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Jeff Skilling had a vision for Enron. In February of 2001, he told the company’s employees that Enron, would, within five years, “be the leading company in the world.”
World dominance was the main message that Skilling and Enron’s chairman, Ken Lay, imparted to their employees in the video of that 2001 meeting, which was re-played on Wednesday morning in courtroom 9B of the federal courthouse in Houston. Forget talk that Enron was short on cash, or that the mighty juggernaut was overextended and hobbled by competitors. Ignore the doubters, like the journalists at Fortune magazine, who had, a few days earlier, published a story saying that Enron’s business model was based on a “black box.” “The company is doing great,” Skilling told the Enron employees. “We’ve got a vision for the next century.”
It was during the playing of that video that it became clear: the Bush Administration has become Enron. World dominance.
The old rules don’t apply. Machiavellian vengeance toward naysayers. Corrupt accounting. And holding all of those ingredients together: a heaping helping of hubris, a hubris that leaves no room for doubt or uncertainty.
That George W. Bush has morphed into his old pal, “Kenny Boy” Lay shouldn’t be surprising. Enron was, until the 2004 campaign, Bush’s biggest career patron. The intrigue lies in the myriad parallels that can be drawn between the Bush regime and the Enron regime.
On a personality level, you have the similarities between Bush and Lay: both are the detached executives who couldn’t know — or didn’t bother to pay attention to — what was happening in their operations. Lay, his defense lawyers insist, had no idea that Enron’s chief financial officer, Andy Fastow, was cooking the books. Lay was in charge of the big picture. He was the public face of Enron, Mr. Outside. Never mind that Lay was a PhD. in economics who couldn’t read a cash flow statement. As for Bush, neither he nor his defense secretary, Donald Rumsfeld, can be held accountable for the torture of Iraqi prisoners that occurred at Abu Ghraib. That was done by rogue soldiers without approval from their commanders.
Both Lay and Bush have backed their subordinates, no matter how grievous their wrongdoing. In October of 2001, after Fastow’s double-dealing was exposed, Lay insisted that he and the Enron board “have the highest faith and confidence in Andy and think he’s doing an outstanding job as CFO.” In May of 2004, right after the Abu Ghraib scandal broke, Bush insisted that Rumsfeld was “doing a superb job” and that America owes him “a debt of gratitude.”
The old rules no longer apply. For Enron, it was the old rules of accounting. As Skilling once told Enron’s chief accounting officer, Rick Causey, “Cash doesn’t matter. All that matters is earnings.” Enron had blown up the old methods. It was operating in a new paradigm, and those who didn’t understand that, well, as Skilling often put it, they just “didn’t get it.”
For the Bush Administration the old rules include anachronisms like the Geneva Convention. Bush insist that he’s fighting a new, stateless, enemy, and thus the “global war on terror” cannot be constrained by old treaties, old rules, or the countries that Rumsfeld calls “old Europe.” That means that “illegal enemy combatants” can be held at Guantanamo Bay, or in secret prisons in Syria, or elsewhere, for as long as Bush deems necessary.
Cheney, plays the role of Skilling. Like the monomaniacal Enron executive who never doubted that his vision for a business that would dominate global markets in everything from natural gas and electricity to paper and steel, Cheney is the true believer in America’s global dominance, the one who constantly pushes against old notions that might constrain America’s power. If that means torturing prisoners, no problem. As Cheney said shortly after the 9-11 attacks, the U.S. government must, “work through, sort of, the dark side.” And that means that it is “vital for us to use any means at our disposal, basically, to achieve our objective.”
Opponents of the regime must be dealt with quickly and harshly. For Enron, that meant that stock analysts like Merrill Lynch’s John Olson, who never parroted the company’s rosy predictions, had to be silenced. Merrill fired Olson after Enron made its displeasure known. For the Bush regime, it meant smearing former ambassador Joe Wilson and his wife, Valerie Plame. Wilson’s offense: publicly questioning the story that Iraq was trying to buy radioactive materials from Niger.
Opponents who don’t follow the script are “assholes.” That was made clear in September 2000, when Bush, unaware that his microphone was on, pointed to New York Times reporter Adam Clymer and told Cheney, who was standing nearby, that Clymer was a “major league asshole.” Cheney readily agreed.
Skilling used the same term a few months later during an April 2001 conference call with analysts. When Boston hedge fund manager Richard Grubman pressed Skilling on a financial question, Skilling cut him off, and let all of the analysts and his Enron pals know that Grubman, too, was an “asshole.”
Finally, the defense strategies adopted by Bush and his cronies at Enron are exactly the same. That is: everything we did was legal. From the beginning of their trial, the attorneys for Lay and Skilling, Mike Ramsey and Dan Petrocelli, have stuck to that theme. During his opening argument, Petrocelli declared that Enron was “no house of cards…It was a wonderful company, a shining star.” Ramsey told jurors that Enron didn’t fail because of the billions of dollars in accounting shenanigans, it failed because of a “market panic.”
That same tactic has been used consistently by the Bush Administration to defend the CIA’s rendition of terror and the indefinite imprisonment of terrorism suspects – without charges — in places like Guantánamo Bay. Last week, about the same time that the first prosecution witness began testifying on the stand in Houston, Attorney General Alberto Gonzales was testifying before the Senate Judiciary Committee, telling the senators that the secret wiretaps that Bush has authorized are legal. And why are they legal? Well, because Gonzales and the president say it’s legal.
Unlike the execrable Gonzales who has yet to utter a credible word in defense of torture or wiretaps, the Enron attorneys are at least partially correct in their diagnosis of the failure of Enron. It’s true that the collapse of Enron was hastened by a “market panic.” That panic was a direct result of Lay’s incompetence. Lay simply did not know how much money Enron had borrowed to fund its global ambitions. Nor did he grasp just how deeply distrusted Enron was by its peer companies.
Incompetence. Huge debts. Lack of trust. Just another set of parallels for Kenny Boy and his pal, W.
ROBERT BRYCE is the author of Pipe Dreams: Greed, Ego, and the Death of Enron.