Bush team would
be as depopulated as an après-ski party thrown by the Lays this winter in the
Aspen hacienda they have just unloaded at an $8 million profit to the
producer of the CBS soap "The Bold and the Beautiful."
But surely someone should consider the case of Lawrence Lindsey, the
president's top economic adviser and a $50,000-a-year Enron consultant
while advising the Bush campaign in 2000. Let's take the administration's
word that there's no reason for Mr. Lindsey to stay away from Enron
matters, despite having taken at least as much Enron money as John
Ashcroft, who has recused himself from the Justice Department investigation.
Even so, is this the best financial seer American taxpayers' money can buy?
In mid-January the White House proudly declared that Mr. Lindsey had
helped lead an October review to see "the potential impact" of Enron's woes
and had delivered a thumbs-up prognosis, seeing no situation that could
"harm the national economy." Try explaining that to anyone who's taken a
beating in the stock and bond market declines since Enron declared
bankruptcy on Dec. 2.
The good news is that 70 percent of Americans, up from 55 last month, are
telling pollsters they care about this scandal. Already this has driven the
House to take its momentous step to slow the spigots of corporate cash.
Should Congress subpoena any of those Houston strippers to testify about
any or all kinds of Enron partnerships, accounting reform may not be far
behind.
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