While the implosion of Enron is almost as murky as the bankrupt company’s financing schemes, its self-dealing and scamming have evoked memories of other great business scandals, such as Teapot Dome and the South Sea Bubble. Whether or not those analogies ever prove to be justified, the most compelling political comparison for the moment is with another scandal that turned out, despite the investigative zeal of journalists, pols and prosecutors, to be more squib than bombshell: Whitewater.
Consider the stated purposes of the long, costly probe into that tiny, troubled land deal, as expressed in the final report of the Senate’s Special Committee to Investigate the Whitewater Development Corporation and Related Matters (Alfonse M. D’Amato, chairman). According to the report’s preface, its mission was to investigate “the complex web of intermingled funds, fraudulent transactions, political favors and conflicted relationships,” all of them “woven together by common and recurring themes of abuse of power, fraud on federal institutions and theft of public funds, and frequent neglect, if not deliberate disregard, of professional, ethical, and at times, legal standards,” including “clearly identifiable patterns of motivation, conduct and, at times, concealment.”
If those damning phrases sound familiar, then perhaps you’ve been reading some of the better coverage of Enron in periodicals like Fortune , which concluded that even if no one ever goes to jail, “it feels as though a crime has been committed.”
That question will be decided by the courts, which must determine whether Enron was sunk by “fraudulent transactions” as well as more mundane abuses of corporate authority. But there is no question that Enron’s corporate history is laden with “political favors” and “conflicted relationships” with leading figures in the White House, regulatory agencies and the Senate itself.
Those relationships extend well beyond the $2 million bestowed on the President and other politicians by Enron executives, or the substantial blocks of stock held by Bush appointees, or the formidable cadre of connected lobbyists, consultants and officials that make the White House resemble an Enron branch office.
One place to start untangling the Enron tale might be the moment in early 1993 when Bush appointees on the Commodity Futures Trading Commission voted to exempt energy traders from its anti-fraud regulations. The commissioner who initiated that convenient rule-making process, following a post-election request from Enron and several similar companies, was Wendy Gramm, wife of the Texas Senator. She left the CFTC just before the actual vote and, five weeks later, joined the Enron board of directors. This was merely a coincidence, as she and her benefactors in Houston later explained.
Coincidence or not, that decision pulled open the “regulatory black hole” in which Enron thrived and connived. It also represented the beginning of an unwholesome pattern that culminated earlier this year, when Enron’s generosity to the Bush-Cheney campaign evidently won its executives the right to choose their own regulators in Washington. (Meanwhile, those same strutting geniuses were unloading their watered-down stock into the pension portfolios of their unfortunate employees.)
The immediate justification for the Senate probe of Whitewater was that Madison Guaranty, the storefront savings-and-loan operated by small-time hustler James McDougal, had cost the government about $65 million in bailout funding. Setting that pitiful amount against the $60 billion or so that suddenly evaporated from Enron’s market capitalization–as Gene Lyons and Molly Ivins have noted–offers a way to chart the difference in magnitude. Yet so far, thanks to the “war on terrorism” and perhaps other, less patriotic factors, the level of public indignation is inverted; Enron seems to generate about one-tenth of 1 percent as much concern as Whitewater did.
The Justice Department and the Securities and Exchange Commission are examining Enron, of course, and various committees of Congress are also looking into the matter. Their approach, however, is strangely desultory and deferential. Enron founder and chief executive Kenneth Lay blew off an invitation to appear before a House committee the other day, prompting an audible yawn from the same media outfits that screamed incessantly about “the Whitewater scandal” year after year. Those excitable editorialists at The Wall Street Journal have dismissed Enron’s problems as an example of “bad accounting.”
Imagine the outcry if, instead of providing a million pages of documents to the Senate Whitewater Committee, the Clinton White House had withheld all relevant papers. That is precisely what Vice President Dick Cheney has done to date, in response to requests from the House Government Reform Committee about private meetings that he and his energy task force held with Enron executives.
And imagine what Mr. Lay might have said to Mr. Cheney and Larry Lindsey, the former Enron consultant who now serves as the President’s chief economic advisor, during those secret sessions.
You’ll have to imagine, at least for now, because the Vice President and his cronies aren’t talking–and because nobody in the media is even asking.