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OK, it's more Enronitis, but too bitingly delicious not to add to your reading pleasure. When writers as good as Frank Rich show up this visibly (i.e. "The New York Times"), can serious attention to government corruption not be far behind? "Enron may be as much a cultural scandal as it is a business and political scandal. It is, as one friend puts it, as if a window had opened and revealed the way it all really works. What we see is a world in which insiders get to play by one set of rules — entree to Enron side partnerships that could turn minimal investments into millions overnight — while the unconnected and uninitiated pick up the bill."
-Suzanne-
February 2, 2002

State of the Enron
Frank Rich


I had just finished crying over the tragic news that President Bush's mother-in-law had lost $8,000 on her Enron stock when another heartbreaking story sent me reaching once more for the Kleenex. There on the "Today" show this week was the sobbing figure of Linda Lay, Ken's wife, telling America the most rending tale of dispossession since the Yankees stole Tara from Scarlett O'Hara.

"Other than the home we live in, everything we own is for sale," said Mrs. Lay. "There's nothing left." Given that her husband has received some $200 million in compensation from Enron since 1999, and that he (as she explained) was kept in the dark about his own company's shell games, the message was clear: The Lays are the biggest victims of the entire scandal, bigger victims by far than those grandstanding employees who complain of having lost pensions in the piddling five, six or seven figures.

As if the Lays' predicament is not upsetting enough, the "Today" show left us wondering if the second-biggest victim of Enron's collapse may be the Holocaust Museum Houston, whose representative came on- screen along with various clergy and Lay offspring to testify to the family's beneficence. If the Lays are broke, you had to ask, is it only a matter of time before the Holocaust is consigned to the Houston memory hole along with the Astrodome?

I'd still be weeping as copiously as Linda Lay had I not subsequently read in The Wall Street Journal that she and her husband still owned 18 properties in Texas and Colorado, only two of which are up for sale, and that Ken Lay still owned $10 million in non-Enron stocks. Thankfully, others are lending emotional support to the couple in my stead. After ministering to Mr. Lay, Jesse Jackson likened him to Job.

Linda Lay's "Today" performance was coached by a freelancing alum of Hill & Knowlton, the wonderful p.r. folks who have made Americans fall in love with such past clients as the Tobacco Institute, the Teamsters and the Church of Scientology. Perhaps Mrs. Lay hoped she might rev up the nation's sympathy for her man, who rolls out his hear- no-evil, see-no-evil, speak-no-evil defense when testifying before Congress on Monday. But what lingers instead is her colossal arrogance. Just as Ken Lay misled his own employees about the sinking financial health of his company, imploring them to buy more stock while dumping his own, so Linda Lay takes us all for dupes, ready to be sold another bill of goods while she and hubby plot their next escape to Aspen. She didn't even identify which of the Lay sons was the target of a criminal investigation for bankruptcy fraud and embezzlement.

This is why Enron may be as much a cultural scandal as it is a business and political scandal. It is, as one friend puts it, as if a window had opened and revealed the way it all really works. What we see is a world in which insiders get to play by one set of rules — entree to Enron side partnerships that could turn minimal investments into millions overnight — while the unconnected and uninitiated pick up the bill. And it isn't necessarily illegal. All manner of creative accounting schemes took root in the corporate loophole land that was protected from reform in the 90's by such inquisitors-come- lately as Joseph Lieberman and Billy Tauzin, both recipients of accounting-industry largess. It's going to be easier for the Feds to nail mid-level scapegoats, especially those operating shredding machines, than to prove that a Ken Lay or Jeffrey Skilling had felonious intent.

Nor is this culture limited to one party or one company. Terry McAuliffe, the Democrats' chairman, has called Enron "simply outrageous" and declared that his "heart goes out to the employees and shareholders who were victimized by a web of greed and deceit." Now we learn that he parlayed a ground-floor $100,000 investment in the Bermuda-based, Beverly Hills-situated telecom company Global Crossing into $18 million and cashed out well before Global Crossing went belly-up this week, after having never turned a single yearly profit. We are to believe it is Mr. McAuliffe's business acumen that landed him on that ground floor in the first place, not the buddy network he cultivated as chief fund-raiser to his president, Bill Clinton. "If you don't like capitalism," said Mr. McAuliffe in defense of his windfall, "move to Cuba or China."

I wonder if Mr. McAuliffe's heart goes out to a schoolteacher who, having lost more than $120,000 in Global Crossing, told The Times this week, "I don't know how the management of this company did so well while small shareholders did so poorly." Gary Winnick, Global Crossing's chairman and a Clinton- McAuliffe golf partner, walked away with $730 million.

Perhaps that benighted teacher should go back to school and study the bipartisan gospel of both Mr. McAuliffe and our Treasury secretary, Paul O'Neill, who has cited Enron's swift rise and fall as a natural phenomenon "of the genius of capitalism." Under their tutelage, she would learn how Thomas White, the Bush administration's secretary of the Army, could legally exit with more than $10 million of proceeds from an Enron division that, according to his colleagues, overstated its profits by hundreds of millions on Mr. White's watch (he was vice chairman) and has since tossed overboard most of its employees.

President Bush believes that his impressive stewardship of the war will make these stories go away, and so he chose not to mention the word Enron during his State of the Union address. But the country gets the picture now, and the more Dick Cheney tries to defend the secrecy of his energy policy task force, the more he sounds as arrogant and disingenuous as Linda Lay. No less an authority than John Dean has declared of Mr. Cheney's stonewalling that "not since Richard Nixon stiffed the Congress during Watergate has a White House so openly, and arrogantly, defied Congress's investigative authority."

For all the vice president's lofty talk of the principle of executive branch confidentiality, The Times's Don Van Natta reports that the administration had no qualms about releasing an avalanche of records from the Clinton White House. Mr. Cheney has even violated his sacrosanct principle of confidentiality about his own meetings when it suits him politically. As The Los Angeles Times reported last August, the task force did depart from its pledge of secrecy once, when officials paraded a group of renewable-energy experts before White House reporters after their meeting with Mr. Cheney. How cynical can you get? That show meeting took place on the day before the energy plan was sent to President Bush. In reality, environmentalists had about as much serious access to the secret deliberations over Bush energy policy as common stockholders did to the secret partnerships at Enron.

Since we already know that Enron did have repeated meetings with the Cheney task force, what is he covering up? Logic dictates there must be some bombshells among the non-Enron names, starting with any from the vice president's former (and now imperiled) employer, Halliburton. Equally revealing are the names of those he rebuffed. This week Dianne Feinstein, the senior senator from California, revealed that her three requests to meet personally with either the president or the vice president during her state's energy crisis were denied even as the administration greeted Enron executives bearing wish lists.

Like Linda Lay, the Bush administration asks that we take its ethical purity on faith. In defending the energy task force, Ari Fleischer went so far this week as to invoke the founding fathers on behalf of clandestine administration dealings with oil company executives. "The very document that protects our liberties more than anything else, the Constitution, was, of course, drafted in total secrecy," he said. Never mind that the names of those drafters, unlike the modern-day patriots meeting with Mr. Cheney, were not kept secret. These days freedom's just another word for nothing left for Enron shareholders to lose.

POSTSCRIPT: After my previous column, Mr. Fleischer called me to say that I had been unfair to Lawrence Lindsey, the administration's chief economic adviser, when I wrote that during a Jan. 12 appearance on CNN he had not mentioned overseeing an October administration review of the impact of Enron's travails. Mr. Fleischer says that Mr. Lindsey was doing exactly that when he spoke on CNN of his staff "monitoring the energy markets." I guess I didn't notice because I was too busy wondering why Mr. Lindsey, a $50,000-a-year Enron adviser as recently as 2000, would have been connected to any such review.

Frank Rich (frankrich@nytimes.com)

[This article originally appeared in the New York Times]


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