Add this Page to Facebook!   Submit to Twitter   Submit to Reddit   Submit to Stumble Upon   Pin It!   Fark It!   Tell A Friend  
Printer Friendly Page Save As Favorite Save As Favorite View Article Stats
No comments

OpEdNews Op Eds

Enron's Kazillion Dollar Bash

By (about the author)     Permalink       (Page 1 of 2 pages)
Related Topic(s): ; ; ; ; ; , Add Tags Add to My Group(s)

View Ratings | Rate It


Become a Fan
  (7 fans)

opednews.com

Former Enron president Jeffrey Skilling and the company's founder Ken Lay will testify in their own defense in a Houston courtroom this week where they've been on trial since January, charged with numerous counts of federal securities fraud, insider trading and conspiracy.

Skilling and Lay have maintained that they were unaware of the Byzantine, off-balance-sheet partnerships that caused Enron to implode in a wave of accounting scandals more than four years ago.

But a 1997 videotape featuring Skilling, Lay and several other former executives of the one-time high-flying energy company seems to suggest otherwise. The videotape was produced as a going-away present for departing executive Rich Kinder.

In the 30-minute tape, Skilling joked about Enron using accounting sleight of hand so the company could earn "a kazillion dollars" in revenue - a joke that turned out to be exactly what the government prosecutors has accused Lay and Skilling of doing during their tenure at Enron.

Skilling abruptly resigned from Enron in August 2001, two months before the company's collapse for what he said were personal reasons. He testified before judicial committees in 2001 and 2002 and claimed that the company was financially sound when he left.

Enron executives parody songs and act in ridiculous skits in the video, which also features testimonials by President Bush, who was then governor of Texas, and his father, George H.W. Bush, both of whom thanked Kinder and Enron for helping Bush get to the governor's mansion.


The relationship between Enron and the Bush White House came under scrutiny following the company's spectacular collapse. Lay contributed heavily to Bush's 2000 presidential election. But Bush tried to downplay the friendship following Enron's bankruptcy.

However, documents released in 2002 show that the two were friendlier than Bush let on.

In April 1997, Bush sent a birthday note to Lay saying he and Laura Bush "value our friendship with you."

Two months later, Lay sent a letter to Bush thanking him for supporting Enron's pet project: the deregulation of Texas's electricity industry, and vowed that with Bush's help, Enron would continue to lobby for deregulation nationwide.

Many elements of Vice President Dick Cheney's National Energy Policy contain recommendations from Lay that would have been a financial benefit for his former company.

But it's the 1997 videotape that has turned out to be a significant piece of the Enron puzzle. That was the year when the company may have first broken the law by setting up a controversial off-balance sheet partnership named after the furry "Star Wars" character Chewbacca, to do for Enron's bottom line exactly what Skilling joked about in the video. Chewco, created by Enron's former chief financial officer Andrew Fastow, accounted for two-thirds of the company's losses over a four-year period beginning in 1997 and contributed in part to its downward spiral.

Chewco is one of the complex partnerships that Enron employed to keep billions of dollars of debt off its books, boosting its profits and credit level along the way. The legality of Chewco remains central to the government's criminal case against Skilling and Lay.

Indeed, Joseph Bernardino, the former chief executive of Enron auditor Arthur Andersen testified before Congress in December that Chewco's creation may have been illegal, because it lacked the required 3 percent interest from an independent third party necessary for it to be treated as a separate company and not an Enron subsidiary.

Three years ago, the Financial Accounting Standards Board said that Enron abused the mark-to-market accounting rule, whereby profits from long-term energy contracts are booked immediately rather than when the money is actually received.

The accounting trick allowed Enron's subsidiaries to create an illusion of a profitable business despite the fact that the units were in reality a house of cards.

Next Page  1  |  2

 

Jason Leopold is Deputy Managing Editor of Truthout.org and the founding editor of the online investigative news magazine The Public Record, http://www.pubrecord.org. He is the author of the National Bestseller, "News Junkie," a memoir. Visit (more...)
 
Add this Page to Facebook!   Submit to Twitter   Submit to Reddit   Submit to Stumble Upon   Pin It!   Fark It!   Tell A Friend
The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.

Follow Me on Twitter

Contact Author Contact Editor View Authors' Articles

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

CIA Watchdog Report Says Detainees Died During Interrogations

Whistleblower: BP Risks More Massive Catastrophes in Gulf

Newly Released E-Mails Reveal Cheney Pressured DOJ to Approve Torture

Army's "Spiritual Fitness" Test Comes Under Fire

Newly Declassified DOD Documents Reveal Detainees Tortured To Death

Voter Registration Group ACORN Long a Target of GOP Operatives

Comments

The time limit for entering new comments on this article has expired.

This limit can be removed. Our paid membership program is designed to give you many benefits, such as removing this time limit. To learn more, please click here.

Comments: Expand   Shrink   Hide  
No comments