Bailout Watch #90 – Feb 07, 2002

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BAILOUT WATCH: Keeping an eye on the energy industry and the politicians

Bailout Watch #90 – Feb 07, 2002

Why did the whistleblowers wait? These days mid-level managers and execs at Enron are ratting each other out, telling the public they knew that things at Enron were all wrong and that they even wrote private memos about it months ago. But each of these "whistleblowers" waited until Enron became a financial ruin before coming forward with their insider charges. One Enron VP has been praised for having sent an email to her boss, Ken Lay, detailing the elaborate hoax that was the company, but she said nothing publicly at the time. And Enron’s senior benefits accountant reportedly discovered that employee benefits funds were diverted to "friends" of company executives, yet she kept silent for months, waiting until the company had conspicuously begun its downward slide before coming forward with her information. Where were these "heroes" while California taxpayers were shipping truckloads of cash to Enron and shareholders were reinvesting their dividends? True whistleblowers would have alerted the proper authorities, such as the Houston branch of the U.S. Attorney’s office, long before the Congressional investigations. It seems as though the Enron whistleblowers’ consciences didn’t kick in until their 401ks kicked the bucket.

I’m not an energy trader, but I play one on TV. According to Dow Jones Newswires, Enron secretaries were among 75 employees hurriedly redeployed in 1998–to an otherwise empty Enron trading floor in the Enron tower in Houston. Enron execs, hoping to impress Wall Street analysts who were evaluating their energy services division, ordered the secretaries to pretend to negotiate energy contracts over the phone. One administrative assistant remembered that "[Lay] said the analysts needed to see a bunch of warm bodies working so Enron could get a good credit rating."

EPA v. EPA. There are two EPA’s in the Bush Administration: the Environmental Protection Agency, led by Bush appointee Christie Whitman and the Enron Protection Agency, run by Vice President Cheney. A series of confidential memos show that the two EPAs were fighting each other last Spring in the weeks leading up to the May publication of the Administration’s National Energy Policy. On April 17, 2001, Enron chief Kenneth Lay gave Cheney a memo outlining the energy industry’s wish list for the National Energy Policy; it focused on expanding deregulation and blamed the nation’s energy woes on lingering regulation ("siting and permitting problems have frustrated construction of new [power] facilities"). Ten days later, the Environmental Protection Agency sent a memo of its own, released by Cal. Representative Waxman this week, apprising the VEEP of concerns that drafts of the energy plan "create the false impression that environmental regulations are the major cause of supply constraints." Guess which EPA won? Hint: the Policy finally released by the White House proposes to address "inflexible siting process," and "[u]ncertainty about future environmental controls."

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