Josh Marshall

Josh Marshall is editor and publisher of TalkingPointsMemo.com.

Articles by Josh

1998 was the year of Monica and Impeachment. 2002 is turning out to be the year of PFBNB.

What's that? Paid For But Not bought -- the excuse, explanation and defense of choice for politicians high and low.

Like the Bush administration. Yes, Enron gave us tons of money for access and favors. But when they came calling, we dropped 'em cold, left 'em in the lurch! We were paid for, but not bought.

Same with Billy Tauzin. Same with the other folks on the House committee. Same with the Senators. Paid for, they say, but not bought.

I was so busy yesterday that I forsook my normal routine of coffee at Starbucks poring over the daily papers. And I missed this fun, complimentary review of Talking Points Memo in the Washington Post. (Note to self: no criticisms of Post -- i.e., Bob Woodward -- for rest of February, if possible.)

P.S. Excitement for the TPM relaunch continues to build. Even George Argyros is apparently getting into the spirit.

Actually, it's time for another Argyros update. Back on January 28th we noted that Argyros, US Ambassador to Spain, had used the Embassy website to post a list of comically self-promoting awards he had gotten, or bought, over the years. (You know, like his induction into the "Horatio Alger Association of Distinguished Americans, perhaps the single most coveted award given in American (sic) to non-military, non-show business individuals...") Then Tuesday we noted that our mockery had gotten picked up in Argyros' hometown paper and he'd had the good sense to take it down, or maybe Colin Powerll made him take it down. Then later Tuesday we revealed that he was still show-boating among the locals since he hadn't taken down the Spanish language version of the list. Now it's gone too.

Note to Ambassador Argyros: if you're visiting TPM so often, maybe it's time to support the site with an easy online contribution?

Yesterday's testimony from various current and former Enron executives confirms, I think, the importance of the questions we raised here a few days ago.

That is, who else got to sign on to one of Andy Fastow's outside partnerships, in which investors incurred no risk yet made windfall profits? We now know that many non-Enron employees got into these deals. Fastow apparently used them as chits on occasion when dealing with investment banks who did other business with Enron, though sometimes the Enron business was the plum he used to leverage folks into the partnerships.

One thing that's clear is that all the partnerships were not alike. Or at least not everyone came in on the same terms. Some were the uber-sweetheart deals that made millions. Others only got investors who had to be coaxed into the deal.

What is important to know, however, is just who all the partners were. Why? Because if there was financial or political corruption going on which reached outside of Enron, this almost has to be where you'd find it.

There's even apparently an example of a partnership deal being used in this fashion with an Enron employee. Soon after quasi-whistleblower Jeffrey McMahon got reassigned for questioning Fastow's partnership deals, his replacement got cut in on a piece of the action. Says today's Times ...

A short time later, Mr. McMahon was replaced as treasurer by Ben F. Glisan Jr. According to an investigation by Enron's board, Mr. Glisan put $5,800 in one of the partnerships organized by Mr. Fastow and two months later was given $1 million.
More to come later on conflicts of interest and ingenious ways to hedge your bets against business losses.

Today's Enron profile in the New York Times is of one-time Enron CEO Jeff Skilling, who testifies tomorrow on Capitol Hill. The title of the piece is "Darth Vader. Machiavelli. Skilling Set Intense Pace." But reading the piece you get a pretty clear sense that the author's working title was "Jeff Skilling: Big Jerk."

Here's one of the key passages ...

Mr. Skilling tried to incubate a culture of risk-taking at Enron that sometimes even went beyond the boundaries he set. At a worldwide meeting of the corporation's vice presidents in 2000, he singled out Louise Kitchen for praise. Ms. Kitchen had started the company's Internet-based trading operation, Enron Online, even though Mr. Skilling had repeatedly refused to allow her to do so. Instead, she pulled the new network together in secret, using funds allocated for other purposes.

A former vice president who attended that meeting was aghast: "The moral of this story is, `You can break the rules, you can cheat, you can lie, but as long as you make money, it's all right.' "

And you wonder why they got into trouble.

One of the most telling details of the Enron saga is the way that nearly everyone agrees that 'aggressive' (as in 'aggressive accounting') should serve as a synonym for 'deceptive.'

'Aggressive accounting' means massaging the numbers so they'll yield a deceptive impression of a company's financial health.

'Overly aggressive accounting' is bad because that's too deceptive.

But 'aggressive accounting' is okay because that's only deceptive, not too deceptive.

Is this the attitude that's at the root of the problem?

As we noted Tuesday evening, one key question now is who the 'investors' were in the debt-concealing outside partnerships overseen by Andrew Fastow.

This and other articles in Wednesday's Times seem to imply that the partners were all Enron employees. The Post, meanwhile, seems more agnostic on this question.

Yet the authors of the Powers Report (as I try to explain here) seem not to have been able to determine precisely who the investors were. Indeed, the authors of the Report say that they were not able to get access to the "the materials in the possession of the Fastow partnerships or their limited partners." These papers, I would imagine, are where you find out precisely who the partners were. Finally, the Times profile of Fastow notes the incentives that existed to recruit partners who were either not employees of Enron or employees who were of low enough rank not to need to show up in SEC filings.

By 1999, there were small fissures in Mr. Fastow's labyrinthine financing empire. As early as 1997, Enron had difficulty finding a partner to buy out Calpers's interest. So, apparently to skirt disclosure rules, Mr. Fastow proposed listing his wife's family as outside investors. When he was rebuffed, Michael Kopper, who worked under Mr. Fastow at Enron, was selected. Because he was a lower-level employee, Enron would not have to disclose his interest in S.E.C. filings. Mr. Kopper would eventually make at least $10 million in profit from the venture.
To recap, 'investors' in the partnerships reaped immense profits by investing little money and assuming no risk. If people outside the company were getting these sweetheart deals, who were they?

LATE UPDATE! Does TPM get results or what!?

Last week, we noted how America's Ambassador to Spain, George Argyros, was embarrassing the United States by using the US Embassy in Madrid website to post a biography with a pitiful "Partial List of Awards Received" numbering twenty-five in all.

This included such honors as his induction "into the Horatio Alger Association of Distinguished Americans, perhaps the single most coveted award given in American (sic) to non-military, non-show business individuals."

As we noted earlier this evening, Argyros' hometown newspaper The Orange County Register picked up TPM's razzing yesterday in the paper's 'buzz' section and gave Argyros another whack.

Well, when we returned to the ambassador's website this evening, we found (surprise, surprise) that at some point between the 29th and today the offending biography had been removed and replaced with a new one which is at least slightly less injurious to the dignity and reputation of self-respecting Americans.

Talking Points Memo: bringing shameless dorks to heel in North America and the Iberian Peninsula.

Late Late Update: You can still see the original list in the archived version available from Google. Plus, our reputation among web-savvy Spaniards may still be suffering because Argyros' show-boating list is still online in the Spanish language version of his biography. Special thanks to TPM reader A. for the Google catch.

Excitement continues to grow for the upcoming Talking Points relaunch, especially at Talking Points world headquarters! Or, well, at least at Talking Points world headquarters. Anyway, the big date is Friday, February 15th.

Also, remember George Argyros? As TPM noted last week, he's the high-rolling slumlord from Newport Beach, California. He bought an ambassadorship from the Bush administration. And now he's making America look bad in Madrid with his comical, show-boating ways.

Well, now Argyros' hometown newspaper The Orange County Register has picked up TPM's comments in its 'Buzz' section. Clearly Argyros can run but he cannot hide from the long arm of TPM's satire and mockery.

Coming up soon, details on Argyros' whacky, boondogglian plan to convert the former El Toro Marine Air Station into a passenger airport even though the main take-off path flies right into a mountain.

If you're looking to see where the Enron story might get explosive, this might be the place to look.

Consider the following: the Powers Report describes how Enron's outside partnerships (controlled by Enron CFO Andrew Fastow) allowed Fastow and others to make millions of dollars for transactions which had no other purpose than to obscure Enron's true financial health and make money for "Fastow and others."

Who were the "others"?

The partnerships were paper companies which made large sums of money for transactions which involved no risk. They were, in other words, perfect vehicles for sweetheart deals political or otherwise, for helping friends 'make' tons of money. Fastow was key to each of the partnerships. The report discusses other Enron employees who were "partners." So, again, who were the other partners?

Footnote 65, on page 149 of the report, says ...

We have not seen any evidence that any member of the Board of Directors had a financial interest in any of the partnerships that are discussed here.
Let's unpack what this means.

According to the report, the board's investigators had "no access to the materials in the possession of the Fastow partnerships or their limited partners." This and the quote above imply that the investigators didn't have access to records detailing who all the partners in the partnerships were. Otherwise, why use the phrasing "have not see any evidence that..."? If you have the list in front of you, there's no need to say you haven't seen any evidence, etc. You either know or you don't, period. (One also assumes, since this was the board's committee, that the board members cooperated with the investigation and said they weren't partners.)

So we know there were multiple partners in the partnerships. Some are named Enron employees. None of them, according to the report, were members of the Enron board. But the investigators assumed that there were, or at least could be, other unnamed partner/profiteers out there.

Again, who are they?