Sunday, January 29, 2006

More Bad News For Bush On The Horizon

After four years, Enron's Lay and Skilling to face jury

By Matt Daily

HOUSTON (Reuters) - Four years after the dramatic demise of Enron Corp., former chiefs Ken Lay and Jeffrey Skilling will enter a federal courtroom in Houston on Monday to face charges linking them to one of the biggest business disasters in U.S. history.

The case against Lay, 63, and Skilling, 52, hinges on whether the two executives, who once enthralled Wall Street by creating a company that became the nation's seventh largest, were aware of Enron's financial shell game that pumped up earnings while hiding billions of dollars in debt.

The Enron Task Force, a special unit created by the U.S. Department of Justice to investigate wrongdoing at the Houston-based company, will parade several former Enron executives who have struck plea agreements in front of jurors to try to tie Lay and Skilling to criminal acts of fraud and conspiracy.

The government's case got a boost last month when Enron's former chief accountant, Richard Causey, who was due to go on trial with Lay and Skilling, struck a deal that will send him to prison for seven years and likely put him in the witness stand.[....]

Lay faces seven charges, including conspiracy and fraud, all of which stem from the few months when he returned to the chief executive post vacated by Skilling before the company's bankruptcy.
Now, couple that with this:
Price-gouging Inquiries Target Enron

Overcharges in California May Exceed $40 Billion

By Kathleen Sharp, Globe Correspondent, Mar 03, 2002

LOS ANGELES - The practices of Enron Corp. and other energy companies that designed California's energy-deregulation bill resulted in $40 billion to $70 billion in utility overcharges and ancillary costs, said a consumer group and the agency that operates the state's energy grid.

These figures are sharply higher than the $8.9 billion refund that the state has demanded from Enron and other energy firms. They have been calculated as four state entities - the state attorney general's office, the Public Utilities Commission, the Electricity Oversight Board, and a state senate committee - investigate price-gouging allegations.

"We've been ringing the warning bell for quite some time," said Greg Cook, manager of market monitoring for the California Independent System Operator, which runs the state's energy grid.

The collapse of Enron has prompted numerous lawsuits and investigations concerning its accounting practices, and media attention has focused largely on the plight of shareholders and employees. But the business practices that propelled a small gas-line operator into the nation's seventh-largest company are also coming under scrutiny, highlighting the costs to consumers and the markets where Enron operated.[...]

State Senator Steve Peace, in an October 2000 letter to the Federal Energy Regulatory Commission, said Enron and other marketers cornered supply in order to get "exorbitantly high prices" for power. "This capability distorts [prices] and is purely the result of the unlawful exercise of market power in a market that was collusively structured," he wrote.

By 1999, the wholesale price of electricity had climbed from $20 a megawatt at the start of regulation to $250 a megawatt, even though demand had been relatively flat. The state's utility operator wanted to cap prices. But Enron and the other suppliers threatened to take their power elsewhere, said Woychik.

By late 1999, wholesale prices exploded to $750 a megawatt. The ISO declared that price gouging was widespread and capped prices. This angered the private companies, including Enron chairman Kenneth Lay. He wrote to the FERC, urging it to nullify the price caps. On Nov. 1, 2000, the agency removed the caps.

At the height of the state's power crisis, the price of electricity boomed to $3,000 a megawatt. Some household utility bills were $800 a month - more than rent. All told, the state's cost rose from $6 billion in 1999 to $27 billion in 2000 and $27 billion in 2001, according to the Third Annual Report from the California Independet System Operator.
OK, so how does all this tie into Bush?
Bush's Enron Ties

By Edward B. Winslow, AlterNet. Posted January 2, 2002.

The cozy relationship between the Bush White House and Enron enabled Kenneth L. Lay, then Enron's CEO, to meet in secret with Vice President Richard Cheney to help mold the nation's energy policy. Bush's presidential campaign received $1.14 million from Enron.

Shortly after taking office, President Bush waged a battle against the imposition of federal price controls in California that allowed Enron to price-gouge consumers by extending the energy crisis in California, costing the state billions of dollars. Enron reported increased revenues of almost $70 billion from the previous year.

Bush also resisted attempts to crack down on Enron's utilization of its 847 offshore subsidiaries in countries with lax banking-regulation laws. The consumer-rights watchdog organization Public Citizen alleges that some of these offshore havens helped Enron defraud its stockholders.
Now, add to this mix the whole Bush/Abramoff connection, ably reported by Time magazine last week:
The President's memory may soon be unhappily refreshed. TIME has seen five photographs of Abramoff and the President that suggest a level of contact between them that Bush's aides have downplayed. While TIME's source refused to provide the pictures for publication, they are likely to see the light of day eventually because celebrity tabloids are on the prowl for them. And that has been a fear of the Bush team's for the past several months: that a picture of the President with the admitted felon could become the iconic image of direct presidential involvement in a burgeoning corruption scandal like the shots of President Bill Clinton at White House coffees for campaign contributors in the mid-1990s.[....]

Abramoff knew the game. In a 2001 e-mail to a lawyer for tribal leader Lovelin Poncho, he crows about an upcoming meeting at the White House that he had arranged for Poncho and says it should be a priceless asset in his client's upcoming re-election campaign as chief of Louisiana's Coushatta Indians. "By all means mention [in the tribal newsletter] that the Chief is being asked to confer with the President and is coming to Washington for this purpose in May," Abramoff writes. "We'll definitely have a photo from the opportunity, which he can use." The lawyer had asked about attire, and Abramoff advises, "As to dress, probably suit and tie would work best."

The e-mail, now part of a wide-ranging federal investigation into lobbying practices and lobbyists' relationships with members of Congress, offers a window into Abramoff's willingness to trade on ties to the White House and to invoke Bush's name to impress clients who were spending tens of millions of dollars on Abramoff's advice.
(emphasis added) A pattern of corruption. People will make the connection between both scandals to Bush if we on the left make them see it.

So if Bush seems particularly distracted this week during the State of the Union Address, now you'll know why. The noose is tightening that will hang his legacy, if not him.

Photo courtesy of Blondesense

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