'Enron is dead, long live Enronism!'

Wednesday, December 3, 2003 - 11:00

Fat Cats and Running Dogs: the Enron Stage of Capitalism
By Vijay Prashad
Zed Books, 2002, 246 pp, $28.95 (pb)

REVIEW BY PHIL SHANNON

Enron, the giant US-based energy corporation, may have died from "creative accounting" and speculative self-implosion, but, as Vijay Prashad writes in Fat Cats and Running Dogs, the "Enron stage of capitalism" remains in full-looting-swing.

Enron's criminal practice of lying to investors, banks, regulators, US Congress, its employees and the general public were a sign of the times. Enron was a standard-bearer for the anti-social behaviour of corporate globalisation.

Enron began its life of crime in the "greed is good" 1980s as a natural-gas company in Texas. By 2001, it had grown to become a US$100-billion monster, the seventh biggest corporation in the world. From electricity generation, Enron branched into adventures on the derivatives, futures, options and other financial markets, commodities and pollution credits trading, and in "e-commerce".

Enron reached for the stars with its greed booster engines in overdrive only to crash to Earth bankrupt after making huge losses, cooking its books all the way. "Enron went down on the false valuation of assets, bogus deals between related parties and millions of dollars pocketed by executives, ... artificially boosting its earnings to bilk its shareholders and lift its stock price", Prashad explains. The health of its share price was Enron management's only concern.

The accountancy firm Arthur Andersen, a recidivist white-collar crook since at least 1988, was complicit in Enron's financial quackery, papering over fake transactions and colluding with Enron to obstruct justice by shredding Enron-related documents the day after the US government corporate regulator, the US Securities and Exchange Commission, opened its enquiries into Enron.

Just before Enron burnt up on re-entry, there was a massive bailout by top Enronistas, who grabbed their coats and remuneration packages and ran to Wall Street to cash in their shares. CEO Kenneth Lay lost a few million in small change from now worthless stock options, but he cashed in a lot before the crash (the hundreds of millions of dollars he "earned" over the years were also safely secured in offshore bank accounts).

Lay still had a million-dollar Aspen vacation home and a $7 million mansion, from where he and wife Linda cried: "We've lost everything. There is nothing left."

Enron's 11,000 employees lost their jobs and $1.3 billion of their retirement money, which had been compulsorily locked into Enron shares. Fifty-billion dollars of the savings of millions of other working-class Americans also went west — two thirds of Enron's shares were held by superannuation funds.

Even prior to its demise, Enron had caused much social damage. The 2001 California electricity "crisis" was an Enron special. With its claws on California's privatised wholesale electricity supply, Enron used a state government provision (which it had helped to create) to buy electricity in California, sell it to a front company out of state, and then buy back the electricity at higher prices to be sold to California's retail electricity suppliers during times of electricity shortages — which Enron deliberately caused. Enron's profits quadrupled through this scam.

Enron was assisted by Republican and Democrat governments. Both treasury secretaries during Bill Clinton's presidency had Enron connections. The George Bush administration's luminaries have been, or still are, in the oil business. The entire Bush clan is steeped in personal oil wealth and has made tidy sums from Enron.

Enron has donated $2 million to Bush junior throughout his political career, and $10 million in campaign contributions and lobbyist fees since 1997 to the Republican Party. As part of corporate welfare "mutual obligation", US administrations made sure that regulatory agencies lack the teeth to bite the hand that feeds them — and appointed Enron executives, consultants, lobbyists and major shareholders to government regulatory bodies. Many of these mild-mannered government regulators regularly became Enron executives and back again.

Enron's decades of overseas corporate looting of public assets was aided by capital from US and other Western public finance agencies, which was used to finance 38 projects in 29 countries. The US-dominated International Monetary Fund and World Bank played major roles on behalf of Enron (and other capitalist predators) by clearing obstacles (tariffs, wages, unions, public ownership of utilities, government regulation etc) to unfettered profit-making. In developed countries, such as Britain, governments helped Enron's march to "liberate the gas and power markets of Europe" by establishing "open, competitive" (privatised) energy markets.

In Kuwait, after the 1991 Gulf War, it was the clout of former President George Bush senior, and sons Martin and Neil, which clinched an Enron contract to rebuild a Kuwaiti power plant selling electricity at 11 cents per kilowatt/hour — 44 times the usual rate. In Mozambique, threats by the US embassy to cancel all overseas aid funds persuaded the Mozambique government to sign a generous (to Enron) gas and pipeline deal in 1995. Argentina (with assistance from Bush senior and Neil Bush) was threatened with the loss of all US investment if Argentina did not stop favouring domestic over foreign companies like Enron.

Enron's state-assisted local and overseas rampages made a mockery of capitalist rhetoric about "open markets". All this political support and government assistance for Enron resulted in vast private fortunes for the wealthy few (during boom and crash) at the public's expense.

Everyone who had ever suffered at the hands of Enron through loss of job or retirement pension, more costly and less reliable water and electricity, or had a public asset stolen from them has a right to be enraged over Enron.

The General Agreement on Trade in Services must look like manna from globalisation heaven to the next generation of Enronist capitalists eagerly anticipating the full privatisation and deregulation of the enormous multi-trillion dollar global market in services (energy, water, education, health, etc).

"Enron is dead, long live Enronism!" is their cry as a future of spectacular greed, private enrichment and public theft awaits the planet. Unless, of course, opposition movements, the anti-corporate globalisation protesters and the "battered but still defiant" trade unions apply the brakes to free-wheeling global capitalist market forces and work towards a future in which people rule over profit.

The Enron story is not, as corporate apologists maintain, a case of a "bad apple" among capitalism's finest. Enron, through "foul" means and "fair" was merely invoking the "divine right of capital" to boost its share price to return profits to its wealthy shareholders.

The problem is not one of "bad" kings (such as Enron, Worldcom and HIH) but an entire system in which profit is king, where not only in "bad" times of corporate collapses but also in the "good" times of capitalist business-as-usual, the aristocracy of wealth lords it over its poor subjects.

From Green Left Weekly, December 3, 2003.

Visit the Green Left Weekly home page.

From GLW issue 564