THE CORPADOS OF AMERICA from the Progressive Review

P R O G R E S S I V E R E V I E W

THE CORPORADOS

earlier stories

MAY 2003

IF YOU WANT TO BREAK THE LAW, INCORPORATE FIRST

RALPH NADER, DISSIDENT VOICE - For Citigroup, $300 million in fines and disgorgement is less than 1 percent of last year's revenues, which topped $92 billion. Likewise, Credit Suisse First Boston's penalty of $150 million is barely pennies on the dollar of the $56 billion in revenues it took in last year. These fines come nowhere near the $7 trillion dollars that investors lost since it became apparent that the corruption on Wall Street is endemic.

Truly shocking is that the majority of the settlement may yet be tax deductible and/or covered under insurance - everything except $487 million in civil penalties, according to Sen. Charles Grassley (R-Iowa), head of the Senate Finance Committee.

Even more astonishing, however, is that these financial institutions and banks got off the hook without a single admission of wrongdoing. What this means is that defrauded small investors, who already have had the decks stacked against them by years of lawmakers' rolling back investor rights to seek restitution in the courts (most notably the Private Securities Litigation Reform Act of 1995), now will now have an even more difficult time getting their day in court.

MORGAN STANLEY HEAD SAYS FINE IS NO BIG DEAL

ADRIAN MICHAELS, FINANCIAL TIMES - US regulators have taken the extraordinary step of reprimanding Morgan Stanley's chief executive for public comments about the global settlement over conflicts of interest on Wall Street. William Donaldson, chairman of the Securities and Exchange Commission, wrote to Philip Purcell, Morgan Stanley's chairman and CEO, after he was reported as saying the investment bank's $125m settlement, announced on Monday, was not a matter of concern to retail investors.

"Your statements reflect a disturbing and misguided perspective on Morgan Stanley's alleged misconduct," Mr Donaldson wrote. "Your reported comments evidence a troubling lack of contrition and lead me to wonder about Morgan Stanley's commitment to compliance with the letter and spirit of the law and the high standards of conduct all investors have a right to expect from their brokerage firms."

Mr Donaldson's blistering attack follows separate criticism of Stan O'Neal, Merrill Lynch's chief executive, by Eliot Spitzer, the New York attorney-general. . .

As part of the settlement announced on Monday, Morgan Stanley acknowledged it had "engaged in acts and practice that created conflicts of interest for its research analysts with respect to investment banking." Mr Donaldson's letter states that the SEC's division of enforcement also has looked at Mr Purcell's comments. It cautions Morgan Stanley not to breach the settlement by denying the allegations. "I caution you that the Commission would regard a violation of that obligation as seriously as a failure to comply with any other term of the settlement." Mr Donaldson writes. . .

Mr Donaldson's letter comes after Eliot Spitzer, New York attorney-general, on Monday reprimanded Mr O'Neal though he did not mention him by name. Although Mr Spitzer did not specifically target Mr O'Neal, he criticised a chief executive who authored an editorial in a major publication last week. Mr O'Neal wrote an opinion piece for last Thursday's Wall Street Journal. "I saw last week an article in one of the major publications where one of the CEOs said this (settlement) is merely an effort to eliminate risk from the marketplace," Mr Spitzer said. "Risk is inherent in the markets. We all understand that and we thrive on it. What is not tolerated however, is fraud," Mr Spitzer said. "So, Mr CEO, and I read your article carefully, if I were you I would reflect. What your company did, and what we have alleged about your company, is that you committed fraud."

APRIL 2003

BROKERAGE FIRMS GET SLAP ON WRIST FOR CHEATING CUSTOMERS

[As Jon Stewart noted, this is like fining someone a buck for stealing $100]

KATHLEEN DAY, WASHINGTON POST - Government regulators said the settlement they reached this week with 10 top Wall Street firms will end unfair practices that have cost individual investors billions of dollars. In fact, the agreement leaves several key issues anything but settled.

Among them are how to parcel out the $1.4 billion settlement, how to create uniform rules to govern company research and investment departments, and how to change the regulatory system to prevent widespread abuses from recurring. . .

Only $387.5 million of the settlement will go directly to investors who lost money because of what the firms did. Rep. Richard H. Baker (R-La.), who chairs the House Financial Services subcommittee that oversees capital markets, has criticized Spitzer and other states for not putting more of the roughly $400 million they will receive into a fund for investors.

BLOOMBERG OUT TO SELL OFF NEW YORK CITY'S NAME TO HIGHEST BIDDER

MARCH 2003

THE WAL-MARTING OF AMERICA

- Wal-Mart's sales on one day last fall--$1.42 billion--were larger than the GDPs of 36 countries.

- It is the biggest employer in 21 states, with more people in uniform than the U.S. Army.

- It plans to grow this year by the equivalent of--take your pick--one Dow Chemical, one PepsiCo, one Microsoft, or one Lockheed Martin.

- If the estimated $2 billion it loses through theft each year were incorporated as a business, it would rank No. 694 on the Fortune 1,000.

TELEMARKETERS HAVE NEW WAY OF GETTING AROUND ZAPPER

HEADED FOR BANKRUPTCY, US AIRWAYS GAVE $35 MILLION TO TOP BRASS

GLOBAL GROCER AHOLD ADMITS OVERSTATING EARNINGS BY LARGE SUM

AOL COMES UP WITH A CORPORATIZED, INTRUSIVE TIVO

CLASS ACTION FILED AGAINST LOEWS FOR ADS BEFORE MOVIES

HUNDREDS OF TOWNS AND CITIES PRIVATIZE WATER MANAGEMENT; ATLANTA EFFORT COLLAPSES

DAIMLER CHRYSLER ACCUSED OF DISCRIMINATION AGAINST BLACK CAR BUYERS

PRIVATIZED WATER IN AUSTRALIA ACCOMPANIED BY SEWAGE SMELL

NY TIMES TRIES TO REHABILITATE KENNETH LAY

ENRON EXECS SAID TO HAVE BRIBED TAX OFFICIALS

JANUARY 2003

The Dow Chemical Company has filed a lawsuit against a group of female survivors of a toxic spill who demonstrated against the company in Bhopal, India last month. The lawsuit asks for $10,000 in damages from protesters who participated in the peaceful two-hour protest, claiming the women caused Dow employees "loss of work." The lawsuit also asks that activists be restrained from holding future demonstrations within 100 meters of the Dow offices. - WOMEN'S E-NEWS

OCT 2002

THE LIST

$15,400 - Amount the Bush campaign paid Enron and Halliburton for use of corporate jets during the 2000 recount.

$13,500 - Maximum amount each of Enron's 4,500 laid-off employees would receive as part of a proposed settlement.

$5,300,000 - Average amount Enron paid each of its 140 top executives last year

[Harper's]

KENDRA MAYFIELD, WIRED - If current copyright laws had been on the books when jazz musicians were borrowing riffs from other artists in the 1930s and Looney Tunes illustrators were creating cartoons in the 1940s, entire art genres such as hip-hop, collage and Pop Art might never have existed. The debate over whether artists can use copyrighted materials entered the national spotlight this week as the Supreme Court heard opening arguments in Eldred v. Ashcroft, a case in which plaintiffs are seeking to overturn the 1998 Copyright Term Extension Act. To acknowledge this landmark case, an exhibit will celebrate "degenerate art" in a corporate age: art and ideas on the fringes of intellectual property law. The exhibit, Illegal Art: Freedom of Expression in the Corporate Age, will take place in New York from Nov. 13 to Dec. 6 and in Chicago from Jan. 25 to Feb. 22. "Almost all art, to a certain extent, is unoriginal," said Carrie McLaren, publisher of Stay Free! magazine and organizer of the exhibit. "(In) an environment where you can have free exchange of ideas, you get better art."

. . . Exhibit organizer McLaren hopes Illegal Art will "wake people up" to restrictive copyright legislation. "When people see this exhibit they won't want to support the laws that make this type of work illegal," she said.

SEP 2002

DONNA MILLSAP OREGON HERALD - Regal Cinemas, by their own words, the "largest cinema chain in the world," is forcing customers to view ads to help pay their bills. Our investigation indicates Oregon customers, by a large majority, do not wish to view any advertising in any form when they pay for entertainment. Regal employees, confused and obviously uneducated in at least this area, have no good answers and management refuses comment. The real problem, in addition to having to pay for ads, is not knowing when the film will begin. Will there be previews, will the movie begin on time? . . .

The Cinema Billboard Network, which is a division of Screenvision Cinema Network, boasts: "We have a captive audience watching your advertisement. No interruptions! The patrons sitting in the theaters are not going anywhere." Not all movie companies allow ads before their movies. The general counsel to Buena Vista, which distributes Disney movies, explained in 1990 why Disney generally prohibits advertising in theaters before its movies: "We do not believe people should be held hostage to unavoidable commercials in theaters any more than on their telephones." According to the Los Angeles Times, New Line Cinema and Warner Bros. don't allow in-theater advertising before their films.

GRETCHEN MORGENSON with ANDREW ROSS SORKIN, NY TIMES - Tyco International agreed to pay a severance package of $44.8 million in cash to Mark H. Swartz, its chief financial officer, while he was under investigation by a grand jury in Manhattan that later indicted him on fraud charges. A copy of the Aug. 1 agreement was obtained yesterday from a person close to the investigation of Mr. Swartz and L. Dennis Kozlowski, Tyco's former chief executive. It was approved on Aug. 14 by two board members serving on Tyco's compensation committee. The amount paid to Mr. Swartz was not disclosed to shareholders, though the complex formula that Tyco used to devise his exit agreement was outlined in a document attached to its most recent quarterly filing.

DAN GILLMOR, SAN JOSE MERCURY NEWS - Jack Valenti says he and his movie-industry employers are all for compromise in the copyright wars. But the solutions they advocate for an admittedly tough dilemma, copyright infringement, are grossly one-sided. . . In fact, the entertainment cartel has in recent years grossly tipped the balance. Spending millions of dollars on campaign contributions and lobbying, it has persuaded Congress to enact laws reflecting a radical view of information and its use. The major media/entertainment companies believe that control of information -- absolute control over how it can be used -- belongs to the owner of the copyright. They insist, moreover, that copyrights should be able to last indefinitely. This is not a compromise, no matter what Valenti calls it. This is a radical agenda, one that overturns tradition and would ultimately wipe out the public domain, without which our culture would be vastly poorer.

ERIN MADIGAN, STATELINE - For a Kansas-based Web company electronic government is turning into big business, as cash-strapped state governments search for ways to fund online services. NIC (National Information Consortium) builds and manages government Web sites by charging user fees for access. The publicly held company has operated Indiana's state government Web site since 1995, and currently does business with eight local and 16 other state governments. Other NIC clients include Idaho, Iowa, Kansas, Hawaii, New Hampshire and Utah. Of these 17 states, 14 charge fees so only taxpayers that use the service cover the cost. . . Critics say charging fees denies some individual users or organizations needed and readily accessible state services. . . Darrell West, director of the Center for Public Policy at Brown University and author of a new study on state and federal e-government, is concerned subscriber fees could stop poor residents or those who live in rural areas from gaining access to certain services on state Web sites.

QUESTION OF THE DAY What president cut taxes four times, reduced the national debt by a third, and reported budget surpluses every year in office?

ANSWER OF THE DAY Calvin Coolidge. Not too many months after he left the White House, the country was plunged into a depression -- something that has happened every time America has significantly reduced its national debt.

IS THE MARKET BEING RIGGED?

John Crudele of the New York Post points to big purchases of index futures at stock market crisis moments as evidence the government may be manipulating what happens on Wall Street. He writes that in 1989 a member of the Federal Reserve Board, Robert Heller, suggested just such a tactic. Writes Crudele: "Essentially, whenever there is heavy buying of these futures contracts it causes the underlying stock market to rise. The futures contracts can be bought cheaply; they are highly leveraged so you get more bang for each buck, and they eliminate the need for a rigger to purchase, say, all 30 stocks that make up the Dow. Heller explained that the process was simple. And it is. The trouble is, the government never has had authority to rig the stock market. . . . Take last Thursday, when the Dow was down more than 200 points and the House was passing a resolution to investigate the President of the United States. Exactly when the debate was going on in Congress, the S&P 500 futures contracts shot up in price like someone needed a market rally awfully bad." Review, 1998

MBA BRAINS FOUND
SIMPLE ENOUGH
FOR COMPUTER TO ASSESS

Confirming anecdotal evidence about America's managerial class, the Educational Testing Service has announced that a computer will replace one of the humans formerly used to evaluate essay answers on the Graduate Management Admissions Test. According to the Washington Post, the computer program, based on previous successful answers, will "search for vocabulary and syntactic structure to find key words and phrases as evidence of a 'good argument.' Although a human evaluator will also check the work, the plan assumes that a computer can find the words "bottom line" and "outside the box" as well as a real person. - 1998

Economics Affects The Poor's Life-Span
More Than Drinking, Smoking, Lack Of Exercise

A study in the Journal of the American Medical Association, reports that the poor have a death rate 2.77 times higher than that of other Americans -- even when smoking, drinking alcohol, overeating and lack of exercise are accounted for. These factors are responsible for about 13% of the low income death rate.

Even Americans making between $10,000 and $29,000 had a death rate 2.14 higher than those earning $30,000 plus after subtracting the effect of harmful habits.

And while the poor having greater smoking and weight problems, contrary to common perception they drink less than wealthier groups of Americans. Sixty percent of the poor don't drink at all compared to 31% of those earning $30,000 or more. The study was funded by the National Institute on Aging and the Robert Wood Johnson Foundation. - 1998

LISA GIRION, THE LOS ANGELES TIMES - In a setback for multinational corporations, a federal appeals panel ruled that such companies can be held liable in U.S. courts for aiding and abetting human-rights violations committed abroad. The ruling, which the panel said was unprecedented, came in a case that accuses El Segundo, California-based Unocal Corp. of turning a blind eye to alleged human-rights abuses, including murder and rape, against Burmese villagers who were forced by Myanmar government soldiers to work on a $1.2 billion natural-gas pipeline. The decision by a panel of the 9th U.S. Circuit Court of Appeals in Pasadena, California, was seen as a breakthrough for foreigners seeking to hold multinational corporations accountable for their alleged complicity with repressive foreign regimes in human-rights abuses. At least ten similar lawsuits are pending around the United States against corporations, including Chevron-Texaco and Coca-Cola, and human-rights lawyers have several other cases waiting in the wings.

JOHN M. BRODER, NY TIMES - Widespread power failures during California's energy crisis of 2000 and 2001 could have been avoided if five independent energy companies had not withheld electricity they were capable of producing, a study by state regulators said today. The investigation by the California Public Utilities Commission said the five companies - Duke, Dynegy, Mirant, Reliant and AES/Williams - had withheld power from their California plants. This contributed to the "unconscionable, unjust and unreasonable electricity price spike that California experienced during the energy crisis," the report said. The commission did not directly accuse the companies of deliberately trying to drive prices up. Officials said investigations were continuing into possible price manipulation and collusion among the companies.

JUNE 2002

RECOVERED HISTORY
Before Enron

[The collapse of crony capitalism began well before Enron's troubles were revealed as a caller tried to explain this morning to Diane Rehm of Nominally Public Radio. The determination with which Rehm hung up on mention of Robert Rubin, Citicorp, and Long Term Capital Management sent us to the archives.]

PATRICE HILL, WASHINGTON TIMES - Robert E. Rubin, the former Treasury secretary and current vice chairman of Citigroup Inc., is portrayed in the latest Enron lawsuit as trying to protect the bank's extensive investments in Enron Corp. by orchestrating a bailout for the energy giant in the fall. Mr. Rubin, who was lauded as one of the best Treasury secretaries in history when he left the Clinton administration in May 1999, first tried to get the Treasury Department to intervene in early November to prevent a devastating downgrade of Enron by Wall Street's credit-rating agencies. His overture to Treasury Undersecretary Peter Fisher to mediate a creditor bailout, perhaps like the one Mr. Rubin and Mr. Fisher helped engineer for the failing Long Term Capital Management hedge fund in 1998, was spurned, Treasury officials said. At the same time, Treasury Secretary Paul H. O'Neill rebuffed a similar plea for intervention from Enron Chairman Kenneth L. Lay. Mr. Lay had cultivated a relationship with Mr. Rubin when he was at the Treasury and appears to have sought his assistance. Having failed in Washington, Mr. Rubin in late November tried to use his leverage on Wall Street to pressure the leading credit agency, Moody's Investors Service, not to downgrade Enron's rating to junk status, according to an amended complaint filed yesterday by thousands of Enron shareholders in the U.S. District Court in Houston. Moody's also rejected Mr. Rubin's pleas and issued the downgrade that plunged the company into bankruptcy on Dec. 2, the lawsuit says. A spokeswoman for Citigroup said the investment bank spoke with Moody's about Enron and may have tried to patch Mr. Rubin in on the call but that he never connected or actually spoke to anyone at Moody's. A Moody's official testified last month that Mr. Rubin, who is not a defendant in the lawsuit, called the agency. The lawsuit contends that Mr. Rubin and Citigroup, with eight other Wall Street firms and two Enron law firms, had inside knowledge about Enron's questionable finances and colluded with the company to deceive investors to protect their billions of dollars of Enron investments. Mr. Rubin and William Harrison, the chairman of J.P. Morgan, in particular sought leniency from the credit agencies because they were desperately trying to arrange an eleventh-hour merger between Enron and Dynegy Inc. that might have saved the company and earned them $90 million in fees, the lawsuit contends.

DAVID IVANOVICH, HOUSTON CHRONICLE - Former Treasury Secretary Robert Rubin joined Enron Corp. executives in a futile effort to persuade the Bush administration to help keep the company from plunging into bankruptcy, government officials said. Rubin, Treasury secretary under President Clinton and now head of one of Enron's largest creditors, Citigroup, called the Treasury Department and raised the prospect of the government intervening on the company's behalf . . . Rubin called Peter Fisher, Treasury's undersecretary of domestic finance, who had been assigned to monitor the Enron fallout, Treasury spokeswoman Michele Davis said. Rubin asked Fisher "what he thought of the idea of Fisher placing a call to rating agencies to encourage them to work with Enron's bankers, to see if there was an alternative to an immediate downgrade," Davis said. "Fisher responded that he didn't think it was advisable to make such a call," Davis said. Rubin "thought that was a reasonable answer."

. . . The Federal Reserve confirmed Friday that Lay placed a call to Greenspan on Oct. 26, just days before Moody's Investors Service downgraded the credit rating on the company's long-term debt, a decision which sent Enron's stock nose diving. The Federal Reserve had orchestrated the bailout of the hedge fund Long Term Capital Management, using $3.5 billion ponied up by the private sector to save the firm. Lay had recalled the government's role in the Long Term Capital rescue in his conversation with O'Neill. A Fed spokesman would not characterize Greenspan's conversation with Lay, but he did note: "The Fed chairman did nothing in response because it would have been inappropriate."

JOHN GREENWALD, TIME, 1998 - Washington and Wall Street buzzed last week with outraged talk of "moral hazard," and for once it had nothing to do with Bill Clinton's sex life. Instead people were talking about the danger created when government backing for private lenders encourages them to take bigger risks -- in search of bigger rewards. That danger was demonstrated in dramatic fashion when the Federal Reserve had to engineer the rescue of Long Term Capital Management, a high-flying hedge fund that as recently as August controlled high-risk, global investments worth more than $120 billion--enough to buy all of AT&T.

Though the partners and investors in Long Term Capital are sophisticated and wealthy (the minimum price of admission was $10 million), Federal Reserve officials feared letting them go bankrupt. So many of the nation's biggest banks and brokerages had loaned so much money to Long Term Capital that its collapse could have severely damaged those lenders, forced a spiral of securities sales and shaken confidence in the already wobbly world financial system. Long Term Capital, if not exactly too big to fail, loomed too large on the balance sheets of institutions like J.P. Morgan and Merrill Lynch.

Supporters of the bailout stressed that the Federal Reserve only facilitated the deal, and that the $3.5 billion in rescue capital came from 16 large banks and brokerages, rather than from taxpayers. Yet the critics pointed out that the rescuing banks are backed by taxpayers through federal deposit insurance. Moreover, they enjoyed that federal backing while throwing the money at Long Term Capital that enabled it to pursue its exotic--and, for three years, very profitable--speculations. "Why should the weight of the Federal Government be brought to bear to help out a private investor?" demanded former Fed Chairman Paul Volcker. "It's not a bank."

Last week's bailout raised twin fears in Washington and on Wall Street as tall as Manhattan's Twin Towers. The first: that Long Term Capital's financial troubles are shared by many of the country's 4,000 hedge funds--lightly regulated and often secretive, high-risk vehicles for sophisticated investors. The banks and brokerages that have loaned them money could be carrying big and undisclosed potential liabilities. If those lenders get caught in a cash squeeze, they could respond by cutting back on lending, even to low-risk borrowers.

The second fear is that the Long Term Capital bailout could encourage banks to make still more risky loans, confident that the government won't let them get into trouble. In this regard, the rescue was rich in irony: it came as the Senate passed a bill that would make it harder for ordinary citizens to seek bankruptcy-court protection from banks and other creditors.

John Hsu, whose investment company manages some $500 million in assets, observes that "given all the losses that U.S. banks suffered in the late 1980s and early 1990s, you would think they would remember what went wrong." Concurs Ken Guenther, executive vice president of the Independent Bankers Association of America: "Why wasn't the Fed blowing the whistle on these totally inappropriate, crapshoot investments by some of the biggest banks in the country?"

WORLD SOCIALIST WEB SITE, 1999 - The response of US financial authorities to the LTCM failure formed a stark contrast to the prescriptions handed down in Asia. Whereas the International Monetary Fund, taking its directions from Rubin and the US Treasury, demanded the closure of failed banks and the lifting of interest rates in Thailand, Indonesia and Korea, when the crisis reached Wall Street the Federal Reserve Board pumped more liquidity into the financial system, bringing a further expansion in the stock market bubble.

KATIE COURIC: Alright, well Bob Rubin, who was of course the former Treasury Secretary under the Clinton administration now senior executive at Citigroup, made a call to an undersecretary at the Treasury regarding Enron. Ultimately it was decided they should not get involved in this, it wouldn't be prudent. But is this muting calls by the Democrats because the Democrats themselves might be culpable? Or they might be fingers ultimately pointed at them as well?

TIM RUSSERT: Absolutely. The Republicans are using Bob Rubin as a poster boy to say it just, it isn't just us. Here's Bob Rubin involved with Citicorp, Citigroup. Enron owed them $750 million. Why would he make a call even suggesting that something be done. Both parties here are pointing fingers, both are culpable. There's a lot of money in this political process."

[And then there was Global Crossing, another financial disaster the media has largely chosen to ignore]

ALEX GIMARC - The bankruptcy of Global Crossing, Terry McAuliffe's sugar daddy started to take off nicely last week, with the announcement of an FBI investigation into its accounting practices. Global Crossing, who trafficked in international fiber links, was about the same size a Enron, was about as closely tied to the Clinton White House, and failed about as spectacularly as Enron. Unlike Enron, it was purchased after bankruptcy. Who paid for Global Crossing? None other than Hutchison - Lampoa, a holding company headquartered in Hong Kong. Hutchison - Lampoa also is a front for the Peoples Army of Red China. The company also now manages both ends of the Panama Canal.

DRUDGE REPORT - For McAuliffe, Global Crossing turned out to be a bonanza. The stock had soared in the late 90s, when Winnick once bragged that he was the "richest man in Los Angeles." McAuliffe operated out of an office in downtown Washington that belonged to Winnick - to help the mogul "work on deals." McAuliffe told the NY Times' Jeff Gerth in late '99 that his initial $100,000 investment grew to be worth about $18 million, and he made millions more trading Global's stock and options after it went public in '98.

WORTH MAGAZINE - In 1995, Cincinnati billionaire Carl Lindner, whom McAuliffe had successfully courted as a donor, put up money for McAuliffe to buy American Heritage Homes, then the second-largest home builder in Florida. And in 1997, Los Angeles businessman Gary Winnick, also a Democratic donor, gave McAuliffe an early opportunity to invest $100,000 in Winnick's new company, Global Crossing, an owner and operator of undersea fiber-optic cables. When the stock subsequently soared, McAuliffe made a reported $18 million from that $100,000 investment. Two years later, McAuliffe arranged for Winnick to play golf with President Clinton, and Winnick then gave a million dollars to help build Clinton's presidential library. So it went in the 1990s: McAuliffe was helping the rich and powerful gain access to Bill Clinton, and everyone was making money. Anyone who suggested that there was something inappropriate about all the back-scratching-something that reeked of access peddling-only sounded like a spoilsport. With the stock market boom and the Internet gold rush and the whole country making money, why not join the party?

PROGRESSIVE REVIEW - Bush also got a six-figure sum from Citibank for speeches he gave in Vietnam. But his most amazing venture was a talk in Japan where he was paid in shares of Global Cross LTD in lieu of an $80,000 speaking fee. In one year, the value of the stock went up to $14.4 million. The Wall Street Journal reported that the day after the speech, Bush expressed curiosity about the company over breakfast Global Crossing's co-chairman, Gary Winnick. Winnick reportedly suggested that Bush take his fee in stock in their privately held firm instead of cash, and Bush agreed. Global Crossing went public shortly thereafter, and its stock price jumped fivefold. We don't know whether he held on to it, but the stock has plummeted since fall from nearly 100 down to the mid 60s.

FEBRUARY 2002

||| JOHN BRESNAHAN & DAMON CHAPPIE, ROLL CALL - In early 1998, Enron Corp. secured a $750,000 contract for political operatives tied to House Majority Whip Tom DeLay (R-Texas) to secretly conduct an aggressive grassroots campaign pushing energy deregulation, according to documents obtained by Roll Call and interviews with individuals involved with the effort. The contract was awarded after DeLay personally recommended to Enron officials that they hire the team of strategists who make up the inner circle of his political and fundraising machine. In a January 1998 meeting at his home in Sugarland, Texas, DeLay reviewed plans to have Enron bankroll a new grassroots operation to jump-start the deregulation debate with three of his operatives

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||| TAMARA LYTLE, ORLANDO SENTINEL - A Wall Street money-management firm was busy buying millions in plummeting Enron stock on behalf of Florida's pension fund last year at about the same time it was advising the state of New York to sell its shares. U.S. Sen. Bill Nelson, D-Fla., said that he wants to know why Alliance Capital Management had such bad advice for Florida's pension fund for teachers, state and local workers while recommending the opposite for New York's. Florida lost more than $300 million on its Enron investments - more than any other state . . . Alliance Capital has come under fire because one of its executives, Frank Savage, also sat on the board of directors of Enron. Critics say that presented a conflict of interest and that Savage should have warned Alliance Capital's investors when he discovered the precarious state of Enron's finances. Florida has since fired Alliance Capital and is considering suing the company.

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||| ENRON INFORMATION LINE: Even if you don't have a question, the number is worth calling. 1-213-213-6070

[DAVID MARTIN, an independent investigator who has previously done work on the Vince Foster mystery and other cases, sent $25 to the Office of the Medical Examiner of Harris County, Texas and obtained a notarized copy of the autopsy of former Enron executive, J. Clifford Baxter. Here are some of things Martin found in it.]

||| DAVID MARTIN, GREAT SPECKLED BIRD - 1. Although the "Manner of Death" on page 1 is given as "suicide," no effort is made in the autopsy to support that conclusion, and, indeed, there is no supporting evidence for suicide in the autopsy. The conclusion could only have been reached based upon something extraneous to the autopsy.

2. The strongest evidence in the autopsy report is most consistent with murder. Under EVIDENCE OF INJURY on page 3 we find, "The defect is stellate and, when the wound edges are repositioned, measures 7.2 centimeters in the horizontal direction and 4.5 centimeters in the vertical direction."

This suggests a wound inflicted by a starburst of rat shot pellets which were far enough from the muzzle of the weapon to have separated from one another by as much as 2.83 inches before striking the head. Who would, or could, shoot themselves in the temple like this?

A friend of mine has consulted with a technician at CCI Ammunition, a company that makes .38 caliber rat shot charges like the one apparently causing the death of Baxter. The technician says that a general rule of thumb is 1 inch of spread for every one foot of distance between the gun muzzle and the target. That suggests that the gun would have been between two and three feet from Baxter's temple when it was fired, a rather peculiar way for someone to shoot himself. Maybe Baxter wanted to give himself a sporting chance.

In the paragraph above the EVIDENCE OF INJURY we read that "The palmar surface of the left hand is remarkable for an irregular, red, recent abrasion occurring at the base of the fifth digit, which measures 1/4 inch along the linear axis. There is an irregular abrasion on the palmar surface of the distal phalanx of the fifth digit, which measures 1.5 centimeters. This injury consists of discontinuous superficial abrasions with a trail of black material."

Such an injury, though very slight, is not consistent with Baxter having shot himself while seated in his car. Rather, it suggests that he had recently fallen to his left (consistent with being shot in the right temple) and attempted to break to fall by extending his left hand, perhaps on an asphalt road. The black material should have been tested to see what it is, but apparently it was not.

3. The car was much nearer to the house than news reports have indicated, for what that might be worth. As in the original Houston Chronicle report, the autopsy report says Baxter was found in his car in the 5200 block of Palm Royale Boulevard. We learn for the first time here, though, that his home was at 5211 Palm Royale Boulevard. He was less than a block from home, and could have been in front of his own house.

4. His dress, workout pants and a t-shirt, are most consistent with his having just ventured out from his house rather than his having been out in some public place.

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||| REUTERS - The Houston Astros smacked the disgraced Enron Corp. right out of their ballpark, buying back the naming rights for the stadium from the fallen energy trader for $2.1 million. The park born in 2000 as Enron Field for now will be called Astros Field until the baseball club can find a new buyer for the naming rights. The two parties agreed to the deal before a scheduled hearing on the matter in a U.S. Bankruptcy Court in New York set for later on Wednesday. Enron in 1999 agreed to pay $100 million to put its name on the stadium for 30 years. Wednesday's deal nullifies the remaining 27 years of the naming rights contract, and gives Enron some much-needed cash.

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||| PETER ASMUS, GREENBIZ - One of the few energy-related assets Enron maintained was its wind-turbine-manufacturing subsidiary, Enron Wind Corporation. Even though wind power has been the fastest-growing power supply source over the past decade, Enron had been trying to sell its wind unit for more than a year. Enron seemed oblivious to the true value of the United States' last major wind company. Or perhaps it just viewed a company whose revenues grew from $50 million in 1997 to $750 million in 2001 as a source of cash to shore up its shaky financial footing . . . To its credit, Enron supported curbing emissions to global climate change. Yet the firm failed to recognize that the value of one of the few energy-related hard assets it owned - Enron Wind Corp. - showed tremendous profit potential due to global climate change concerns.

"We are one of the top three wind turbine manufacturers in each of the top three world wind power markets: the United States, Germany, and Spain," said Adam Umanoff, CEO and president of Enron Wind Corporation. Among those interested in Enron Wind, which is not part of the bankruptcy proceeding that has engulfed its ailing corporate parent, is UBS Warburg of Great Britain. If snatched up by a European firm, the billions of U.S. dollars in private and public sector capital invested into wind technology will have failed to sustain even one major domestic wind turbine manufacturer . . .

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||| CHRISTOPHER STERN WASHINGTON POST - During 2000 and 2001, a period when Global Crossing Ltd.'s stock was falling along with demand for its international telecommunications network, 14 company insiders sold more than $482 million worth of shares in the firm. Global Crossing chairman and founder Gary Winnick reaped the biggest gains over those two years - a total of more than $280 million, according to figures provided by Thomson Financial/Lancer Analytics . . . Winnick and other company officials have defended the sales, saying the transactions were fully disclosed to investors and others as part of Global Crossing's routine reports to federal regulators. But the sales were made during a period now under scrutiny by the Securities and Exchange Commission and the FBI. The agencies are looking into charges that the company, which filed for bankruptcy protection last month, reported inflated revenue numbers in an effort to mislead investors, creditors and regulators about its financial condition.

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ENRON

[From testimony before a House committee by Enron Vice President Sherron Watkins. Watkins is being asked by Rep. Greg Ganske about her memo to Kenneth Lay warning him of massive financial irregularities in the company's accounts.]

GANSKE: Did you keep a copy for your own personal files?

WATKINS: Yes, I did. Yes, I did.

GANSKE: And where did you keep those files? At home?

WATKINS: No.

GANSKE: At work?

WATKINS: No, in a lockbox.

GANSKE: In a lockbox. So you were enough concerned about this that you wanted to put this somewhere where it couldn't be destroyed.

WATKINS: Yes.

GANSKE: Were you worried about your own personal safety?

WATKINS: At times, I mean, just because the company was a little bit radio-silent back to me, so I didn't know how they were taking my memos or the investigation.

GANSKE: Why would you be worried about your personal safety?

WATKINS: Because it was the seventh-largest company in America.

GANSKE: And you were dealing with a really powerful person-

WATKINS: Yes.

GANSKE: . . . and a really powerful company.

DERIVATIVE AMERICA
& THE ENRON GENERATION

THE word from the Secretary of State that what this country really needs is "rebranding" provides further confirmation that America itself has become a derivative, a socio-political version of those financial instruments Roy Davis has described as having "no intrinsic value, but derive their value from something else . . . The job of a derivatives trader is like that of a bookie once removed, taking bets on people making bets."

John Maynard Keynes explained it more than 60 years ago:

"'Professional investment may be likened to those newspaper competitions in which the competitors have to pick out the six prettiest faces from a hundred photographs, the prize being awarded to the competitor whose choice most nearly corresponds to the average preferences of the competitors as a whole; so that each competitor has to pick, not the faces which he himself finds the prettiest, but those which he thinks likeliest to catch the fancy of the other competitors, all of whom are looking at the problem from the same point of view. It is not a case of choosing those which, to the best of one's judgment, are really the prettiest, nor even those which average opinion genuinely thinks the prettiest. We have reached the third degree when we devote our intelligences to anticipating what average opinion expects the average opinion to be. And there are some, I believe, who practice the fourth, fifth and higher degrees.'"

Since the rise of metastatic media and mass mood manipulation, America has become similarly removed from the first degree of itself. The process described by Keynes applies as well to politicians as it does to gold trading, witness Bill Clinton's weekly meetings with pollsters to determine what he should think and say over the coming days. Or consider the media, which now widely substitutes perceptions for news; features talk shows that offer perceptions of the validity of previous perceptions; and which, even when still reporting news, does so only after careful consideration of what the viewers want to see, which by definition bars anything that is new and thus news.

Even war has become another degree of itself. War used to be something to win against an enemy that had a name. There were some relatively firm standards - such as a surrender - to indicate when that had occurred. Now we are told that we are in a war not against somebody but against a character flaw called evil doing, and that the war may not be over for 5, 10, or 50 years depending on who is talking about it.

This, of course, is not really a war at all, but a new status quo that has been declared, one in which violence and paranoia and strip searches are not just part of a sacrifice one must make for a better future. They are the future.

Thus have America's leaders become rogue traders of reality, creating derivatives of it for their own purposes at extraordinary risk to the rest of us, demanding that we bet our all on a psychic 401K that is invested only in megalomaniacal notions of foreign relations and in a dictator's notion of security.

How has this happened? One reasonable hypothesis is that the character of Enron's management is not a perversion of elite values at all, but rather a revealing insight into what has occurred in the rest of society as well, including the media, academia, and politics.

You even find it in the military, witness the current chair of the Joint Chiefs of Staff, General Richard Meyers, who actually says things like "facilitize" (a derivative of "facilitate" which is a derivative of "assist") and who excused the slaughter of 16 innocent Afghans by arguing that "the difference between a normal Afghan citizen and a Taliban is very thin," much as if he were a corporate representative explaining misdelivered order.

The trend is particularly striking in politics. The last two administrations have been characterized by the invasive influence of an arrogant, autistic, and amoral class of late 20th century MBAs and similar members of the technocratic elite. This class has junked sixty years of social democracy, helped wreck the Russian economy, made every American worker a temp-in-waiting, carpet bombed the English language, trashed every moral concept in their way, and twisted reality so effectively they even convinced many that they were sex objects.

And they are everywhere. You will find them running schools and universities and managing once great museums. They talk mush, think mush, market mush, report mush, and defend mush. They attempt to make up in certitude what they lack in wisdom; they can't tell the difference between a phrase and a product; and they create infantile and self-serving distortions of economic principles that they declare to be the only principles in life worth observing. They are, in the end, just so many more televangelists, but with themselves as God. Perhaps worst of all, they are without the capacity for shame. Like other sociopaths, they are remorseless.

The fraud, the huckster, the salesman are not new phenomena in America; what is new is that they now so strongly control every estate of our society. Those of a nature that would have once caused Americans to close the door, hang up, or say "no thank you," now teach our children, run our government, and tell us what to think. They are the Enron generation, filled with postmodern versions of Willy Loman: "He don't put a bolt to a nut, he don't tell you the law or give you medicine. He' s a man way out there in the blue, riding on a smile and a shoeshine."

America, in its first degree, made things people wanted, said things that needed to be said, and fixed things, including itself, that needed fixing. Now it is out there in the blue, riding only on a smile and a shoeshine. The problem, as Willy Loman discovered, comes "when they start not smiling back - that's an earthquake. And then you get yourself a couple of spots on your hat, and you're finished." - SAM SMITH

||| ASSOCIATED PRESS is reporting that Enron executives urged employees to invest all their retirement money in Enron stock, according to Rep. Henry Waxman who obtained a videotape of a company meeting.

||| MARK SHERMAN, ASSOCIATED PRESS - The nation's fourth-largest bankruptcy has gotten scant attention in Washington because it occurred around the same time as the largest. But like Enron, Global Crossing Ltd. was a major player in the capital. . . Global Crossing's campaign contributions have come in large chunks - unregulated soft money to both parties, favoring Democrats but not to the extent that Enron directed its money to Republicans. Lawmakers on key committees have been a focus.

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||| PATRICE HILL, WASHINGTON TIMES - The Clinton administration provided more than $1 billion in subsidized loans to Enron Corp. projects overseas at a time when Enron was contributing nearly $2 million to Democratic causes. Clinton officials refused to finance only one out of 20 projects proposed by the energy company between 1993 and 2000 to build power plants, natural-gas pipelines and other big-ticket energy facilities around the world, according to the Export-Import Bank and the Overseas Private Investment Corp., the agencies that provided the subsidies. In addition, the administration, which lauded Chairman Kenneth L. Lay as an exemplary "corporate citizen," granted about $200 million worth of insurance against political risks for nine Enron projects in such politically volatile areas as Argentina, Venezuela and the Gaza Strip, according to documents the agencies provided to the Senate Finance Committee.

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||| MARCY GORDON ASSOCIATED PRESS - Former Enron chairman Kenneth Lay offered a seat on the company's board in 1999 to Robert Rubin, who was then treasury secretary, and lobbied Rubin and his successor on issues affecting Enron, documents obtained show. The notes and letters show that Lay pressed Enron's interests to Clinton administration officials. Last month, the Bush administration disclosed a series of telephone calls from Lay - one of President Bush's biggest campaign contributors - to members of the Bush Cabinet as the company was sliding toward bankruptcy last fall.

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||| CARL LIMBACHER, NEWSMAX - The National Enquirer may finally be able to add some desperately needed spice to the otherwise enervating Enrongate scandal, with a report hitting newsstands Friday that claims the collapsed energy giant was knee-deep in wild sex parties and CIA espionage . . . Some highlights reported by NE:

"Enron executives frequented several Houston strip clubs and billed thousands of dollars directly to the company - including a tab for VIP rooms where sexual favors were dispensed to big spenders.

"Typically a group of five or six would come in for lunch, drink a few martinis and get private lap dances from the girls. They paid with credit cards that clearly said 'Enron' on them," a source at one of the clubs told the tabloid.

"Anything goes in the VIP room. It isn't uncommon for the girls to provide sexual favors for big spenders. And a lot of these middle-aged Enron executives were some of the biggest spenders in the club.

"Enron-sponsored parties would often spiral out of control with senior officials' bar tabs skyrocketing to over $10,000." . . .

The story takes a cloak-and-dagger twist with the allegations that both the Clinton and Bush administrations signed off on CIA help for the corporate giant.

"There have been at least 20 CIA agents on the payroll of Enron for the last eight years," a source familiar with several ongoing Enrongate probes told the tabloid.

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||| RUSSELL MOKHIBER & ROBERT WEISSMAN - Frank Easterbrook and Daniel Fischel are University of Chicago law professors who believe that, when it comes to making profits, nothing - not even the law - should stand in the way. (For almost two decades, Easterbrook has also been a federal appeals court judge.) Twenty years ago, writing about antitrust crimes in the Michigan Law Review, Easterbrook and Fischel, then both professors at the University of Chicago, wrote that managers not only may, but should, violate the rules when it is profitable to do so. And it is clear that they believed that this rule should apply beyond just antitrust.

In a nutshell, this is the Chicago School view of corporate law that has taken hold over the past 20 years. Under this view, if a Fed Ex truck needs to double park to make a delivery - double park. No problem. Pay the $20 fine. Just as long as you are still making money, violate the law. Or course, when it comes to corporate crime and violence, we aren't talking about just double parking. We're talking about fraud, corruption, pollution, price-fixing, occupational disease, and bribery. The Chicago School says these are "externalities" and related fines and penalties should simply be viewed as the "costs of doing business." . . .

Lawmakers of both parties are shamelessly portraying Enron and Arthur Andersen as rotten apples, even though those same lawmakers were just until recently on the take from both corporations, and doing the dirty work of defeating laws that would have governed both . . .

As Easterbrook and Fischel so clearly show, the corporate world is now governed by an ideology that is rotten to the core. After all, as the great Chicago professors teach us, it is the duty of managers to violate the law when it is profitable to do so.

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||| GLOBAL CROSSING made big payments and forgave loans to executives even as it headed for bankruptcy court the Wall Street Journal reports.

JOSEPH N. DISTEFANO, PHILADELPHIA INQUIRER: To manage its far-flung financial interests, avoid local taxes and shroud high-stakes deals from investor scrutiny, Enron Corp. organized a sprawling network of 2,000 corporate subsidiaries in 23 states and 62 countries. Hundreds of Enron units were set up in offshore tax havens such as the Cayman Islands; others were under the laws of Brazil, England and other places Enron did business, according to the bankrupt company's annual report. But the largest number of Enron subsidiaries -- 685, not counting duplicate names -- were set up in Delaware, where the creation and care of corporate entities is big business. The speed, secrecy and state tax exemptions offered by Delaware, along with its business-friendly courts, have long enticed everyone from blue-chip corporations to international gangsters. State officials say more than half of Fortune 500 and New York Stock Exchange companies are chartered there, and the General Accounting Office cites Delaware as a haven for foreign money launderers. You can start a Delaware company without going there. First, pick a Delaware-registered corporation agent. They advertise in magazine and on the Web. For just $85 in fees, you're in business. You don't need to open a bank account; disclose your profits, sales or purpose; or even give your name. Yearly fees of $50 to Delaware and another $100 or so to your agent will keep you there.

GOING FOR THE GOLD

IGNORED BY the stenographic media is the possibility that the Enron scandal may be eclipsed by other derivative-based disasters, most notably one involving the shaky gold markets. It has been left to concerned gold traders and market aficionados to blow the whistle on this crisis in the making.

One exception in the press is Kelly Patricia O'Meara of Insight Magazine who writes in the current issue:

"There are many in the world of high finance who aren't buying the official line and warn that Enron is just the first to fall from a shaky house of cards. Many analysts believe that this problem is nowhere more evident than at the nation's bullion banks, and particularly at the House of Morgan (J.P. Morgan Chase). One of the world's leading banking institutions and a major international bullion bank, Morgan Chase has received heavy media attention in recent weeks both for its financial relationships with bankrupts Enron and Global Crossing Ltd. as well as the financial collapse of Argentina . . .

"In recent years Morgan Chase has invested much of its capital in derivatives, including gold and interest-rate derivatives, about which very little information is provided to shareholders. Among the information that has been made available, however, is that as of June 2000, J.P. Morgan reported nearly $30 billion of gold derivatives and Chase Manhattan Corp., although merged with J.P. Morgan, still reported separately in 2000 that it had $35 billion in gold derivatives. Analysts agree that the derivatives have exploded at this bank and that both positions are enormous relative to the capital of the bank and the size of the gold market.

"It gets worse. J.P. Morgan's total derivatives position reportedly now stands at nearly $29 trillion, or three times the U.S. annual gross domestic product.

"Wall Street insiders speculate that if the gold market were to rise, Morgan Chase could be in serious financial difficulty because of its "short positions" in gold. In other words, if the price of gold were to increase substantially, Morgan Chase and other bullion banks that are highly leveraged in gold would have trouble covering their liabilities. One financial analyst, who asked not to be identified, explained the situation this way: 'Gold is borrowed by Morgan Chase from the Bank of England at 1 percent interest and then Morgan Chase sells the gold on the open market, then reinvests the proceeds into interest-bearing vehicles at maybe 6 percent. At some point, though, Morgan Chase must return the borrowed gold to the Bank of England, and if the price of gold were significantly to increase during any point in this process, it would make it prohibitive and potentially ruinous to repay the gold.'"

One reason no one knows for sure what is happening in the gold market is because those that do know aren't saying. For example: how has the Fed and the US government used the gold market for their own purposes? The Gold Anti-Trust Action group has dug up some tantalizing, oblique references.

There is, for example, this comment from a former Fed governor during a meeting of the Federal Open Market Committee on March 26, 1991: "I would hesitate for us to have foreign currency holdings that have swap puts that just sit there, [which] is now becoming the case for our gold."

At another FOMC meeting, in January 1995, then Federal Reserve Governor Lawrence Lindsey asks about the legal authority to engage in a Mexican financial rescue package then under discussion. J. Virgil Mattingly, general counsel of the Fed and FOMC, replied: "I don't think there is a legal problem in terms of the authority. The statute is very broadly worded in terms of words like 'credit' - it has covered things like the gold swaps - and it confers broad authority."

Here is Fed Chairman Alan Greenspan before the House Banking Committee and Senate Agricultural Committee in July 1998: "Nor can private counter-parties restrict supplies of gold, another commodity whose derivatives are often traded over-the-counter, where central banks stand ready to lease gold in increasing quantities should the price rise."

In January 2000, Greenspan wrote a letter to Senator Lieberman attempting to explain his testimony: "This observation simply describes the limited capacity of private parties to influence the gold market by restricting the supply of gold, given the observed willingness of some foreign central banks - not the Federal Reserve - to lease gold in response to price increases . . . The Federal Reserve owns no gold and therefore could not sell or lease gold to influence its price. Likewise, the Federal Reserve does not engage in financial transactions related to gold, such as trading in gold options or other derivatives.
Most importantly, the Federal Reserve is in complete agreement with the proposition that any such transactions on our part, aimed at manipulating the price of gold or otherwise interfering in the free trade of gold, would be wholly inappropriate."

But now consider a lawsuit in which Edward A. J. George, Governor of the Bank of England and a director of the Bank of International Settlements, is quoted as having written: "We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore at any price, at any cost, the central banks had to quell the gold price, manage it. It was very difficult to get the gold price under control but we have now succeeded. The U.S. Fed was very active in getting the gold price down. So was the U.K."

AS GATA would point out later, "The 'abyss' was the problem of covering the short physical gold position evidenced by a mountain of gold derivatives on the books of the bullion banks."

It was none other than former Treasury Secretary and now Harvard president Lawrence Summers, who in a 1988 paper explained why a number of gold specialists are highly skeptical of the banks' and government's role in gold prices. Summers, then Nathaniel Ropes professor of political economy at Harvard, co-authored with Robert B. Barsky an article entitled "Gibson's Paradox and the Gold Standard." A principal conclusion of the article is that in a genuinely free gold market unaffected by "government pegging operations," gold prices will move inversely to real long-term interest rates, rising when real rates fall, and falling when real rates rise.

Last August, the Golden Sextant web site offered this analysis: "Gibson's paradox continued to operate for another decade after the period covered by Barsky and Summers. But sometime around 1995, real long-term interest rates and inverted gold prices began a period of sharp and increasing divergence that has continued to the present time. During this period, as real rates have declined from the 4% level to near 2%, gold prices have fallen from $400/oz. to around $270 rather than rising toward the $500 level as Gibson's paradox and the model of it constructed by Barsky and Summers indicates they should have. The historical evidence adduced by Barsky and Summers leaves but one explanation for this breakdown in the operation of Gibson's paradox: what they call 'government pegging operations' working on the price of gold. What is more, this same evidence also demonstrates that absent this governmental interference in the free market for gold, falling real rates would have led to rising gold prices which, in today's world of unlimited fiat money, would have been taken as a warning of future inflation and likely triggered an early reversal of the decline in real long-term rates."

GATA, which would like to see gold prices function freely, claims that financial giants such as Goldman Sachs and Morgan have conspired with the Treasury to keep gold prices low. It sees this practice as risking a short covering panic, endangering the US gold supply, and helping countries such as Russia, China, and Japan who are happily buying the cheap gold. And it notes that the US Mint has included in its inventory some "deep storage gold," which GATA suspects may be gold that is still to be mined.

Banks have loaned gold, have shorted gold, and may have manipulated gold prices with the help of the government. If so, a marked rise in gold prices could cause a short covering panic since the demand for gold would outstrip the actual supply.

In one of the bizarre examples of what can happen, a gold price rice in the recent past caused two mining companies to belly up. Why? Well in part because they had been convinced by their financial advisors to short their own product. Even Marx had more respect for capitalism than that.

The size of the derivatives - gold and otherwise - held by Morgan is staggering and therein lies what could be a fatal problem; as one analyst put it, "Morgan is too big to fail and it's too big to bail."

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||| DOCUMENTS OBTAINED BY PUBLIC Citizen suggest that as governor of Texas, President Bush helped promote Enron Corp.'s foreign and domestic business agenda on behalf of company CEO Kenneth Lay In 1999, for example, Lay sent Bush a letter asking him to meet with the Romanian prime minister when he visited Houston. Lay noted that Enron had just finalized a gas marketing joint venture with Petrom and had a Bucharest office. Lay noted that "we are committed to participation in the Romania energy and water markets."

In 1997, Lay sent Bush a letter noting that Bush would be meeting with Uzbekistan's ambassador and saying that Enron was negotiating a $2 billion joint venture to develop Uzbekistan's natural gas. Lay noted that "this project can bring significant economic opportunities to Texas" and said that "I am delighted that the two of you are meeting."

In 1997, Lay sent Bush a letter thanking him for calling then-Pennsylvania Gov. Tom Ridge, noting that "I am certain that will have a positive impact on the way he and others in Pennsylvania view our proposal to provide cheaper electricity to consumers."

In 1997, Lay sent Bush a letter thanking him for his efforts to find a middle ground on the debate regarding electricity industry restructuring in Texas. "Thanks to your leadership . . . we made significant progress towards the goal of making the state's electricity industry fully competitive. . . . Enron looks forward to continuing to work with you."

In 1998, Lay, as chair of the governor's business council, sent a letter to Bush thanking him for his "outstanding and committed leadership" in getting eight bills passed that made changes to the legal system to help business.

In 1998, Lay wrote Bush to bring his attention to a federal tax bill relating to wind production tax credits that Lay was supporting for Enron's wind energy business and asked Bush to send a letter to U.S. House Ways and Means Committee Chairman Bill Archer in support of the measure.

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PHOTOCOPIES

||| FLOYD NORRIS & DAVID BARBOZA NY TIMES - Kenneth L. Lay sold $100 million in Enron stock last year, the company disclosed, with a large part of that coming from selling shares back to the company after he was warned by Sherron S. Watkins that the company might collapse "in a wave of accounting scandals." The sales, disclosed in a report filed by Mr. Lay with the Securities and Exchange Commission, included $20 million of shares sold in the three weeks after Ms. Watkins, an Enron official, sent her warning to Mr. Lay. It is not clear how much profit Mr. Lay made on his sales, many of which came while he was encouraging Enron employees to buy shares . . . Despite the sales, family members said yesterday that Mr. Lay, who is 59, faced serious financial difficulties as he struggled to repay loans taken out to make investments, many of which have lost value.

||| SCOTT POLLS - 78% of American adults believe that senior Enron executives should spend some time in jail. Among American investors, 85% believe jail time is in order for Enron officials. Those numbers represent an increase from two weeks ago when 66% of adults thought jail time was appropriate . . . 40% of Americans now expect the Enron bankruptcy to seriously hurt the U.S. economy, while 33% say it will not . . . Despite the intense interest in the Enron story, it is not clear at this time whether either political party has an Enron advantage.

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||| SHAILA K. DEWAN - Even as Enron (news/quote) insiders have become Washington's favorite and perhaps most politically profitable target, Houston's lawmakers have been slow to join in. Instead of vitriol, they have expressed sorrow, focusing on the plight of former employees. Representative Sheila Jackson-Lee, a Democrat whose district includes Enron's headquarters, has appeared most prominently in news accounts as the author of bills intended to protect pensions and as a Washington shepherd for a group of ex-Enron workers bused in by the Rev. Jesse Jackson. "I've been in the mode of action," as opposed to inquisition, she said in an interview earlier this month . . . Such restraint is not the norm for Ms. Jackson-Lee, who is known to relish publicity and weigh in on issues large and small. "It's out of character for her not to stand up and be waving the flag for morality," said Tony Williams, a Democratic campaign consultant here. "You've got to wonder why she's being so quiet. Sheila's supposed to be the people's person." To some, the reason for the silence is clear: money. Ms. Jackson-Lee owes her political career to Mr. Lay, who supported her, despite her liberal views, to help beat her predecessor. In Congress, she and another Democratic Houston representative, Ken Bentsen, are among the biggest recipients of Enron campaign money. Along with Gene Green, a third Democratic representative from Houston, they have returned at least some of their campaign contributions from Enron. But others who had their campaign coffers enriched by Enron have used more direct means of distancing themselves from the company. Representative Billy Tauzin, Republican of Louisiana, has even suggested that "maybe somebody ought to go to the pokey for this." Ms. Jackson-Lee received the bulk of her Enron money for the 1994 election, when she won her seat.

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||| JOHN BRESNAHAN, ROLL CALL - In the spring of 2000, as the presidential battle between George W. Bush and then Vice President Al Gore heated up, Enron Corp. lobbyists in Washington quietly launched an effort to reach out to the Gore campaign and his allies on Capitol Hill . . . Enron's Washington office came up with a "Gore 2000 Strategy," a copy of which was obtained by Roll Call. This document outlines a "six-month action plan "designed to help Enron officials build ties with Gore at the same time the Houston-based firm and its employees were on their way to becoming the top donors to Bush's White House campaign, kicking in more than $113,000 in direct contributions . . . Enron donated just $13,750 to the Gore campaign, according to federal election records.

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||| ELLEN NAKASHIMA & PETER BEHR WASHINGTON POST - As an Enron Corp. division vice chairman, Thomas E. White was responsible for the nuts-and-bolts performance of big energy-management contracts with an impressive roster of customers, ranging from J.C. Penney Co. to the Archdiocese of Chicago. How well White did that job has now become an issue in the aftermath of Enron's collapse, as investigators try to determine whether White's unit, Enron Energy Services, contributed to the massive misstatement of Enron's profits over the past four years. White, who retired in 1990 from the Army as a brigadier general, returned to the Pentagon last year as President Bush's choice as secretary of the Army - an appointment for which his business expertise was highly touted. Now he and others who worked at EES are answering investigators' questions about the unit's operations. White has declined to discuss publicly his 11-year executive career at Enron. "I have fully cooperated with investigators on the subject of Enron and will continue to do so," he told a reporter.

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NEAL TRAVIS, NY POST - Bill Clinton may have a lot more to answer for. Some of Ken Lay's powerful friends in Washington say the former Enron chief has good reason to take the Fifth before Congress and to stall investigators as long as possible. These friends suggest, quite seriously, that President Bush could pardon "Kenney boy" in the event he's convicted in the scandal. "We'd have the Marc Rich precedent on our side," notes one GOP moneybags. "Clinton certainly raised - or should it be lowered? - the pardon bar in that case." He's probably right. The hoo-hah about Clinton's late-night, last-minute pardoning of the fugitive financier quickly died down and the threatened congressional investigations seem to have petered out. Should Bush want to keep his Texas pal out of the pokey (if it comes to that), he could grant a presidential pardon at the end of 2004, right after his re-election - or his defeat. MORE

THE LIST

Amount given by Enron to political parties, 1991-2001

Republican Party: $2,943,548
Democratic Party: $992,740
Green Party: $0

|| RONALD FINK, CFO MAGAZINE - In an appearance before the Securities and Exchange Commission late last month, former Enron CFO Andrew Fastow is said to have invoked the Fifth Amendment when asked about his role in the company's downfall. Just days before, Fastow's lawyer reportedly told one newspaper that Fastow bears no responsibility for the company's collapse - the largest in U.S. corporate history. But Fastow's own comments suggest that he does. In an interview with CFO in mid-1999, Fastow asserted that he had helped keep almost $1 billion in debt off Enron's balance sheet through the use of a complex and innovative arrangement. "It's not consolidated and it's non-recourse," he told CFO.

That would seem to depend on how you define "non-recourse." In fact, the 10-Q that Enron filed on November 19, 2001, states plainly that the debt ultimately was Enron's responsibility. According to the filing, the $915 million debt was backed by Enron's obligation to extinguish it, if necessary with cash. That obligation, as reported in the 10-Q, would fall to Enron if the company experienced a downgrade below investment grade by any of the three major credit rating agencies. Sure enough, that downgrade took place shortly after the disclosure of the $915 million obligation, along with another $3 billion in similar off-balance-sheet liabilities. And that downgrading, in turn, prompted Enron's bankruptcy filing.

The debt that Fastow discussed with CFO was needed for a partnership called Marlin, which helped finance the Atlantic Water Trust, Enron's unconsolidated subsidiary. The Atlantic Water Trust in turn invested in Azurix, a subsidiary that owned a majority of the water facilities of a U.K. company known as Wessex. "What we did," Fastow told CFO, "is we set up a trust, issued Enron Corp. shares into the trust, and then the trust went to the capital markets and raised debt against the shares in the trust, using the shares in the trust as collateral." During the 1999 interview, Fastow boasted that the Atlantic Water Trust was so effective at minimizing Enron's balance-sheet exposure that several banks that had not been involved in the transaction later "came back and marketed it to us" as their own invention.

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||| BOB PORT, NY DAILY NEWS - Yet another White House official has a long history with Enron. White House counsel Alberto Gonzales, who has been mentioned as a possible Bush nominee for the Supreme Court, received more than $100,000 in political contributions from the energy industry in recent years as a justice on the Texas Supreme Court. Enron and Enron's law firm were Gonzales' biggest contributors in his 2000 judicial election, giving $35,450. Gonzales also worked for Enron's law firm from 1982 through 1992. In addition, Gonzales served as special counsel to the host committee for a 1990 world economic summit held in Houston. Former Enron CEO Kenneth Lay was chairman of that committee. Now Gonzales is the White House advocate for keeping secret the roster of people who helped Vice President Cheney devise the administration's energy policy.

||| RUSS BAKER, NATION - On December 14, Bush invoked executive privilege in refusing to comply with two subpoenas from [Rep. Dan] Burton's panel, the House Committee on Government Reform, seeking information from the Justice Department. One, a continuation of Burton's late-1990s anti-Clinton crusade, requested internal prosecutorial memos outlining Janet Reno's decision not to appoint an independent counsel to investigate impropriety in Clinton/Gore fundraising. The second concerned an FBI investigation in Boston more than twenty-five years ago. When Burton's committee requested internal prosecutorial memos from the case, the Administration balked, saying that such a release would have a chilling effect on confidential advice offered within the executive branch. . .

Why is Bush trying to stake a claim of executive privilege in two closed investigations in which there is no longer any threat to law enforcement or prosecution? Indeed, the political fallout from any revelations about Janet Reno's decision not to pursue an independent investigation of Clinton/Gore campaign finances could only hurt Democrats. [Law professor and executive privilege expert Charles Tiefer] and others worry that this may be part of a far-reaching strategy. "President Bush will want to stake out his secrecy powers in cases like these where he can't be accused of covering up a matter of political or corrupt self-interest," says Tiefer. "Next year, if the investigating accountants put together a criminal case against Enron, but for inexplicable reasons the Justice Department refuses to charge anyone except low-level or insignificant Enron officials, the same type of President-ordered cover-up would be used to prevent Congress and the public from finding out why no serious indictments occurred." MORE

||| MOLLY IVINS - On Jan. 25, the administration ordered federal agencies to review their contracts with Arthur Andersen and Enron, saying the scandal swirling around the companies raise doubts about whether they should continue to receive taxpayer money. This would be well and good if the same administration had not, on Dec. 27, repealed a Clinton-era rule that prevents the government from awarding federal contracts to businesses that have broken environmental, labor, tax, civil rights or other laws. What we have here is not so much hypocrisy as complete incoherence. Shouldn't they have to wait at least a month before they contradict themselves? Or maybe the Bush doctrine is that you can give government contacts to chronic lawbreakers as long as they're not in the headlines. MORE

||| THE REASON I got involved is that Andersen is in big trouble and they were looking for someone to sprinkle some holy water on them. -Paul A. Volcker Jr., former Federal Reserve chairman and new chief of an Arthur Andersen oversight committee.

||| NO PERSON involved in pursuing this investigation has any conflict or any ties that would require a recusal. - Justice Department explaining why an independent prosecutor is not needed to investigate Enron, a major backer of the Bush administration.

||| LA TIMES - Nearly half said that the Bush administration's actions in regard to Enron have been at least unethical (35%) if not outright illegal (12%) while only a quarter think the administration did nothing wrong. . . The survey found strong public support for independent oversight of investigations into the Enron collapse. After being told that Attorney General John Ashcroft recused himself because of having accepted campaign contribution from Enron, six out of ten said that the Justice department cannot be trusted to be impartial in this issue, and that a special prosecutor should be appointed to oversee the case." MORE

WHEN FORTUNE SMILED

"Fortune is painted blind, with a muffler afore her eyes" - William Shakespeare

The following is from an Enron brag sheet distributed in Latin America a while back.

- 100 Best Companies to Work for in America (Fortune Magazine, January 11, 1999)
- Forbes A-List of Companies - Top Power Company in the World (Forbes Global Business Magazine, January 11, 1999)
- The Fortune Global 500 - The World's Largest Corporations (Fortune Magazine, August 3, 1998)
- World's Most Respected Companies (Financial Times, November 30, 1998)

It is then mentioned that Fortune had rated Enron the "most innovative company" in 1996, 1997, 1998, and 1999.

|| GREG PALAST - There's a whole band of power pirates out there fiddling the books, rigging the markets, and buying and selling politicians like bags of sugar - from Argentina to Houston to Washington to New York. In fact, you simply can't divide the collapse of Enron from the collapse of Argentina. Enron wasn't a bad apple - the entire system of deregulating electricity is rotten, root and branch. Arthur Andersen didn't have a few bad boys. As an investigator, I've watched their financial finagling run amok - all under the name of 'innovation.' They just don't get it: one, two, a hundred Enrons are charging down on us, and a dozen Argentinas - unless we restore the right to put the reins on these let-the-markets-rule pirates. That's why kids were in the streets of Seattle, and are now protesting the World Economic Forum. It's more than a protest, it's a wake-up call" MORE

||| JAMES RIDGEWAY, VILLAGE VOICE - Why would a man who wanted to hire a bodyguard one day kill himself the next? This is the question that rattles conspiracy theorists in the case of Cliff Baxter, the Enron whistleblower whose death by gunshot last week in Sugar Land, Texas, was ruled a suicide. Baxter had been subpoenaed to testify this week on Capitol Hill. Those who doubt the official line think he's another Vince Foster, murdered in cold blood to stop him from spilling the beans on Enron chief Ken Lay and blowing open the whole scam-offshore accounts, political connections, and all. Skeptics [in the Baxter death] are homing in on the Harris County coroner, Joye M. Carter, a former D.C. medical examiner who graduated from Howard and currently is attached to Baylor and the University of Texas. After performing a court-requested autopsy, Carter's office declared the former Enron exec had killed himself. While saying they respected that decision, local police said they intended to continue investigating. Carter has had her share of controversy. In 1998, Harris County paid a former employee in the medical examiner's office $375,000, after a jury agreed Carter fired her for reporting potentially illegal cover-ups. Then a federal court awarded another whistleblower $250,000 after she was fired for reporting that an unlicensed physician had performed autopsies. In 2000, writes The Houston Chronicle, a Harris County commissioner asked the county to hire an outside law firm to review Carter's hiring and firing practices. MORE

THE LIST
Some Enron losses

Georgia: $127 million worth of Enron
Ohio: $114 million.
Washington state: $42 million
Alabama: $47 million.
University of California pension fund: $144 million loss.
Teamsters: over $100 million.
California's Public Employee Retirement Fund: $100 mil.
Florida, $300 million.
New York City: $110 million

||| DAVID LAWARUS, SAN FRANCISCO CHRONICLE - While the White House insists that details of its talks with Enron officials remain secret, a memo outlining those discussions reveals the extent to which the Houston energy giant lobbied to influence government policy. The memo, a copy of which was obtained by The Chronicle, was handed by former Enron Chairman Ken Lay to Vice President Dick Cheney last April when the two met to discuss the administration's response to California's energy crisis. The White House acknowledged that aspects of the memo resembled elements of Cheney's energy plan, but it refused to say whether the document was included in notes that Cheney now refuses to divulge to congressional investigators . . . The three-page document contains eight points spelling out Enron's case for why federal authorities should refrain from imposing price caps or other measures sought by California officials to stabilize runaway electricity prices. A number of the positions in the memo subsequently made it into Cheney's energy plan or were reflected in comments by senior administration officials. MORE

||| CATHRYN CONROY, COMPUSERVE NEWS - A day after former Enron executive John Clifford Baxter was found dead in his parked Mercedes with a gunshot wound to the head, the medical examiner ruled it a suicide. Not so fast. A top homicide investigator with the Sugar Land (Texas) Police Department isn't positive it was a suicide and is still actively gathering evidence in the case. And that is why the suicide note found next to Baxter's body has not yet been released. The New York Post reports that detective Billy Baugh is retracing Baxter's movements in the days prior to his death. In addition, he is checking the car for blood splatters and fingerprints and running ballistic tests on the gun that was found in Baxter's hand . . . Adding to the mystery: A family friend told the New York Post that Baxter's wife says he was home in bed just hours before his body was found at 2:23 a.m. on Friday, January 25. "His wife couldn't believe he could get out of bed without her knowing it," said the friend. The Sugar Land Police Department says it isn't disagreeing with the findings of the medical examiner, but wants to be sure nothing is overlooked in the investigation. Meanwhile, CBNC reported that the suicide note says Baxter was distraught about Enron's collapse and the prospect of having to testify against former colleagues and friends. MORE

||| PHILIP DELVES BROUGHTON, TELEGRAPH, LONDON - Enron was a company in love with itself. Office affairs were rampant, divorce among senior executives an epidemic, and stories of couples steaming up glass-walled offices after late-night meetings were the talk of Houston. "It was insane," says a former energy trader, soothing her financial injuries with a margarita. "There were no rules for people, even in our personal lives. Everything was about the company and everything was supposed to be on the edge - sex, money, all of it." . . . Jeff Skilling, the executive who transformed Enron under the more genteel rule of Ken Lay, the former chief executive, decorated his house all black and white, Enron's corporate colors, from the marble to the sofas to the flowers, wallpaper and pictures. The Enron wives became known around town for their Mercedes, fur-trimmed sweaters and leather trousers . . . [Skilling] wanted to recruit the best, which meant persuading the leading business school graduates, from places such as Harvard and Stanford, to choose Houston over New York or Silicon Valley. He did so by creating the same culture of unselfconscious greed and reward which Wall Street was forced to suppress by the insider-trading scandals of the late 1980s. He built his own Bonfire of The Vanities in Houston and everyone wanted to feel its warmth . . . Managers employed a system known as "rank or yank". Every employee's performance was ranked 1-5. Five meant you were out. The bottom 15 per cent of workers were fired each year. For the best workers the incentives were staggering. Bonus day was known at the company as Car Day, because of the lines of extraordinary sports cars arriving for the most successful employees. MORE

||| WASHINGTON POST - Former Enron executives disclosed that a top Bush campaign adviser, Edward Gillespie, served as the company's key conduit to the White House and House leaders. Gillespie's firm received $525,000 over nine months last year from Enron for lobbying that included the energy task force and economic stimulus legislation with tax provisions that would have helped Enron. MORE

ENRON EXPLAINED I

It was the fault of the press. The press caused it. - Mrs. Ken Lay

ENRON EXPLAINED II

[According to Biz Ethics, the following is circulating among former Enron employees]

Traditional Capitalism: You have two cows. You sell one and buy a bull. Your herd multiplies, and the economy grows. You sell them and retire on the income.

Enron Capitalism: You have two cows. You sell three of them to your publicly listed company, using letters of credit opened by your brother-in-law at the bank, then execute a debt/equity swap with an associated general offer so that you get all four cows back, with a tax exemption for five cows. The milk rights of the six cows are transferred through an intermediary to a Cayman Island company secretly owned by the majority shareholder who sells the rights to all seven cows back to your listed company. The Enron annual report says the company owns eight cows, with an option on one more.

||| JONI JAMES, MIAMI HERALD - Florida House Speaker Tom Feeney plans to appoint a select committee to investigate how the state pension fund lost $306 million on Enron stock. Feeney's plan - coupled with investigations already under way at the pension fund and the attorney general's office - will bring to three the number of state entities investigating the ill-timed stock purchases by a contract fund manager on behalf of the pension plan . . . The State Board of Administration, which oversees the $96 billion pension fund, has joined a class-action lawsuit against the directors of Enron and its accounting firm, Arthur Anderson. MORE

||| DRUDGE REPORT - Enron-stung GOPers are discreetly eyeing the collapse of Global Crossing [which became the 4th largest bankruptcy in history] and its Chairman Gary Winnick, a top Democrat donor who helped DNC head Terry McAuliffe turn a $100,000 stock investment - into $18,000,000. McAuliffe arranged for Winnick to play golf with President Clinton in 1999 after his cash windfall. Winnick then gave a million dollars to help build Clinton's presidential library . . . "McAuliffe is a guy who made millions and millions and millions off this Global Crossing stock? And the company goes bankrupt. And he has the gonads to criticize anyone on Enron," blasted [a] Bush insider who asked not to be identified . . . For McAuliffe, Global Crossing turned out to be a bonanza. The stock had soared in the late 90s, when Winnick once bragged that he was the "richest man in Los Angeles." McAuliffe operated out of an office in downtown Washington that belonged to Winnick - to help the mogul "work on deals." McAuliffe told the NY Times' Jeff Gerth in late '99 that his initial $100,000 investment grew to be worth about $18 million, and he made millions more trading Global's stock and options after it went public in '98. MORE

||| WORTH MAGAZINE - In 1995, Cincinnati billionaire Carl Lindner, whom McAuliffe had successfully courted as a donor, put up money for McAuliffe to buy American Heritage Homes, then the second-largest home builder in Florida. And in 1997, Los Angeles businessman Gary Winnick, also a Democratic donor, gave McAuliffe an early opportunity to invest $100,000 in Winnick's new company, Global Crossing, an owner and operator of undersea fiber-optic cables. When the stock subsequently soared, McAuliffe made a reported $18 million from that $100,000 investment. Two years later, McAuliffe arranged for Winnick to play golf with President Clinton, and Winnick then gave a million dollars to help build Clinton's presidential library. So it went in the 1990s: McAuliffe was helping the rich and powerful gain access to Bill Clinton, and everyone was making money. Anyone who suggested that there was something inappropriate about all the back-scratching-something that reeked of access peddling-only sounded like a spoilsport. With the stock market boom and the Internet gold rush and the whole country making money, why not join the party? MORE

||| DICK MORRIS, NY POST - Democrats seeking to blame President Bush and the GOP for the Enron scandal need to look more closely at their own house - especially at the work done by the former Democratic National chairman, Sen. Christopher J. Dodd. While many candidates of both parties have received campaign contributions from Enron and its "independent auditor" Arthur Andersen, very few have passionately fought their cause in Washington as diligently as Chris Dodd. It was on account of Dodd's tireless efforts that Arthur Andersen was able to act as both "independent auditor" and management consultant to Enron for $100 million a year. That role - so fraught with conflict of interest that it makes a joke of the concept of outside auditors protecting shareholders - has been identified as one of the major causes of the debacle. In 1995, it was Dodd who rammed through legislation, overriding President Clinton's veto, to protect firms like Andersen from lawsuits in cases just like Enron. The Dodd bill limited liability for lawyers and accountants for "aiding and abetting" corporate fraud by their clients, making them liable only for their "proportionate" share of the blame, rather than for the entire fraud. So, if an accounting firm kept secret the true picture of a corporation's finances, it would only be liable for part of the total fraud on the investors. For shareholders, this law is awful - the fraudulent company has usually lost nearly all its value before the shareholder learns about it, so there's nothing left. For the accounting firm, though, it's great - the shareholders can't pin the total losses on you. MORE

||| JOHN MCCASLIN, WASHINGTON TIMES - Enron-funded pundits. That's what columnist Andrew Sullivan, senior editor of the New Republic, has labeled those journalists who pocketed Enron cash before the company collapsed in bankruptcy. The list of scribes includes: Bill Kristol, Weekly Standard editor (paid $100,000 for serving on an Enron advisory board); Lawrence Kudlow, National Review contributing editor (got $50,000 from the Houston company); Paul Krugman, New York Times columnist (received $50,000 for serving on Enron's advisory board); Peggy Noonan, Wall Street Journal columnist (pocketed as much as $50,000 for helping prepare Enron's annual report and one speech for former Enron CEO Kenneth L. Lay). So, what's a journalist with his or her hand stuck in a crumbling Enron cookie jar to do? "Let's say these Enron-funded pundits did nothing illegal or unethical," writes Mr. Sullivan. "Let's say they just took $50,000 minimum from this company for legit extracurricular work. Maybe they didn't know what a scam Enron was at the time. The point is at some point in the future any big corporation could be a scandal. "And what does the pundit do then? He can disclose, sure, as Krugman and Noonan have," he observes. "But that doesn't get rid of the problem, unless they actually return the money." No, there's an even bigger problem. One that smacks against the integrity and ethics that should have been remembered from Journalism 101. "Haven't these pundits essentially undermined themselves as independent watchdogs of the culture?" Mr. Sullivan asks. "Isn't the entire point of the press to be independent - observers of problems, not part of them?" MORE

MARCH 2002

||| JACQUELINE TRESCOTT WASHINGTON POST - Smithsonian Secretary Lawrence M. Small told a congressional panel that the $2.5 billion needed to modernize the institution's museums and the National Zoo will have to be raised from both government and private sources. But Rep. Maurice Hinchey (D-N.Y.) told Small he had already seen enough of soliciting funds from corporations and individuals, and then rewarding them with their names on halls, buildings and theaters. "Frankly, just speaking as an individual citizen, I deeply resent it. You didn't start this but you seem to me to be the biggest cheerleader. What we are experiencing is crass commercialization," Hinchey said. "I think it is a bad thing - we are selling ourselves very, very cheaply. I would hope that it would stop. I would hope you will do something to stop it. I hope that this Congress would recognize its responsibility and fund all of what goes on so we wouldn't have to stoop so low. This is very troubling." . . . Three Republicans on the House Appropriations subcommittee said they found some benefit in the corporate partnerships. Rep. Ralph Regula (R-Ohio) said the films of the National Zoo done by the Animal Planet network "really raise awareness." Rep. George Nethercutt (R-Wash.) said, "If the regents take a hard look and don't put out flashing neon signs, I think it is a matter of taste." Rep. Zach Wamp (R-Tenn.) added that he could imagine Theodore Roosevelt would be encouraged to have Chiquita Banana company support an ape exhibition.

MORE

||| RALPH NADER criticized Smithsonian Secretary Lawrence Small for ignoring the taxpayers who pay most of his salary and selling this nation's great legacy to a weapons manufacturer whose revenues are derived heavily from taxpayers. Nader also denounced the Smithsonian chief's decision to belittle the contribution of an individual and promote a big corporation instead. Nader was responding to news that the Smithsonian has agreed to rename the movie theater in the popular National Air & Space Museum after the Lockheed Martin Corp. The company is expected to announce soon a $10 million gift to the Smithsonian. Until now the Air & Space Museum theater has borne the name Samuel P. Langley, the aviation pioneer.

The Smithsonian is governed by a 17-member Board of Regents, including Vice President Dick Cheney and Chief Justice William Rehnquist. "Cheney, Rehnquist and Small are disrespecting the taxpayers," Nader said. "Besides, individuals have made this nation great," Nader said. "The Smithsonian should honor individual achievement, not corporate glory-mongering."

In recent years, Lockheed Martin has settled several lawsuits related to the use or release of toxic chemicals. "The Smithsonian's mission is to promote the increase and diffusion of knowledge, not to honor corporate polluters," Nader said. "Just how is Lockheed accounting for this contribution on its tax returns?"

MORE

RICHARD A. OPPEL Jr. & KURT EICHENWALD, NY TIMES - A House committee sent a letter to Mr. Skilling, the former Enron chief executive, saying that recent interviews with other Enron officials "appear to raise serious questions" about whether Mr. Skilling told the truth before Congress last month. The interviews, with three Enron accounting executives, concern one of the most contentious and significant episodes of suspected financial manipulation at Enron: How much Mr. Skilling knew and approved of the restructuring of four partnerships known as the Raptors a year ago that essentially allowed Enron to delay the disclosure of hundreds of millions of dollars in losses. When those losses became public in October, they began the cascade of negative disclosures that ultimately led to Enron's collapse in December. Today, the House Energy and Commerce Committee, which heard Mr. Skilling's testimony on Feb. 7, sent him a letter stating that the interviews - conducted by investigators for a special committee of the Enron board - suggest he was aware of much of the details of the restructuring, despite his statement that he did not know it was intended to conceal losses or that anything was wrong with Enron's financial statements.

MORE

||| DON VAN NATTA JR. & NEELA BANERJEE - Eighteen of the energy industry's top 25 financial contributors to the Republican Party advised Vice President Dick Cheney's national energy task force last year, according to interviews and election records . . . Critics of the process said that President Bush and Mr. Cheney were quick to respond to executives from the energy sector not only because of campaign contributions but also because they share the philosophy of the oil patch, where both made fortunes.

MORE

CORPORATE DELINQUENTS

Major corporations accused of violations on federal contracts and the penalties they paid
see story below

CONTRACTOR*
CONTRACT AWARDS
FOR FY 1999
VIOLATIONS &
ALLEGED VIOLATIONS
FINES/PENALTIES;
RESTITUTION;
SETTLEMENTS

1. American Telephone & Telegraph (AT&T)
$673,347,000

14
$16,090,000

2. Amerisource Distribution
$544,023,000

0
$0

3. Archer Daniels Midland (ADM)
$124,567,000

8
$208,195,500

4. Bechtel Group
$1,617,447,000

4
$1,524,858

5. Bell Construction
$224,885,000

0
$0

6. Bindley Western
$215,032,000

3
$20,700,000

7. Boeing
$14,217,112,000

36
$357,973,000

8. Bollinger Shipyards
$169,096,000

0
$0

9. California Institute of Technology
$1,315,374,000

1
$40,119

10. Cal Western Packaging
$122,807,000

0
$0

11. Cargill
$368,659,000

8
$102,001,000

12. Carlyle Group
$1,621,110,000

8
$32,820,000

13. Clark Enterprises
$125,192,000

0
$0

14. Compaq Computer
$214,122,000

2
$4,500,000

15. Computer Sciences
$1,685,208,000

6
$10,258,730

16. ConAgra
$279,346,000

9
$14,967,557

17. Cordant Technologies
$423,618,000

0
$0

18. Crane Company
$134,882,000

0
$0

19. DynCorp
$909,574,000

2
$1,850,000

20. Electronic Data Systems (EDS)
$576,464,000

4
$2,641,500

21. Fluor
$1,117,956,000

19
$70,016,614

22. General Dynamics
$4,747,711,000

8
$61,255,894

23. General Electric
$1,584,999,000

63
$982,859,555

24. Goldman Sachs
$402,971,000

3
$40,214,890

25. Honeywell
$1,415,988,000

10
$28,813,616

26. International Business Machines (IBM)
$612,012,000

4
$8,865,000

27. Jones Group
$394,605,000

0
$0

28. JP Morgan
$102,390,000

0
$0

29. Litton
$2,254,289,000

8
$111,464,600

30. Lockheed Martin
$19,028,600,000

63
$231,872,404

31. Morrison Knudsen
$1,561,426,000

3
$63,000,000

32. Northrop Grumman
$3,509,571,000

21
$87,876,581

33. Doug O'Bryan Contracting
$226,343,000

0
$0

34. Ratcliff Construction
$147,741,000

0
$0

35. Raytheon
$7,767,012,000

24
$128,652,919

36. Research Triangle Institute
$128,213,000

0
$0

37. Science Applications International Corp. (SAIC)
$2,116,558,000

4
$4,299,850

38. Textron
$1,426,510,000

9
$22,231,000

39. Thompson Ramo Wooldridge (TRW)
$2,498,627,000

16
$389,484,000

40. Unisys
$634,583,000

12
$182,245,692

41. United Technologies
$2,663,556,000

18
$214,836,860

42. University of California
$3,210,904,000

12
$30,040,739

43. Westat
$249,961,000

0
$0

TOTAL

$3,431,592,478

PROJECT ON GOVERNMENT OVERSIGHT

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SEARCH SITE	SEARCH WEB	HARD COPY	WEB TOOLS	EMAIL US	LINKS

CONTRACTOR*	CONTRACT AWARDS FOR FY 1999	VIOLATIONS & ALLEGED VIOLATIONS	FINES/PENALTIES; RESTITUTION; SETTLEMENTS
1. American Telephone & Telegraph (AT&T)	$673,347,000	14	$16,090,000
2. Amerisource Distribution	$544,023,000	0	$0
3. Archer Daniels Midland (ADM)	$124,567,000	8	$208,195,500
4. Bechtel Group	$1,617,447,000	4	$1,524,858
5. Bell Construction	$224,885,000	0	$0
6. Bindley Western	$215,032,000	3	$20,700,000
7. Boeing	$14,217,112,000	36	$357,973,000
8. Bollinger Shipyards	$169,096,000	0	$0
9. California Institute of Technology	$1,315,374,000	1	$40,119
10. Cal Western Packaging	$122,807,000	0	$0
11. Cargill	$368,659,000	8	$102,001,000
12. Carlyle Group	$1,621,110,000	8	$32,820,000
13. Clark Enterprises	$125,192,000	0	$0
14. Compaq Computer	$214,122,000	2	$4,500,000
15. Computer Sciences	$1,685,208,000	6	$10,258,730
16. ConAgra	$279,346,000	9	$14,967,557
17. Cordant Technologies	$423,618,000	0	$0
18. Crane Company	$134,882,000	0	$0
19. DynCorp	$909,574,000	2	$1,850,000
20. Electronic Data Systems (EDS)	$576,464,000	4	$2,641,500
21. Fluor	$1,117,956,000	19	$70,016,614
22. General Dynamics	$4,747,711,000	8	$61,255,894
23. General Electric	$1,584,999,000	63	$982,859,555
24. Goldman Sachs	$402,971,000	3	$40,214,890
25. Honeywell	$1,415,988,000	10	$28,813,616
26. International Business Machines (IBM)	$612,012,000	4	$8,865,000
27. Jones Group	$394,605,000	0	$0
28. JP Morgan	$102,390,000	0	$0
29. Litton	$2,254,289,000	8	$111,464,600
30. Lockheed Martin	$19,028,600,000	63	$231,872,404
31. Morrison Knudsen	$1,561,426,000	3	$63,000,000
32. Northrop Grumman	$3,509,571,000	21	$87,876,581
33. Doug O'Bryan Contracting	$226,343,000	0	$0
34. Ratcliff Construction	$147,741,000	0	$0
35. Raytheon	$7,767,012,000	24	$128,652,919
36. Research Triangle Institute	$128,213,000	0	$0
37. Science Applications International Corp. (SAIC)	$2,116,558,000	4	$4,299,850
38. Textron	$1,426,510,000	9	$22,231,000
39. Thompson Ramo Wooldridge (TRW)	$2,498,627,000	16	$389,484,000
40. Unisys	$634,583,000	12	$182,245,692
41. United Technologies	$2,663,556,000	18	$214,836,860
42. University of California	$3,210,904,000	12	$30,040,739
43. Westat	$249,961,000	0	$0
TOTAL			$3,431,592,478