Editors’ Blog

You know things are

You know things are really, really bad when grown men and women with advanced degrees and six-figure salaries start making excuses which, in the normal course of things, you wouldn’t accept from a five year old.

That’s Enron today, in spades.

(Mom: Who ate the cookies?! Johnny: Umm, Mom, I’ve gotta say I was out of the loop on the decision-making on that one.)

The clearest explanation I’ve yet heard of what Enron was doing is found in this paragraph from today’s Times, quoting the so-called ‘Powers Report’ …

If the Raptor accounting was correct, the committee concluded, then “a company with access to its outstanding stock could place itself on an ascending spiral: an increasing stock price would enable it to keep losses on its investments from public view; which, in turn, would spur further increases in its stock price; which, in turn, would increase its capacity to keep losses from its investments from public view.”

And who’s to blame?

Ken Lay’s wife says her husband, the founder, longtime CEO and Chairman of the Board of Enron was just ‘out of the loop‘ when it came to the accounting shenanigans that swindled millions of Americans out of billions of dollars.

Jeff Skilling, Lay’s longtime number two who briefly served as CEO in 2001, told the Enron Board’s investigating committee that he too didn’t have much sense of what was going on.

The upshot of the Board’s investigating committee report is that the members of the board just didn’t keep a close enough eye on all the inappropriate and/or criminal acts the company’s executives were committing, i.e., they didn’t know what was going on either!

If these bozos still don’t know what was going on they should definitely pick up the Monday New York Times, which provides a nice timeline of the hidden events which led to Enron’s collapse.

The aforementioned ‘raptors’, the paper vehicles used to hide Enron’s losses, began to buckle and strain a bit more than a year ago. They had to be reorganized first at the end of 2000 and then again in March 2001. This provided Enron executives and insiders the window of time necessary to cash out their stocks. Things apparently began to hemorrhage again about three months later. But this time the problem couldn’t be papered over and the fireworks began.

As I mentioned today on MSNBC, what is now coming into focus is that the work of the Cheney Energy Task Force, the California energy crisis, and Enron’s desperate efforts to save itself were all happening at roughly the same time — with many of the most important developments taking place in the late Spring. As Henry Waxman no doubt realizes, this makes the Energy Task Force records more important than anyone could have imagined six months ago.

And speaking of things that were taking place at the same time, I continue to be interested in the sequence of events taking place at Enron at the end of last summer, many of which at the time must have appeared unconnected, but now merge into a larger whole.

Consider a few …

August 8th: On August 8th Enron board member Frank Savage leaves Alliance Capital to form Savage Partners, LLC. Backstory: Alliance Capital, the largest institutional holder of Enron stock, instructed the Florida state pension fund, among others, to buy Enron stock after the end of October. Savage was the Chairman of Alliance Capital International, a division of the firm handling investments in the Middle East and Africa, until leaving Alliance on August 8th.

August 14th: Jeff Skilling unexpectedly resigns as Enron CEO after only a few months.

August 21st (on or about): Sherron S. Watkins sends whistlblower letter, anonymously, to newly-returned CEO Ken Lay.

September 4th: Senator Phil Gramm, husband of Enron board member Wendy Gramm, announces his retirement from the Senate. Gramm’s name was on the list of potential Senate retirees; but his announcement came as a surprise.

I mean, hell, I can wait on the Cheney Energy Task Force notes. But the minutes and papers of the members of the Enron board during July and August are what you just really want to see.

These two sentences from

These two sentences from today’s New York Times provide the telling summary of Enron’s seemingly damning internal review.

Lawyers not involved in any [Enron-related] lawsuits said the report appeared to support an argument that Enron’s directors did not recklessly or willfully participate in fraud. That is the conclusion the board, which appointed the investigators, might want a bankruptcy court to reach in deciding whether to leave the company under its control instead of naming a special trustee …

This other article in the Times, by Kurt Eichenwald, paints a slightly different picture of the report, describing it as an effective road map to a number of indictments. But the key point here is not how damning the report is, but who it was damning of. The report squarely places the blame on key executives, not the board, even though such a distinction may be difficult to sustain given what we now know of the board’s close involvement with Enron’s inner-workings.

Also worth noting is the membership of Enron’s investigating committee. Two of the members, William Powers Jr. and Raymond S. Troubh are new members of the Enron Board. They signed on after the current crisis was already underway. But the third, Herbert S. Winokur Jr., has been on the Board since at least 1986.

I’m wondering if Winokur’s utility was as something on the order of an expert witness. So, for instance, when the authors of the report said that the board had “failed . . . in its oversight duties,” perhaps Winokur was able to detail all the screw-ups he and fellow board members had been responsible for? It sounds like he could be really helpful with that.

I’m unclear on this. But maybe some TPM reader who’s down with corporate management practices could help me out with this one?

If youd like your

If you’d like your Talking Points delivered live to your office TV, you’re in luck. Talking Points will be pundit-in-residence from 1 PM to 6 PM EST Monday on MSNBC. You know the drill, one on the right, one on the left — there to provide commentary as needed on Enron, the budget, and whatever else comes up during the afternoon news churn.

Im always amazed at

I’m always amazed at how these things work. Ken Lay was dead set on testifying tomorrow and setting the record straight. But this morning his lawyer Earl J. Silbert, watched the Sunday shows and saw that Reps and Senators really take a dim view of his client. And he “instructed Mr. Lay to withdraw his prior acceptance” of the congressional invitation.

Obviously, Ken Lay is just bustin’ at the seams to get in that chair and clear things up. But the hyper-cautious Silbert won’t let him. Lay is like the hothead spoiling for a fight whose friends keep holding him back, even as he flails his arms trying to get into the melee.

Lay must be giving Silbert an earful tonight: Don’t hold me back! Don’t hold me back! Lemme at ’em!

Another interesting factoid. As

Another interesting factoid.

As we noted earlier, Comdisco is another Fortune 500 company that managed to go into bankruptcy with a lot of stockholders’ cash, but had execs and insiders who made out just fine.

Comdisco’s CEO is Norman P. Blake, a ‘turnaround’ expert who took over the company early last year.

Blake is also on the board of Enron.

It turns out there’s another similarity between Enron and Comdisco. They were both on the list of the sixteen corporations in line to get $100 million or more in rebates from the federal government if the House GOP stimulus bill went through.

Enron which was #7 on the Fortune 500, came in at #9 on the windfall list, in line for $254 million. Comdisco, which was #433 on the Fortune 500, came in at #13 on the windfall list and was in line for a check for $144 million.

If only they could have held on for the pay-off.


Get set for the

Get set for the exciting Talking Points Memo relaunch, coming later this month. More details soon.

Company goes belly up.

Company goes belly up. Investors take a bath. Bigwigs had been cashing out for months and managed just fine.

Sound familiar? Enron?

No. But close. We’re talking about Comdisco Inc., which went into bankruptcy last July.

Comdisco’s CEO Norman P. Blake, Jr. sits on the Enron Board.

(For more details, see Crain’s Chicago Business, July 23, 2001, p.6)

Just after George W.

Just after George W. Bush became president, many journalists were uttering a lament that transcended politics, ideology or government. President Bush was just going to be so boring.

Well, I mean, it’s hard to match 1998 with the Lewinsky scandal, impeachment, the Balkan wars, and everything else. But President Bush is really giving Bubba a run for his money.

What do we have? The War on Terrorism, the return of structural deficits, and now a scandal that is spreading out through the administration like a splash of ink seeping into the fibers of a paper towel.

This article says the Justice Department has ordered the White House and the rest of the executive branch to preserve all documents that “relate in any way to Enron’s financial condition and/or business interests.”

It’s worth noting that the order goes back to January 1st 1999 — half way back into the second Clinton administration. No doubt the White House will note that. Unfortunately, for them, it doesn’t matter.

This is the kind of announcement that gives press officers and political operatives cold sweats. Does this mean the Bush administration did anything wrong? Of course not. But it does mean that the Bush White House is now part of a criminal investigation. And it becomes very, very difficult for anyone at the White House to say this isn’t a political scandal. Fair, or not.

Does Karl Rove and

Does Karl Rove and the White House media operation need some better liaison with the adobe-jockeys over at the Department of Energy? Seems like it to me. This pic on the right isn’t some knock-off from cheneysucks.com. It’s from the Department of Energy website!

A Vito Corleone-imitating picture of Dick Cheney with his head eerily incorporated into an oil derrick? This is on-message?

And I thought the Dems were the ones trying to portray Cheney as an ominous goon doing the bidding of the big oil producers. Maybe this is more complicated than I thought?

P.S. Special thanks to TPM reader MF for the catch.

We dont do reader

We don’t do reader comments on TPM. But here we’ll make an exception since this whole issue of pension fund management is such a complicated one.

Dear TPM: Your comments on Alliance Capital go beyond the realm of facts and
into speculations that are unfair and not true. You ask if Alliance was
buying Enron stock for the account of Florida and other clients while
simultaneously selling for its own account. This is demonstrably not true,
as Alliance, a money management firm, does not own stocks for its own

Having said that, buying Enron shares in October goes under the heading of an
honest mistake. To really understand the impact of Enron on Florida or any
other Alliance Capital client, you would need to know the performance of the
portfolio they were managing. While Enron obviously hurt their performance,
its the return of the whole portfolio that matters.

Your comments this morning are much closer to the mark.

— Anonymous TPM Reader
(Who Works in the Money Management Field)

These are some good points. But as I say below, I still think Alliance has some real explaining to do.

One point particularly seems worth making. For a company like Alliance it seems to me that there’s an easy to make distinction between one of ‘their’ mutual funds (which are obviously made up of clients money) and pension funds like Florida’s which they advise on what to buy and sell.

One other point, a number of readers have argued that it could never be rational for Alliance to have a client blow money on Enron late in the game because Alliance’s reputation and profitability is completely tied up with their reputation for making their clients money, not losing it. True enough. But humans don’t always work in such a mechanistic or logical way. More about this point soon.

A few readers have

A few readers have said I was terribly unfair to Jeb Bush for implying that he had some role in getting the Florida state pension fund to buy Enron stock as it slid into oblivion last Fall.

This surprised me because I didn’t say that, or even imply it.

Here’s what I said …

One of the three trustees of the Florida pension fund is Governor Jeb Bush. But there is as yet no evidence that he acted as anything more than a passive overseer. The actual decision-making was coming from the private company managing the state’s money.

That sounds pretty straightforward to me. How ’bout you? In fact, my reason for mentioning Bush was to make the point that though he was a fiduciary of the fund, and thus had some legal responsibility for its management, he didn’t seem to have actually made any of the decisions about which stocks were bought.

In any case, some thought I was trying to accuse him or perhaps accomplish the same through innuendo (perhaps because of the ordering of the paragraphs?). So let me say for the record that I wasn’t. I’ve seen no evidence that Bush took any role in choosing which stocks were purchased.

A few readers have also said I’m being unfair to Alliance Capital. To them my response is quite different. We don’t know Alliance did anything more than make a bad call in getting Florida to load up on Enron as the company was being exposed as a money-loser and a book-cooker. But as far as I’m concerned they have a lot of explaining to do.

Lets connect a few

Let’s connect a few dots on the Florida-Enron front. But let’s also keep an eye on some complexities and an even wider range of remaining questions.

As noted earlier, the Florida state pension fund lost more than $300 million on Enron stock. What’s key is that roughly a third of the shares were purchased after October 22nd. (To get a feel for what was publicly known about Enron at the time, read this reprint of a New York Times article from October 28th.)

Most, though not all, of this Enron purchasing was done on the advice, perhaps even the de facto authority, of Alliance Capital Management — the pension fund’s paid advisor.

Alliance was also itself the largest institutional investor in Enron. A high-level Alliance executive, Frank Savage, also sat on the Enron board.

Now, as this new article in the Washington Post clearly demonstrates, as far back as 1997 Enron board members were kept abreast of the notorious private partnerships which allowed Enron to hide its debt and eventually dragged into bankruptcy. So Frank Savage went into 2001 quite aware of the precariousness of Enron’s position.

Thus one question is whether Alliance was unloading its own Enron stock while getting pension funds, which it advised, to buy — thus keeping some demand in the system and facilitating sale. (One article in the Financial Times from December 19th, 2001 seems to imply that Alliance was getting out while it was advising Florida to buy, but I haven’t found anything definitive on this.) One might also speculate that Alliance might have pushed pension funds to buy in order to stabilize the price of a stock it owned quite a bit of.

At this point, much of this is just speculation: some one needs to go through the books and see who was buying and selling what when. These are the sorts of questions which underlie the lawsuit Florida is now filing against Alliance. And no doubt their lawyers are looking at all this stuff right now.

But before we go too far down this road, at least with Frank Savage, two points must be made.

According to Alliance, Savage was involved in the firm’s international work, and thus shouldn’t have been ‘in the loop,’ shall we say, on domestic pension fund management. And he left Alliance in August, before Enron started to really tank and before the manic buying began.

As far as I’m concerned the big question right now is what Alliance was doing with its own Enron stock while it was telling Florida to buy. More generally, I think we’re going to be hearing a lot in the coming weeks about corporate donations to state controllers who are entrusted with control over state pension funds, and are thus in a position to have their funds buy or sell their patrons stock.

Coming up soon: the Carl McCall / Frank Savage connection.

On a DC radio

On a DC radio show last night I said there was no evidence of Enron-like accounting shenanigans in the Global Crossing bankruptcy (the fifth largest ever), just a company that went belly-up. Maybe I spoke to soon.

Andersen accounting clients now count for the 1st and 5th largest bankruptcies in American history. When Andersen inevitably goes under what place will they come in?

Refusing to disclose the

Refusing to disclose the details of the Veep’s Energy Task Force to Congressman Henry Waxman of the House Government Reform Committee to check on possible Enron connections = A matter of the highest principle.

Disclosing the details of the war on terrorism to Bob Woodward of Washington Post for an endless series of puff pieces = A matter of the highest necessity.

Talking Points has received

Talking Points has received a secret internal memorandum from Presidential Advisor Karl Rove, relative to the visit of interim Afghan leader Hamid Karzai.

TPM releases it here for the first time.

From: Karl Rove
To: Card, Hughes, Fleischer, Rice

#43’s nicknaming has always been a good thing for us. Polls well. Works very well in the red states. But the recent Ken Lay stuff could hurt us (“Kenny-Boy” etc.). Believe me, I think it has legs. I think it’s imperative we come into the SotU with an outta-the-park nickname the president can use for Hamid Karzai. Here’s what I’ve come up with.

1. Hammy, Hammy-Boy, ‘big ham.’ Discussion: This works really well. Rolls off the tongue. The sorta thing #43 might come up with on his own if he weren’t so busy. But there’s a problem. According to smarties at State Department, Muslims don’t go in for ham and don’t even like talking about it. Could offend. This always seems to be a problem with them. (Remember ‘Operation Infinite Justice’? Ouch!) You wish this were the one. But apparently it’s a no-go. Ideas?

2. ‘The Ham-ster’ … Discussion: Again. Works well. If You Haven't Clued in Already, Yes, This is a Parody.Rolls off the tongue. #43 would get right to it. However, it may sound like the rodent, which could be demeaning, but also might be endearing since hamsters were a popular pet in the 1970s and 1980s when Karzai, I’m told, spent some time in America. Could Muslims have same ‘issues’ with rodents as with pigs? (Note: Don’t go to State with this. Someone check this with Grover Norquist. He may know.)

3. ‘Yo-Hamid’ … Discussion: I like this. I like it A LOT. Sounds eerily like Mo-Hamid (i.e. Mohammed) who is extremely popular among Muslims around the world. Also, this could be a two-fer. Could help on minority-outreach, inclusion, ‘uniter not a divider’ front. (Yo, yo, yo… etc.)

4. ‘Kar-man’, ‘Green Hat’, ‘Greenie’, ‘Caped Crusader.’ Any thoughts on any of these? I just came up with them at the end.

Let’s huddle. This is important!


Okay one more TPM

Okay, one more TPM scoop for the day.

As TPM reported back on December 6th, there was always major controversy within the law firm of Morrison & Foerster over its decision to represent TPM World Exclusive!  You heard it hear first!  Must Credit.American Taliban fighter John Walker Lindh. Now, according to this article, the firm has removed its name from the representation and the case is being conducted under the names of the attorneys handling Walker’s defense. (The lead attorney is MoFo partner James J. Brosnahan.)

Now, however, TPM can reveal a heretofore unreported element of the controversy — a fact, at first at least, not even revealed to many partners in the firm.

Morrison & Foerster not only agreed to take Walker’s case. From the beginning, they agreed to do so pro bono.

Ya heard it here first.

For all the stuff

For all the stuff I’ve seen about Enron, nothing has shocked me more than what I’m about to describe.

You may already had read that the Florida state pension fund took a bath on Enron stock. The fund owned 7.6 million shares of Enron stock totalling roughly $300 million.

But according to this editorial in the St. Petersburg Times, “nearly a third of the state’s 7.6-million shares were bought after Oct. 22.”

That’s shocking.

If you look at this chart of Enron’s stock decline last year, you’ll see that October was the month that Enron stock went into complete free-fall. On October 16th, Enron announced a $1.2 billion decrease in company value. On October 22nd, the SEC announced an investigation of the company. And the next day, October 23rd (unbeknownst to the public, at least) Andersen kicked the document shredding into overdrive. Though the formal bankruptcy came later, October was the month that Enron fell through the floor.

Ok, sure, they say ‘buy on the dips.’ But is there any reasonable explanation why a pension fund would invest $100 million in Enron as it was heading into its death spiral? I can’t imagine what that explanation would be.

This AP article portrays it as a case of hindsight being 20/20 and the persistent power of misplaced trust in Enron. But I’m not sure that’s credible. Nor does the Florida AG, who is considering filing a RICO suit.

Who’s responsible? That’s not clear. But there are some intriguing clues.

One of the three trustees of the Florida pension fund is Governor Jeb Bush. But there is as yet no evidence that he acted as anything more than a passive overseer. The actual decision-making was coming from the private company managing the state’s money.

That company was Alliance Capital, the biggest institutional holder of Enron stock. Until last August a member of Enron’s Board, Frank Savage, was a high-level Alliance executive. (Specifically, he was the chairman of Alliance Capital International, a division of Alliance Capital Management.) Savage left Alliance Capital on August 8th, a week before Jeff Skilling resigned as CEO of Enron.

(Savage’s political contributions heavily favor Democrats.)

U.S.-based institutional client sales and marketing for Alliance Capital is directed by Roger Hertog, a major funder of conservative causes, a major contributor to the Republican party, and apparently also a friend of Ken Lay.

If you go look

If you go look at the just-released updated list of administration appointees who owned Enron, you’ll notice that George Argyros’ name is at the top of the list.

Now, I’ll grant you, that’s mainly because his name starts with ‘A’. Even so, let’s talk for a moment about George Argyros, Ambassador Extraordinary and Plenipotentiary of the United States of America to Spain and Andorra.

It’s not just that Argyros owned between $100,000 and $250,000 of Enron stock, which in itself isn’t a bad thing. Nor that he bought his ambassadorship for $130,000. Not even that he’s considered a notorious slumlord in his haunts in Southern California.

No, what’s really bad about George Argyros is that he’s apparently an incorrigible egomaniac and pitiful self-promoter who’s probably making us look bad to most Spaniards.

If you look at Argyros’ biography on the US Embassy in Madrid website, you’ll see a “Partial List of Awards Received” numbering twenty-five in all. These include, and I quote, such honors as …

“Heart Award”, presented by the Costa Mesa Chamber of Commerce, in recognition of all his years of community service and philanthropic contributions. (1987)

“Paul Harris Fellow Award”, presented by the Orange Rotary Club on behalf of the Rotary Foundation of Rotary International, in appreciation of tangible and significant assistance given for the furtherance of better understanding and friendly relations between peoples of the world. (1990)

Inducted 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. (1993)

Recipient of the American Academy of Achievement Golden Plate Award, honoring him as a representative of the many who excel in his chosen profession. (1996)

Inducted as Chairman of the Horatio Alger Association of Distinguished Americans. (1998)

Recipient of Manager of the Year Award presented by Society for Advancement of Management, California Chapter. (2001)

Glad he didn’t have to scrape the bottom of the barrel or anything.

What American can hold his or her head high in Spain if this goofball is our Ambassador?

Heres your updated list

Here’s your updated list of administration appointees (Senate-confirmed and otherwise) who either owned Enron stock or hadTPM World Exclusive!  You Heard It Hear First!  Must Credit. some other relationship with the company. It supercedes the earlier list we published on January 2nd and has eight new names.

Let’s stipulate again that most of these folks disclosed Enron assets in the one-thousand to fifteen-thousand dollar range and probably just had Enron as some obscure line-item in their investment portfolios. Others had much more. (Remember: the employees who lost their shirts because they had Enron-heavy 401(k)s had a piece of the ‘ron too. And they’re victims, not perps.)

In any case, the data speaks for itself and is provided as such.

Appointee: George L. Argyros
Title: Ambassador Extraordinary and Plenipotentiary of the United States of America to Spain and Andorra
Department: State
Relationship: Enron Stock $100,000 – $250,000; $1,000 – $15,000

Appointee: Grant D. Aldonas
Position: Under Secretary for International Trade
Department: Commerce
Relationship: Enron stock value $15,001-$50,000, dividends and capital gains $2,501-$5,000

Appointee: Vicky A. Bailey
Title: Assistant Secretary, International Affairs & Domestic Policy
Department: State
Relationship: Enron stock $1,001-$15,000

Appointee: Charlotte L. Beers (Beadleston – married name)
Title: Under Secretary of State for Public Diplomacy
Department: State
Relationship: Enron Stock $100,000 – $250,000

Appointee: Stephen F. Brauer
Title: Ambassador Extraordinary and Plenipotentiary of the United States of America to Belgium
Department: State
Relationship: Enron Common Stock $50,000 – $100,000

Appointee: Nicholas Calio
Position: Assistant to the President, Director of Legislative Affairs
Department: White House
Relationship: Enron stock value $1,000-$15,000, dividends and capital gains $1,000-$2,500

Appointee: Bruce Carnes
Title: CFO
Department: Energy
Relationship: Enron Stock $1,000 – $15,000

Appointee: Steven M. Colloton
Title: US Attorney (S.D. Iowa)
Department: Justice
Relationship: Enron stock $1,001-$15,000

Appointee: Kathleen B. Cooper
Title: Under Secretary for Economic Affairs
Department: Commerce
Relationship: Enron stock $1,001-$15,001

Appointee: Harry Cummins
Title: U.S. Attorney, Eastern District of Arkansas
Department: Justice
Relationship: Enron Stock $1,001-$15,001

Appointee: Linnet Deily
Title: Deputy
Department: Office of the Trade Representative
Relationship: Enron Stock $15,000 – $50,000

Appointee: Nils J. Diaz
Title: Commissioner
Department: US Nuclear Regulatory Commission
Relationship: Enron Stock $1,000 – $15,000

Appointee: Thomas C. Dorr
Title: Under Secretary for Rural Development
Department: USDA
Relationship: (1) Enron stock $1,001-$15,001 (MG Dorr IFT), (2) Enron stock $1,001-$15,001 (Roth IRA)

Appointee: Richard J. Egan
Title: Ambassador to Ireland
Department: State
Relationship: Enron Partial Sale
Value: $250,000-500,000
Dividends: $5,001-15,000
Capital Gains: $100,001-1,000,000

Enron Corporation (SOLD)
Value: Less than $1,001
Dividends: $201-1,000

Egan’s spouse: The following is owned through his wife’s Lawhill Capital fund for the year 2000:

Enron Gas & Oil
15,679 US G/L

Enron Corp.
Lost 12,429 US G/L

Appointee: Linda J. Fisher
Position: Deputy Administrator
Department: EPA
Relationship: (Two separate direct holdings) 1. Enron Corp. Oregon NPV stock value $1,000-$15,000 2. Enron Corp. Oregon NPV stock value $15,001-$50,000, dividends $201-$1,000

Appointee: Peter R. Fisher
Position: Undersecretary for Domestic Finance
Department: Treasury
Relationship: Enron stock value $1,000-$15,000

Appointee: Emil H. Frankel
Title: Assistant Secretary for Transportation Policy
Department: Transportation
Relationship: Enron stock $1,001-$15,000

Appointee: Eugene Hickok Jr.
Title: Undersecretary
Department: Education
Relationship: (1) Spouse Katherine Hickok Rev. Trust: Enron stock $15,001-$50,000 value, $5,001-$15,000 dividends/capital gains; (2) Son Adam Eugene Hickok Trust: Enron stock $15,000-$50,000 value, $5,001-$15,000 dividends/capital gains; (3) Daughter Katherine C. Hickok Trust: Enron stock $15,001-$50,000 value, $5,001-$15,000 dividends/capital gains.

Appointee: Allen F. Johnson
Title: Chief Agriculture Negotiator
Department: US Trade Representative
Relationship: Enron stock $1,001-$15,000

Appointee: Hansford T. Johnson
Title: Assistant Secretary
Department: Navy
Relationship: Enron stock $1,001-$15,000

Appointee: I. Lewis Libby
Position: Chief of Staff
Department: Office of the Vice-President
Relationship: Sold Enron stock value $1,001-$15,000

Appointee: John H. Marburger
Title: Director
Department: Office of Science and Technology
Relationship: Enron stock $1,001-$15,000 value, $201-$1,000 dividends

Appointee: Alice H. Martin
Title: US Attorney, Northern District of Alabama
Department: Justice
Relationship: Enron stock $1,001-$15,000

Appointee: Sandra L. Pack
Title: Assistant Secretary
Department: Army
Relationship: Enron stock less than $1,001 value, $5,001-$15,000 capital gains.

Appointee: John Price
Title: Ambassador to Mauritius, Comoros, Seychelles
Department: State
Relationship: Enron stock through four direct/indirect sources: (1) less than $1,000; (2) $15,001-$50,000; (3) $1,001-$15,000; (4) $15,001-$50,000.

Appointee: John E. Robson
Title: Chairman/President
Department: Export Import Bank
Relationship: Enron stock $1,001-$15,000

Appointee: Karl C. Rove
Position: Senior Advisor to the President
Department: White House
Relationship: Notation on SF-278: “All individual stock holdings to be sold (dated) 5/18/01.” Enron stock value $100,001-$250,000, dividends $201-$1,000

Appointee: Donald H. Rumsfeld
Title: Secretary
Department: Defense
Relationship: Enron stock $1,001-$15,000
(Click here for more on the Rumsfeld holdings, now apparently sold.

Appointee: William Schubert
Title: Administrator, Maritime Administration
Department: Transportation
Relationship: Project Consulting Services for Enron, paid over $5,000

Appointee: Thomas Scully
Title: Administrator
Department: HCFA
Relationship: Enron stock $15,001-$50,000

Appointee: Martin J. Silverstein
Title: Ambassador to Uruguay
Department: State
Relationship: Enron stock $15,001-$50,000

Appointee: Margaret Tutwiler
Position: Advisor to the President

Department: White House
Relationship: Enron stock value $15,001-$50,000

Appointee: Alexander Vershbow
Title: Ambassador to Russia
Department: State
Relationship: Enron stock $50,001-$100,000 value, $201-1,000 dividends

Appointee: Marcelle M. Wahba
Title: Ambassador to the UAE
Department: State
Relationship: Enron stock $1,001-$15,000

Appointee: Donald W. Washington
Title: US Attorney (W.D. Louisiana)
Department: Justice
Relationship: Enron stock $1,001-$15,000

Appointee: Thomas E. White
Title: Secretary of the Army
Department: Defense
Relationship: Former Vice-Chairman of Enron Energy Service; Enron Corp-common stock worth $25,000,001-50,000,000 that paid over $5,000,000 in dividends and capital gains; Enron Corp-stock options worth $25,000,001-50,000,000 that paid $100,001-1,000,000 in capital gains; Enron Corp Cash Balance Retirement Acct (Enron Stock will rollover into permissible property) worth $100,001-250,000 that paid less than $201 in dividends; Enron Corp-DLJ Private Equity Partners Fund II that paid $5,516,131.08 in salary; Enron Employee Stock Ownership Plan, Defined Contribution Plan Managed by Enron worth $1,000,001-5,000,000 that paid less than $201 dividends; Enron Phantom Stock Award worth $5,000,000-25,000,000 that paid less than $201 dividends; Enron Retirement Account (Enron Stock) worth less than $1,001 that paid less than $201 dividends; Agreements: Pursuant to provisions of employment agreement and routine practice of Enron Corp, given $1,000,000 in severance pay; The Phantom Stock Award in Enron (approximately 240,000 shares) were accelerated and paid out when he left Enron.

Appointee: Mark Weinberger
Title: Assistant Secretary for Tax Policy
Department: Treasury
Relationship: Enron stock $1,001-$15,000 value, $201-1,000 dividends

Appointee: William Winkenwerder
Title: Assistant Secretary
Department: Defense
Relationship: Enron stock $1,001-$15,000

Appointee: John S. Wolf
Title: Assistant Secretary for Nonproliferation
Department: State
Relationship: Enron Stock $50,000 – $100,000

Appointee: Robert Zoellick
Title: US Trade Representative
Department: USTR
Relationship: Enron stock $15,001-$50,000, Enron advisory fees $50,000

Arthur Levitt former head

Arthur Levitt, former head of the SEC, tried but failed to prevent accounting firms from being accountants and consultants for a single firm. That might (stress might) have made a difference with Enron. In any case, after Enron, it now looks like a pretty good idea.

In The Hill, Alexander Bolton nicely untangles the web of money contributions and Washington hardball that led thirteen Senators to bully Levitt into backing off.

Most even threatened to cut his funding if he didn’t relent.

Dick Cheneys continued refusal

Dick Cheney’s continued refusal to hand over the notes, minutes and miscellaneous doo-dads of the White House Energy Task Force (ETF) is very bad news for the White House. All that’s unclear is what kind of bad news it is.

Let’s run through the possibilities.

Possibility #1: There’s really nothing in the ETF notes, the White House has a deep ideological belief in executive branch privilege and thus secrecy (which is clearly true). On principle, on separation of powers grounds, they’re resisting encroachments from the Congress.

End Game: The administration is eventually compelled to turn over the notes, either politically or judicially. Nothing bad is revealed, but the period of resistance fuels and continues the Enron cloud over the White House, perhaps even creating the investigative pressure that unearths other things we don’t know about. It keeps Enron as an issue deeper into election season. The fact that nothing was found in the notes after all doesn’t undo the damage. That’s reported in Section L, page 79 of the The New York Times.

Possibility #2: There’s really nothing in the ETF notes, but the White House has made a strategic decision to resist ceding the investigative initiative to the Congress and realizes that this is where it has to make its stand.

End Game: See end game for #1 (above).

Possibility #3: There’s nothing illegal revealed in the ETF notes, but they describe a hand-in-glove closeness between the administration and energy companies, particularly Enron, that will be deeply embarrassing.

End Game: The administration is eventually compelled to turn over the notes, either politically or judicially. The period of resistance fuels and continues the Enron cloud over the White House, perhaps even creating the investigative pressure that unearths other things we don’t know about. Weeks or months of resistance amplify the damage of the embarrassing revelations.

Possibility #4: It’s really as bad as you can imagine. The notes reveal either illegal acts (which I find hard to believe) or one of the following: a) foreknowledge of Enron’s problems, b) a direct nexus between money contributions and efforts to help Enron, c) various bad stuff that will lead heavyweights to resign.

End Game: The administration is eventually compelled to turn over the notes, either politically or judicially. Various people end up doing time or resigning their appointments. It was a good strategy because they had to keep the information secret if they could. It just didn’t work.

My money is on a possibility #3, with #1 and #2 thrown in for good measure.

My how the mighty

My, how the mighty have fallen.

Regulars readers will remember that the first TPM Enron post way back on TPM World Exclusive!  You heard it hear first!  Must Credit.November 29th took aim at the company’s fabulously arrogant “ask why” corporate ad campaign. That was the ad campaign featuring the ‘metalman’ commercial and the annoying computer-voice ‘why, why, why, why‘ trailer. It even had its own website, askwhy.com.

Well, hopefully you took a look at the links while they were available.

The askwhy.com domain is now, surprise surprise, being put on the auction block by an outfit called domaincollection.com.


I guess there’s some joke in here about living by the frictionless markets, dying by the frictionless markets.

Why, why, why, why

In the wake of

“In the wake of Enron’s collapse, it has become apparent that many financial firms — from Enron’s lenders to Wall Street bankers who underwrote the company’s partnerships to investment houses that bought into them to the accountants who reviewed their books — knew more about Enron’s condition than the company publicly disclosed.”

That’s one of the key grafs in a fascinating article in today’s New York Times which describes how Veba, a German utility company considering a merger with Enron, was able to piece together a picture of the company’s rickety financial footing with only a relatively cursory investigation based on publicly available documents.

“We were wondering why this wasn’t common knowledge, or why it wasn’t discovered by those people whose business it was to discover these things,” one of the analysts told the Times.

It’s starting to seem like Enron’s condition was, if not an open secret, then at least a secret that was hidden in something like plain view. Many apparently knew at least some of the key details. And perhaps knew enough to know not to know more.

Who else knew?

Questions one two three

Questions one, two, three and four are each ‘who leaked the memo revealing that Colin Powell – alone among the president’s top military and judicial advisors – wants the al-Qaida and Taliban prisoners classified as prisoners of war under the Geneva Convention‘.

Who got the leak, Bill Gertz and Rowan Scarborough at the Washington Times, gives a pretty clear idea which side of the debate did the deed. But who precisely? The Pentagon, the Counsel’s Office, Condi’s people at the NSC, or perhaps one of the very key people in the office of Vice President Cheney?

What appears to be

What appears to be unfolding now is not only a political scandal but something on the order of an autopsy of a major corporate exponent of Southwestern wildcatter capitalism and its relationship to political power.

First on Enron’s patronage of pundits and opinion leaders. I don’t agree with Andrew Sullivan often. But I think he’s on to something with Enron and its patronage of pundits and intellectuals. I’ve already said I think he’s been way over the top on Paul Krugman. But on the broader issue of Enron putting a lot of money into the pockets of influential opinion leaders, that’s worth looking into.

Some of the people, Bill Kristol for instance, have been pretty up-front about it. Most have been much more cagey.

The real question in my mind is how widespread this practice is. As you can tell from the Online Contribution link over on the left, TPM doesn’t have this problem of interested corporations trying to stuff $50,000 checks in his pocket. But it’s very hard for me to believe that Enron was the only company doing this. Who else?

Then there’s another issue. We now have two apparent cases of Enron’s insinuating itself into the Bush White House – this may actually be giving the White House far too much of a pass – by putting the White House’s campaign consultants on its payroll.

Yesterday the New York Times reported that Enron put Ralph Reed on the payroll as a favor to Karl Rove, to help keep Reed in the Bush camp. Reed and the White House have both sorta denied the claim. But it’s at least consistent with what I learned about Reed while reporting this article two years ago.

(I’ll say more about Ralph Reed in a future post.)

Now it also emerges that Ed Gillespie went immediately from the Bush campaign and into the hands of Enron as its man to lobby the Bush administration. Reportedly, on the energy task force and stimulus package.

Now, I think I know how this works.

Let’s stipulate first that Enron didn’t seem to have much difficulty getting its calls returned at the Bush White House or getting its views understood. The standard good government criticism of this would be that Gillespie didn’t have a ‘cooling off period’ before lobbying his old friends. That misses the point. This sounds a lot more like Gillespie was continuing to work for the Bush White House. He just got put on Enron’s payroll.

Top Ten new names

Top Ten new names to be field-tested for inevitable Arthur Andersen Accounting corporate rebranding campaign.

10. AAA

9. Andersen Foods

8. Kmart

7. Andersens Anonymous

6. Slam Duncan

5. H & R. Andersen

4. Fuzzy Math

3. Hans Christian Andersen

2. Andersen Confetti

1. Yo Yo Baby Andersen.com!

There are countless things

There are countless things that can be said about the tragic suicide of former Enron executive J. Clifford Baxter. The only appropriate and correct expression, of course, is empathy.

In the context of the broader Enron scandal, Baxter’s suicide pushes the whole affair onto the terrain of bad fiction and the paint-by-numbers made-for-TV mini-series.

It also follows the recent pattern of events in which every day brings news that is not just more ominous and damning than the day before but much more ominous and damning than the day before. Don’t mistake me: I’m not talking about the possible political scandal. I’m talking about the corporate and economic one. And on that count, how can anyone deny that this is now one of the greatest business scandals in American history?

What adds a greater element of mystery to Baxter’s death is that, if you were writing this as a script, he isn’t exactly the one who you’d tap to take such a rash step. Far from being the guilty party at the center of the mess, he seems quite the opposite. While being a high-level Enron executive, who probably knew all the relevant facts, he was apparently one of the in-house Cassandras who knew the place was a house of cards and started ringing the alarm bell, at least on the inside. This provoked his departure last May.

He was one of the people doing the right thing, not the wrong thing. Or at least less of the wrong thing than the rest of the brass.

Baxter’s suicide inevitably fits into this puzzle. But he seems to have taken his life not because he knew more or did more, but – as must have been clear when he left the company last May – because his conscience was more delicate than those of his colleagues.

This is a special

This is a special Talking Points Memo screw-up alert. I got the call letters wrong in my earlier announcement. So let me try this again.

Ahem …

Talking Points will be doing special on-air, pre-State of the Union pointillizing on WMAL in Washington, DC. Specifically, the Victoria Jones Show (TPM’s favorite radio personality!) next Tuesday night between 7 PM and 8 PM.

Look at the following

Look at the following paragraph from Larry Lindsey’s article from last Friday’s Washington Post defending the Bush tax cut against possible repeal. The piece has already been rightly criticized for being wilfully disingenuous in using other peoples’ quotes in a misleading fashion. But look at this graf. Is this paragraph as intentionally misleading as it appears? And what precisely does it mean? We’ll say more on this latter point later.

Very high personal taxes were clearly one factor that helped choke off the expansion. While personal taxes on average took only 12 percent of personal income in 1993, they consumed almost 24 percent of the growth in personal income between 1999 and 2000.

The point isn’t simply that it’s misleading. The actual economic reality the statistics point to seems simply enough to understand once you look closely at the structure of the sentence. The point is that it looks intentionally misleading. And if that is so, where were the Post editors?

Glenn Reynolds writes a

Glenn Reynolds writes a great weblog. But I’m afraid he’s got me a bit a wrong in this critique of yesterday’s post which began … “Smoking gun or steaming pile?”

(Yes, I’m hoping this pithy phrase will get picked up widely.)

Glenn took me to mean that “Bush should be judged by his proximity to Ken Lay et al.”

That’s not what I said. I’m not shoulding here. I’m just telling you how I think this will all develop. And there’s a difference.

Also, Glenn points to this post on another site to make the case that … (drumroll) you guessed it, Clinton is worse.

The post (on another blog) lists Marc Rich, the McDougals, and even people like David Hale, who, if you actually follow these things, you know had little if any actual connection to Clinton — as opposed to fictive connections manufactured later, etc. etc. etc.

In any case, Bill Clinton had face time with some less than savory people. I’m willing to grant this. And I don’t think George W. Bush or any of his cronies are guilty of anything by what amounts to some sort of contagious guiltiness. Ken Lay’s a crook. You knew Ken Lay. So you’re a bit of a crook. Etc.

That said, you simply cannot say that Ken Lay was some dime-a-dozen campaign contributor who got his picture taken with the president at a reception. Or someone he’d had some dealings with at some point in the past. It just doesn’t wash.

Finally, TPM readers in Washington, DC can hear their Talking Points live next Tuesday night before the State of the Union. No, no streaming video or audio on TPM. But I will be doing a little pre-game on WMAL between 7 and 8 PM. I’ll update later with details.

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