WASHINGTON, Jan. 18 (UPI) -- Is the bankruptcy of Enron, America's seventh largest corporation, a political scandal akin to Whitewater or merely a business bust? UPI National Political Analysts Peter Roff, a conservative, and Jim Chapin, a liberal, face off on opposite sides of this critical question.
Roff: Much ado about something
Fearful of competing against a president with close to 90 percent approval ratings, the Democrats have seized on the Enron bankruptcy as if it were the second coming of Watergate. To hear them tell it, through the megaphone of a cooperative and compliant Washington press corps, President Bush, his cabinet, and his senior White House aides are all guilty.
The problem is that no one is able to explain just what it is they are guilty of.
It is not surprising that Enron, a natural gas company that tried to transform itself into a broad-based commodities firm, was spreading money all over Texas and Washington. In that, they were no different from most of the other Fortune 500 companies. They are all greatly impacted by government regulation and tax policy and all seek to have access in order to influence it.
It is true that Enron, which was trying to break new ground in the way the energy market operates, retained the services of several leading political figures from the free market movement. It is also not surprising that some of these same people were later placed in important positions in the government. They are some of the best at what they do.
There is, however, no evidence that the Bush administration knew the depth of Enron's financial problems before anyone else. When Enron Chairman Ken Lay called Treasury Secretary Paul O'Neill and Commerce Secretary Don Evans shortly before the company filed for bankruptcy, he did not tell them anything that wasn't already in the public domain.
Nevertheless, there is an ongoing effort to tie the Enron collapse directly to the president and his closest advisors. Democrats in particular are working very hard to create the impression that the administration is guilty of malfeasance while their cohorts in the opinion arena are saying that the whole thing is at least equal to and probably worse than Whitewater.
From their perspective this is probably true, though not in the way they think.
To them, Whitewater and its affiliated investigations were a partisan inquisition about nothing of substance, perpetrated by hostile members of the other party in an effort to bring down a president who could not be defeated at the ballot box.
Their statements and conduct in the matter suggest that the Enron collapse is to them an opportunity to do the same thing to George W. Bush.
After spending a lot of money to assist in the election of George W. Bush, Enron Chairman Ken Lay must have been saddened by the refusal of O'Neill and Evans to intervene and arrange a government bail out.
The rest of us should be grateful, both that the market was allowed to work its will and that the kind of corruption that has become so commonplace in Washington is not evident here.
The collapse needs to be investigated. How Enron got where it was is a subject for fair comment. And it is important to note that whatever happened didn't just start in January 2001 when George Bush was inaugurated.
If the Bush administration is culpable in the collapse because it took campaign dollars from company executives, then so is every politician -- Democrats too -- who took Enron money. But I don't think that's the case.
It is wrong to call Enron's collapse the result of legalized bribery, as one member of Congress did and it is wrong to indict the entire political system, or just the White House, because of it.
Chapin: If You Lie Down With Dogs, You Get Up With Fleas
The Implicit Charge Against the administration: "You consorted with thieves, you broke bread with thieves, you took money from thieves, you changed laws and regulations to make it easier for thieves to steal, and now you won't tell us straightforwardly what exactly you and the thieves did when you spent time together."
Administration Defense Number One: "When the thieves' schemes unraveled, we didn't try to rescue them."
Administration Defense Number Two: "Other people hung out with thieves, too."
Administration Defense Number Three: "We had no political relations with that corporation."
Unfortunately for the administration, I'm surely not the only American to find that none of these defenses is quite to the point.
Defense number three, the gambit advanced by President Bush, was pretty clearly a false statement altogether. It was not true that he met Ken Lay in 1995, it is not true that Ken Lay supported Ann Richards over Bush in 1994, and it was certainly not true that Enron didn't have its fingerprints (and footprints for that matter) all over the Bush administration.
Just tracing the contacts over the last eight years could, and no doubt will, fill several volumes. They range from the significant to the trivial. Enron provided the plane for then-Governor Bush to fly around the country, Enron, Arthur Andersen, and Vinson and Elkins all were heavy contributors to the campaign and the inauguration.
It might be shorter to list which members of this administration were NOT connected to Enron and its partners in crime.
Ken Lay -- a former Deputy Undersecretary for energy matters for the Department of Interior -- was co-chair of the reception committee for the elder Bush's Houston re-nominating effort in 1992. He put Wendy Gramm, wife of Texas GOP Sen. Phil Gramm, on the board shortly after she made sure that Enron's trades couldn't be regulated. A month after they left office, former Secretary of State James Baker and former Secretary of Commerce Robert Mossbacher went on the Enron payroll.
Lay is co-chair of Barbara Bush's literacy foundation. A couple of months ago James Baker presented the Enron award to Alan Greenspan. Dick Cheney met numerous times with Enron folks while he was preparing his energy policy, and just about everyone in Washington believes that Enron got to sign off on major appointments in areas of its concern. And so on and on.
The argument that Enron was bi-partisan is partially true. Lay golfed with President Clinton, and Robert Rubin made calls for Enron in its time of despair. But 73 percent of Enron's money went to Republicans; Arthur Andersen's contributions were even more lopsided.
There's a reason for that -- many of Clinton's appointees stood in the way of the full expression of the deregulation schemes of Enron and Arthur Andersen -- but none of Bush's did.
But if it is supposed to be a defense of Bush that "Clinton did it, too," that's pretty pathetic. Wasn't the idea supposed to be that Bush was better than Clinton? Even George Will called Bush's account of his relations with Lay "Clintonian."
To say that this is a "financial scandal" not a political one, is to miss the point. Markets, most especially anonymous markets, are not "natural." Want evidence of this? Look at nature -- there's far more theft and murder than free exchange out there.
Markets require hard work -- they need transparent accounting. They need government rules to regulate their conduct. The ideologues of free market capitalism don't seem to understand any of this.
Enron turned itself from an energy company into an energy trading company. Like Long Term Capital Management, with whom its situation has often been compared, it made money from inefficiencies in the market, and then started to lose money when those inefficiencies corrected themselves. Unlike LTCM, rather than just going bust, it changed itself into a Ponzi scheme, aided by false accounting and playing into Wall Street's EPS (Earnings Per Share) doctrine.
The Stock Exchange became the vehicle for this Ponzi scheme. It was a variation of the "greater fool" theory -- no matter how much a fool you were to pay a high price for valueless Enron stock, it didn't matter if there was a greater fool to buy it from you. It's quite probable that the people doing this weren't aware that they were carrying on a Ponzi scheme -- but then again, neither was Carlo Ponzi.
When their scheme collapsed, Enron execs turned to their old allies in Washington.
They, at least, proved at the very end that they were not "greater fools."
But to say that they should be forgiven all that they did in the past because they did nothing at the end of this gigantic fraud is to be just a tad too generous.
They've been lying down with dogs for quite a while, and the chances are that they're covered with a lot of fleas.
