|
CounterPunch
November
1, 2002
False Profits
Secretary
of the Army Thomas White Abused Accounting Rules at Enron
by JASON LEOPOLD
If there's any doubt that Army Secretary Thomas
White abused an accounting mechanism when he was vice chairman
of Enron's retail division in order to make his division appear
profitable when it wasn't, read the new rule adopted last week
by a panel of the Financial Accounting Standards Board that suggests
otherwise.
For the first time since Enron's demise
one year ago, the Financial Accounting Standards Board said that
Enron and other energy companies abused a four year-old accounting
rule known as mark-to-market accounting, whereby profits from
long-term energy contracts are booked immediately rather than
when the money is actually received. This accounting trick allowed
companies like Enron to create an illusion of a profitable business
unit despite the fact that the unit, at least in Enron's case,
was really a house of cards.
No company pushed the envelope further
in its abuse of mark-to-market accounting than Enron Energy Services,
the retail division White co-chaired prior to his appointment
as Secretary of the Army last year. Under White's tenure at Enron
Energy Services, his division booked tens of billions of dollars
in profits that were based on bogus predictions of future energy
prices and hid massive losses by inflating the value of the deals.
The only ones who benefited from Enron's use of mark-to-market
accounting are White and a handful of Enron executives who received
millions of dollars in bonuses and stock options once the energy
contracts were signed.
During his testimony before a U.S. senate
committee in July, White said he stood behind the use of mark-to-market
accounting even though many lawmakers told White that these contracts
created a false picture of prosperity.
"The deals that we put together
within the accounting structure that was accepted and was the
standard in the industry -- I stand behind that -- were signed
and the right deals to do and were properly accounted for at
the point that we signed those up."
Now that the Financial Accounting Standards
Board task force recognizes that there was a pattern of abuse
in the way White's division booked profits, it has suggested
that the mark-to-market accounting rule be scrapped. After Dec.
15, energy companies will only be able to report profits from
contracts as they are received. But it's unlikely that White
will ever be held accountable for the dubious accounting methods
he engaged in that made Enron Energy Services appear as if it
were a legitimate operation. Former employees of Enron Energy
Services, who have been reluctant to speak out for fear of being
forced to testify before one of the committees investigating
Enron's collapse, say they are now considering blowing the whistle
on White and others who worked at the unit to set the record
straight.
It's only a matter of time before more
evidence surfaces that will show the public just how deeply involved
our elected officials were in the corporate scandals that wrecked
the companies they once presided over.
So as the issue moves from corporate
malfeasance to a possible attack on Iraq the question is can
we trust what White and members of the Bush administration say
about the threat Iraq poses based on their track record of misleading
the public? No. That is just one of the reasons why we must resist
this war.
Jason Leopold
can be reached at: jasonleopold@hotmail.com
Yesterday's
Features
Paul de Rooij
Amnesty
International & Israel: Say it isn't so!
Jeffrey St. Clair
Gag the
Messenger, Kill the Fish
Ben Tripp
Fourth Estate for Sale: Unfurnished
Neve Gordon
Yigal
Bronner's Rights Violated by IDF
Kurt Nimmo
The Delusions of David Horowitz
Desiree Hellegers and
Laurie Mercier
Red Squads
Redux:
Portland Activists Mobilize Against the FBI's Joint Terrorism
Task Force
Anis Shivani
Anthropologists on Wall Street
Anthony Gancarski
All's
Well That Ends Wells:
Parching the Palestinians
Lee Sustar
Report from the Docks:
This Is Union Busting!
New
Print Edition of CounterPunch Available Exclusively
to Subscribers:
- The Shafts of Death: Bush, Coal Mines, and Death
in the Tunnels;
- Speak Memory!: Carter and the Draft;
- Daniel Pipes' World: Smearing Pro-Arab Academics;
- Ashcroft's Gays: the War on Free Speech;
- Saddam's Amnesty: Could It Happen Here?
- Criminalizing Dissent: a history and preview;
- Iraq 1987: When the Going Was Good;
- Egypt in Turmoil: an Anthropologist's Account;
- Green and Grounded: Profiled at the Gate.
Remember, the CounterPunch website is
supported exclusively by subscribers to our newsletter. Our worldwide
web audience is soaring , with about seven million hits a month
now. This is inspiring, but the work involved also compels us
to remind you more urgently than ever to subscribe and/or make
a (tax deductible) donation if you can afford it. If you find our site useful please: Subscribe
Now!
Or Call Toll Free 1 800 840 3683
home / subscribe
/ about us
/ books
/ archives
/ search
/ links
/
|
October 26
/ 27, 2002
Michael Wolff
A Place
of Tears
Ilija Trojanow
Bali Mon Amour
Ben Tripp
Crocodile Tears
Hope Shand and Silvia Ribeiro
The Great Containment:
GM Fallout from Mexico to Zambia
M. Junaid
Alam
The Wolf Who Cried Wolf:
Charging Anti-Semitism & Extending the Iron Wall
Gavin Keeney
The Fusion Thing:
Landscape + Architecture
Adam Engel
A Good Man is Hard to Misfit
Anis Shivani
Is America Becoming Fascist?
Jason Leopold
Is Thomas White Fit to Lead the Army?
Philip Farruggio
Let Them Eat (Crumb) Cake
Josh Frank
The Grassroots of Hope
Anthony Gancarski
Concerned Citizen: episode 5
Night School
M. Shahid
Alam
The Civilizing Mission
October 25, 2002
Wayne Madsen
Pappy
Bush on Wellstone:
"Who Is This Chickenshit?"
Stuart Timmons
Harry
Hay Dead at 90:
He Paved the Way for Modern Gay Activism
Vanessa Jones
Australia
Votes Green:
Historic No Vote to US War Plans
Ben Terrall
Rep.
Tom Lantos' Big Lie
Ismael Hossein-Zadeh
Behind
the Drive for War:
The Escalating Bush Military Budget
Will Youmans
Israel's and Divestment
Norman Madarasz
Lula
on the Verge
October 24,
2002
Jo Freeman
How the
Christian Coalition Boosts Israel
Ben Tripp
George
W.: Caught Between Iraq and a Hard Place
Harry Browne
Ireland's Dreary Yes to Nice
Anis Shivani
A Guide
for the Perplexed:
the Major Countries of the World as Defined by the Office of
Strategic Influence
T.W. Croft
America's
New Improved War
William Hughes
A Free
Press, But for Whom?
Alan Farago
Jeb Bush and the Environment
October 23,
2002
Daniel Wolff
Pataki,
Witt and the Indian Point Nuke
Wayne Madsen
A Saudiless
Arabia
Sam Bahour
and Paul de Rooij
Abritrary
Imprisonment
Chris White
Why I Oppose
the US War on Terror:
an ex-Marine Sergeant Speaks Out
Anthony Gancarski
Back to Bali
Adam Engel
Twilight
(of the Idols) Zone
Robert Fisk
How to Shut Up Your Critics
October 22,
2002
Jack McCarthy
A Letter
to C. Hitchens
Carol Norris
This Message
Brought to You by Breast Cancer, Inc.
Joanne Mariner
Just
Say "Not Until We're Married":
Legislating Morality and Understanding HIV/AIDS Prevention
Kathleen Christison
Excuse Me?
How Israel Justifies Killing Palestinians
Linda Heard
Iraq War
Mongering:
A Game of Chess with Lives at Stake
Roger Peacock
Marketing the War on Iraq
Resources:
100s of Links
About 9/11
CounterPunch:
Complete
Coverage of 9/11 and Its Aftermath
Five
Days That
Shook The World:
Seattle and Beyond
By
Alexander Cockburn
and Jeffrey St. Clair
Photos by Allan Sekula
(Click Here to Order from CounterPunch
Online at 20% Off Amazon.com's price!)
Read
Whiteout and Find Out
How the CIA's Backing of the Mujahideen Created the World's Most
Robust Heroin Market and Helped to Finance the Rise of the Taliban
and Osama bin Laden
Whiteout:
CIA, Drugs & the
Press
by Alexander
Cockburn
and Jeffrey St. Clair
|