Enron Scandal: Texas Political Scandal

Enron Scandal: Texas Political Scandal

The work of Paul Waldman (2004) entitled: "Fraud: The Strategy Behind the Bush Lies and Why the Media Didn't Tell You" states "The unfortunate truth is this: George W. Bush is a fraud. From the moment he arrived on the national scene, George W. Bush has been telling us how honest he is, and for just as long-despite the ever-mounting evidence for the opposite conclusion -- most Americans, even many of those who oppose him politically have agreed." Indeed Waldman states that quite "contrary to what he seems to never tire of assuring us, George W. Bush is not a man of integrity; in fact he ranks among the most dishonest president in American history." (Waldman, 2004) While Bush lies are many times impromptu, according to Waldman, when asked an unexpected question however, "most often it is the essence of his political strategy, the key to every major policy move." (Waldman, 2004)

The Enron Scandal Breaks

Waldman states that when the Enron scandal broke on the scene and Bush was questioned by reporters concerning his relationship with Enron chairman Kenneth Lay, one would have been forgiven for expected Bush to admit that his ties to Enron are substantial." (2004) However, the truth is that Kenneth Lay is "an old Bush family supporter. Lay raised and contributed money to senior Bush, who made him chairman of the organizing committee for the 1992 Republic convention in Houston." (Waldman, 2004) in fact, Kenneth Lay's company, Enron, contributed more money over the course of the political career of George W. than did any other and contributions are stated as follows:

(1) 1978 - $47,500

(2) 1994 - $75,000;

(3) Two governors races - $312,500;

(4) Use of Enron's corporate jet during 2000 presidential campaign;

(5) $100,000 to inaugural committee with an additional $100,000 in personal money contributed by Lay and CEO for Enron, Jeffrey Skilling'

(5) Lay and his wife contributed $10,000 during the Florida recount;

(6) Enron contributed $1,138,990 in 2000; and (7) Lay contributed $333,910 to the GOP between 1998 and 2002. (Waldman, 2004)

II. George W. Bush -- Denial of Association with Lay

The answer provided by George W. Bush when first questioned about Ken Lay and Enron was as follows: "He was a supporter of Ann Richards in my run in 1994...she named him the head of the Governor's Business Council. And I decided to leave him in place, just for the sake of continuity. And that's when I first got to know Ken and worked with Ken, and he supported my candidacy." (Waldman, 2004)

Waldman reports that the top management at Enron started selling off their stock very quickly "as the house of cards that was the company's finances began to teeter...what makes this action so reprehensible is that the majority of Enron's employees -- who had been encouraged to load up their 401(k)s with Enron stock -- and all of its shareholders were not privy to this knowledge and consequently lost everything." (2004)

Waldman states that Bush sold his Harken stock valued at $848,560 for $4 per share on June 22, 1990, and just a few weeks later "the company issued a quarterly report revealing millions of dollars in losses." (Waldman, 2004) Stock fell quickly "reaching $1 per share by the end of the year. By getting out before things hit the fan, Bush saved himself more than $600,000." (Waldman, 2004) According to the work of Herivel and Wright (2003) the "massive contributions" of Enron to the Bush family and other political candidates "played a key role in the economic rise of Enron..." (Herivel and Wright, 2003)

III. The Enron Scandal Facts

The work of Joel Levy entitled: "The Little Book of Conspiracies: 50 Reasons to be Paranoid" relates that Enron had its beginning in 1985 as a small fuel supply company located in Houston, Texas. Enron sold and delivered gas to customers and "diversified to become an energy broker and dealer in the complex financial instruments of the energy market." (2005) in 2001, an investigation began when a corporate whistleblower tipped off the investigation and ultimately resulted in billions being lost including the share options and pensions of Enron employees and investors. (Levy, 2005, paraphrased) Levy states that the rise of Enron in the financial world "...coincided with a massive deregulation of the energy markets in Texas and America as a whole. The deregulation was forced through by legislators to whom Enron paid out massive contributions..." (Levy, 2005)

The fraud was primarily comprised of "cooking the books to make it look as if the company's finances were consistently rosy, so that share prices would steadily keep rising." (Levy, 2005) More than 30 individuals have received criminal charges since 2001 connected to their dealing with Enron which incidentally "was just one of several companies revealed to have been practicing this sort of fraud..." (Levy, 2005) it is interesting that most of these companies are known to have provided hefty contributions to "politicians of every stripe, but had particularly strong links to the Republicans and to Bush." (Levy, 2005)

IV. Enron is Biggest Political Scandal in History

Robert Bryce states in the work entitled: "Pipe Dreams: Greed, Ego and the Death of Enron" that the Enron failure "was a mind-boggling event..." And that the failure of Enron "...happened so quickly and with such devastating impact that no one could have predicted it." In fact, Enron, went Chapter 11 and is stated by Bryce to have "...done it with Texas-style, in the biggest and gaudiest way possible -- with superlative aplenty." (2004) According to Bryce the Enron failure "is the biggest political scandal in American history." (2005) Bryce states:

"Teapot Dome, a scandal involving payoffs to the Secretary of the Interior Albert Fall by a couple of greedy oilmen -- was memorable, but involved very few people. The Watergate scandal was bigger and more pernicious than Teapot Dome, but it, too, involved relatively few people: Tricky Dick Nixon, a dozen or two of his henchmen, and a few inept plumbers. But Enron was different. By the time of its bankruptcy, Enron owned -- or perhaps was just renting -- politicians in the White House, Congress, state courts, state legislature and bureaucrats at every level." (Bryce, 2005)

V. Enron Scandal is Biggest Scandal to Ever Hit Wall Street

Bryce (2005) states that the Enron scandal is the biggest "...ever to his Wall Street." (2005) the Enron scandal is stated to have "ensnared every major investment bank in New York, including Merrill Lynch, Citigroup, J.P. Morgan Chase, UBS, and dozens of others." (2005) Not only did these banks lend Enron large sums of money as well as performing investment banking for Enron, but as well "their executives invested in Enron's off-the-balance-sheet partnerships. And the same bankers employed a gaggle of analysts, who, given enough investment banking work by Enron, were happy to put out 'strong buys' on the company's stock." (Bryce, 2005)

VI. Enron Scandal Biggest to Ever Hit Accounting