TheWorldJournal.com

The Smoking Gun
By Jean-Francois Numainville, TheWorldJournal.com

The collapse of Enron, a corporation specialized in energy, came as a total surprise for Wall Street analysts. After all, the business report was glooming good earnings potential as well as a stable financial situation. But the truth was completely different: the annual reports of Enron were filled with incorrect and vague statements just to confuse the investors. Everybody got in the game: specialists of all kinds and even Enron's employees believed the company was performing well. But last October, when the management admitted they had been lying to its shareholders Enron was loosing money by the billions - a scandal exploded that brought its stock to 1/200 of its previous value. Now the people cheated by Enron's management are eager to get even.

While the people at the head of the Texan corporation - lead by CEO Kenneth Lay - were bragging about the huge accomplishments of their enterprise, they knew the company was doomed and were liquidating their stakes as early as 1999. Furthermore, the direction of the corporation didn't want anybody to know how their miscalculated investments had generated huge losses, so they asked the firm's accountants to modify the annual report. After Enron announced it would go under the protection of the law, 4,500 laid off workers realized that there retirement fund had vanished. While Enron's management put the expression "Take your money and run away" to new heights, the employees were left with no job and years of savings stolen from them.

But what makes the Enron bankruptcy so special is its close knits with the political powers in Washington. The firm was among the largest contributors to the Republican Party, which happened to have deregulated the energy sector. The resulting new laws gave energy firms more freedom of action, and Enron took great advantage of that. The corporation expanded its activities across the United States, bought many smaller competitors and even started a financial investment branch. Those overly ambitious initiatives would prove to be disastrous for the firm. Also, the deregulation caused many issues: specialists agree that the energy shortage in California and elsewhere was greatly due by that decision. Strangely enough, shortly after (Rep.) George W. Bush took power, he cancelled the Kyoto agreement, which imposes stronger environmental standards for energy production.

Also, Enron possessed many accounts in places where no American laws had jurisdiction in: the Bahamas, Gibraltar and Russia. This is leading to believe that the management well prepared the bankruptcy of their firm by putting their illegally earned money where no one could get it.

Enron's CEO, Ken Lay, had many friends in Washington. Among them: the Bush family, vice-president Cheney and 250 congress members whom all beneficiated from Enron's generosity. Many of them once had a seat on the board of directors of the corporation, which put them in the best position to know what was going. When the direction announced they'd been lying to investors, we can wonder how many politicians were aware of the situation well before it was exposed publicly. However, many of those politicians lost a lot in the downfall of Enron, could those people been cheated too?

Recently, Ken Lay stepped down from the CEO position of the dying corporation and thus writing a new page in the Enron saga. Nobody knows how the story will end, one thing is for sure: somebody is going to have to pay for this.

© January 27, 2002