the CAMP ENRON Report
... gateway to the next Progressive Era?
Some say it's nothing but a train wreck ... roll in the big cranes, clear the track, see what the crew's been smoking. If I thought so, I'd not be writing this ... and if they thought so, they'd not be drumming so hard.
For a brief orientation, see this
Welcome to Camp Enron
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Camp Enron Archives
01/01/2002 - 02/01/2002 02/01/2002 - 03/01/2002 03/01/2002 - 04/01/2002 04/01/2002 - 05/01/2002 05/01/2002 - 06/01/2002 06/01/2002 - 07/01/2002 07/01/2002 - 08/01/2002 08/01/2002 - 09/01/2002 06/01/2003 - 07/01/2003
NOTE to READERS:
(2) All "major" articles of older material have now been imported, some with updates worth perusing. We'll keep it all on the main page for a while, will add a few loose pieces of history, will trim the main page and index the archives for convenience later.
the COGENT PROVOCATEUR:
free agent, loose cannon, pointy stick ... taking an imposing analytic toolkit out of the box, over the wall and into the street ... with callous disregard for accepted wisdom and standard English
reading the tea leaves from original angles, we've led with uncannily prescient takes on the federal surplus, the dotcom crash, the "Energy Crisis", the Afghan campaign, the federal deficit.
More where those came from ... stay tuned.
For brief orientation, see this
Welcome to CP
... gateway to the next Progressive Era?
For a brief orientation, see this
Welcome to Camp Enron
OTHER GOOD STUFF:
Many thanks to Tony Adragna and Will Vehrs, still shouting 'cross the Potomac at QuasiPundit. Early Camp Enron material can be found in QP's Dispatches department.
Wednesday, May 08, 2002
--- Minimal Disclosure is Out, Smoking Guns are In ---Listen up, campers! Some pack of jokers left their smoking guns all over the parade grounds ... and try to don't blame it all on last session's campers! Let's get out there and clean up this mess!
Phoenix Lodge! Andersen's Baptist Foundation of Arizona trial scattered smoking gun documents all along its short unhappy trajectory. Until they bailed out (a week into trial) with a $217M settlement (again), Andersen's defense amounted to "with all this evidence of fraud, everybody should have known the financial statements were bogus ... how can you blame us?". ( MSNBC )
Alamo Lodge! Judge Harmon clears DOJ to introduce Andersen's past bad behavior as evidence of motive to avoid detection of further wrongdoing ... a virtual museum of smoking guns from past screwups and slap-on-the-wrist settlements.
Stamford Lodge! ("Stamford Lodge"? What kinda wimpy camp name is that?) Smoking guns are turning up all around Xerox/KPMG's little misrepresentation "problem" ... design documents for hastily contrived schemes to boost stated results without actually improving business results. The question of the day is whether KPMG was knowingly, actively complicit ... or an unknowing dupe ... or a spineless enabler ... or (KPMG's angle) an outgunned tragic hero.
There's another smoking gun in that drama. We know who was in the room, but we don't know who's pulling whose trigger. SEC Chair Pitt and KPMG CEO O'Kelly met briefly 2002-04-26 ... that much is agreed. O'Kelly claims he lobbied Pitt on behalf of KPMG generally and the Xerox audit case in particular. Pitt vigorously denies any such discussion. What's the big deal? KPMG is Pitt's former client, and any such communication -- with or without material effect -- would be a gross breach of SEC ethics. Neither party seems inclined to back down from their version, or to muddle the issue with mumbles about misunderstandings. Pitt is already under fire for multiple unchaperoned meetings with listed conflicted contacts. He should quit now, if only for appearance reasons. [UPDATE:Today's WSJ lead editorial criticizes Pitt on both action and appearance, projects no hope his situation will improve, zings the White House for standing behind him, and all but demands his resignation. Remember, you heard it here 2002-01-18. ]
Manhattan Lodge! Smoking guns are tumbling out of Wall Street briefcases and hard drives, detailing security analysts' explicit contractual conflict of interest (compensation based directly on investment banking fees). This follows on NY A.G. Spitzer's disclosure of Merrill's smoking POS ("piece of shit") memos deprecating in private the same stocks they rated "buy, buy, buy" in public. NYT's Gretchen Morgenson notes a number of firms are under NASDR Wells notices ("please show why we should not take enforcement action") regarding destruction of documents whose retention is required by law.
The immediate argument will be over remedies and penalties ... structural, civil or criminal ... and who will take credit and control of roasting Wall Street Weenies over the bonfire Spitzer seems to have stoked. [Much news today, more later.]
Alamo Lodge, again! Smoking guns are starting to percolate out of the Enron "upstream" scandal ... the scandal before our beloved "household name" Enron scandal ... the scandal of deregulated power markets contrived and manipulated to rake tens of billions of dollars out of the western states. FERC released Enron trading scheme design documents (provided to FERC by ENE attorney Bob Bennett, who suggests he could have held them as privileged, and notes "not our problem, we sold the trading unit to UBS Warburg").
Various market gaming schemes ("Death Star", "Get Shorty", etc., etc., and the aptly named "Ricochet") were designed to get Enron (or surrogates) paid for moving electrons and relieving congestion, without moving any electrons or relieving any congestion (in some cases, creating congestion) ... to buy California power, move it out of state (creating an energy deficit), and sell it back into California at crisis prices ... and so on. "Death Star", huh? Hey ... watch where you point that thing!
No surprise to camp regulars ... We've been calling this shot for more than a year, and in some detail. As previously suggested, these schemes could either be exposed by painstaking forensic modeling of millions of trading records (which would take years, and it's not clear any agency had either the will or the ways and means) ... or by self-serving leakage of internal documents and turncoat testimony. "I'll take Door Number Two!" Needless to say, more to follow.
Potomac Lodge! Deregulation still has legs, and still scuttles forward. PUHCA repeal is wending its way through Congress, tucked away in the Energy Bill. The Cantwell Amendment (which would have preserved an express public duty to maintain orderly, transparent, competitive, "just and reasonable" market conditions) failed in the Senate. Given recent developments, and given the possibility of irreconcilable differences between House and Senate versions, and given House Energy & Commerce Chair Rep. Billy Tauzin's wont for populist/consumerist grandstanding, maybe some comparable provision will creep back into the bill ... but it needs to flip about 10 votes in the Senate and probably a lot more in the House.
FERC persistently pooh-poohed talk of "market manipulation", and only reluctantly opened the Section 206 investigation -- to which Bennett responded -- at Cantwell's steely insistence. Now FERC wants to turn up the heat. So does GWB.
Questions abound. Were these schemes merely schemed, but not implemented? (ha!) Who else played along? Was market-gaming collusion tacit, or overt? Who will cover tens of billions of dollars in western states' losses? Did FERC merely lie down on the job ... or did it lie down, roll over, sit up and beg? Are there smoking gun documents in FERC or DOE archives? Can the West sue Uncle Sam? Enron's got no money, and some humongous civil claims are already SOL ("Statute Of Limitation'd") into sour grapes land by FERC's previous inaction, or quashed by court decisions rooted in marketarian thinking.
Austin Lodge! Well under most observers' radar, Enron acknowledged it is one of six firms under investigation by the Texas PUC for manipulation of Texas energy markets. Texas began operating under its own power dereg regime this year, following last summers' pilot program.
Alamo Lodge, get back in here! In the downstream scandal, WSJ cites year-old Enron documents that expose billions in knowing overvaluation of offshore assets ... some of them used to collateralize even more off-sheet investment schemes.
Bermuda Lodge! Tropical beachcombers report smoking guns turning up at low tide. Keep an eye on this one ... the same financial hidey-holes (defended proudly by last year's politicians, and fewer of this year's) may have sheltered upperbracket individual tax evasion, corporate tax dodges, corporate accounting duplicity, drug cartel operations and terrorist treasuries.
Manhattan Lodge! Today is D-Day for 2nd and 3rd-hand defendants in Enron bankruptcy proceedings. They (a slew of big name banks, brokerages, law firms, accounting firms) either file to Dismiss claims against them, or enter Discovery ... that's the phase where you wish you'd stamped "UNAPPROVED - DRAFT ONLY" across the face of every physical and electronic document in the whole house.
Sac'to Lodge! There's a sheaf of documents detailing an aggressive, coordinated arm-twisting campaign directed at Enron by state elected officials at the height of the California energy crisis. No, not a campaign threatening legislation or litigation to get Enron to let loose more electrons ... rather a campaign to get Enron exec's to let loose more dollars to help California Republicans win more elections.
"The event in Houston was not a fund-raiser per se," said GOP spokesman Rob Stutzman, "(but) we want to be clear that the hope was that the companies would contribute money." ( the Chron )Austin Lodge! Quick, everybody, take a look at this! Former Governor Bush (R-TX) gives us a smoking gun safety demonstration, in his handling of an Enron request (which he declined, BTW).
"Someone (Ofelia? Dale?) said the Gov is no fan of Ex-Im but didn't want to put on paper," the note said, referring to Bush administrative aides Ofelia Vanden Bosch and Dale Laine. "So I think he had Joe handle by phone." ( the Chron )Potomac Lodge! Speaking of smoking guns, the Crusader 40-ton howitzer project looks dead, while ex-Enron Army Secy. Thomas White is still in the saddle. White dodged a big bullet associated with someone circulating pro-Crusader talking points with Army fingerprints on them, against Defense Secy Rumsfeld's express intent to kill the program.
At Camp Enron, the Culture of Minimal Disclosure is now officially passe. Fun while it lasted, but now it's confession time ... a race to see who comes out fastest with the mostest, and spins it the bestest, and maybe gets in under the wire for a "everybody did it, and we're all really sorry, and we'll never, ever do it again" probationary administrative amnesty program. After that ... next camper to miss a bed check gets hard time!
Speaking of which ... Playboy's "Women of Enron" issue is slated to hit the stands 2002-07-01. Yes, Playgirl has their own project in the works ... and I'm sure we're all dying to know what those Geniuses of Capitalism have had in their defense briefs all this time.