Posted on 01/12/2002 6:06:30 AM PST by anniegetyourgun
WASHINGTON, Jan. 12 (UPI) -- A Senate panel probing energy conglomerate Enron Corp.'s sudden collapse sent a subpoena Friday to Texas Republican Sen. Phil Gramm's wife, Wendy Gramm, panel sources confirmed, while a new contact with a Bush administration official -- by a prominent Democrat -- was disclosed by the Treasury Department.
Wendy Gramm has been a member of Enron's board of directors for eight years and of the crucial Audit and Compliance Committee as the giant company's financial condition was deteriorating.
Her subpoena is among 51 issued by the Senate Permanent Subcommittee on Investigations chaired by Sen. Carl Levin, D-Mich., seeking documents from Enron, the Arthur Andersen LLP accounting firm, and current and former officers, employees and board members of Enron.
Of the 51 subpoenas, 49 went to individuals, one to Enron Corp. and one to the Andersen firm seeking documents as far back as January 1999.
Phil Gramm is the second-largest recipient in the Senate of financial contributions from Enron, receiving $97,350 from the company between 1989 and 2001, according to data provided by The Center for Responsive Politics. The senator receiving the largest contribution from Enron is Sen. Kay Bailey Hutchinson, R-Texas, who received $99,500.
The subpoenas came as government and congressional scrutiny of the collapse intensified.
Friday evening, the Treasury Department disclosed that Clinton administration Treasury Secretary Robert Rubin contacted a department under secretary in early November to suggest he call ratings agencies who were poised to downgrade Enron's credit rating.
A Treasury spokesperson said Rubin, now chairman of the executive committee of a banking conglomerate with hundreds of millions of dollars of exposure to the Enron collapse, Citigroup, called Under Secretary for Domestic Finance Peter Fisher to ask what he thought of Fisher contacting the ratings agencies to encourage them to "worth with" Citibank and other Enron banks.
The spokesperson said Fisher responded negatively, saying he did not think such a call was appropriate and Rubin responded that he thought that was a reasonable position. "Fisher made no such call," the Treasury spokesperson said.
It was Fisher to whom Enron President Lawrence Whalley made six to eight calls in late October and early November, calls a Treasury spokesperson earlier Friday said Fisher took to be suggestions he call Enron's banks.
Then too, the department maintains, Fisher decided not to do anything.
Over Thursday and Friday, it was disclosed that Enron's chairman, Kenneth Lay, contacted top Bush Treasury Secretary Paul O'Neill, Commerce Secretary Don Evans and Alan Greenspan, chairman of the Federal Reserve, in October about Enron's financial difficulties.
Secretary of Commerce Evans said Lay sought assistance from the federal government, but Lay said in a statement late Thursday that he only sought to alert top financial leaders that his mammoth firm was having difficulties. O'Neill said he agreed with Evans that nothing was to be done.
President Bush, who has received political and financial support from Enron and Lay in all his political races, said the Enron chief did not contact him.
Several prominent Democrats have attempted to use the various Enron entreaties as evidence of a close association with the Bush administration but no one has accused White House officials of wrongdoing.
When Enron received no outside financial assistance and as the ratings agencies ultimately downgraded its credit standing, the company reported to stockholders that it had $500 million of previously unreported debt. The subsequent selloff of Enron stock was swift and dramatic -- and left many of the company's 21,000 employees with life savings that diminished to near nothing as the stock fell below a dollar a share.
As several employees later told a congressional hearing, they were prohibited from selling their Enron stock from their 401K retirement plans even though top executives sold $1 billion in shares while they still retained their value.
The company sought protection under Chapter 11 of the U.S. Bankruptcy Code on Dec. 2.
Arthur Andersen, the company's auditing firm, reported in testimony in December that it told Enron officials that some of their financial transactions might be illegal. Joseph Berardino, Andersen chairman, also testified that Enron withheld financial information from Andersen. He admitted that his firm's accountants may also have made some mistakes.
Then Thursday, Andersen disclosed that a "significant" number of correspondence, electronic files and other data may have been destroyed, some of it after investigations had begun.
Well before the Enron debacle began gathering steam, on Sept. 5, Sen. Gramm announced that he would not seek re-election after serving 18 years in the Senate. During his retirement announcement, Gramm said that he had achieved his goals as a senator and would move on to another career.
Gramm's spokesman, Larry Neal, declined comment on the subpoenas, but said Enron had nothing to do with Gramm's decision not to seek another term.
"He outlined in detail in his retirement announcement his reasons for leaving, and those were his only reasons," Neal said.
The House Energy and Commerce Committee, run by Republican Rep. Billy Tauzin, R-La., also wants to talk to Wendy Gramm. Tauzin requested the interview with Wendy Gramm by name in a Dec. 10 letter to Enron.
The spectacular financial collapse of Houston-based Enron has drawn broad scrutiny from a host of federal agencies and congressional committees.
On Wednesday, it was revealed that the Justice Department had opened a criminal investigation into the Enron matter.
On Thursday both U.S. Attorney General John Ashcroft in Washington and U.S. Attorney Michael T. Shelby in Houston recused themselves from the investigation. Selby's office announced that he and several other attorneys had relatives who were employed by Enron.
Ashcroft received a $25,000 contribution from Enron during his run for re-election to the Senate from Missouri and in an unsuccessful attempt to win the Republican presidential nomination.
The Securities and Exchange Commission also has opened a probe into whether Enron officers were capitalizing on their knowledge of the firm's financial condition when they sold millions of dollars in stock prior to its nosedive.
The agency also wants to determine whether Enron financial claims to investors were misleading and whether Arthur Andersen's audit of those statements was proper.
The House Energy and Commerce Committee led by Tauzin and Ranking Minority Member John Dingell, D-Mich., Friday announced that it was demanding a host of financial records -- including some that Arthur Anderson says were destroyed -- as well as interviews with Enron's financial oversight officials.
That request covers 43 areas of Enron's finances and corporate behavior including all earnings-related documents and memos, details about the finances and discussions related to several outside investment vehicles operated outside the company's normal procedures.
In the Senate, a Commerce Committee subcommittee -- led by North Dakota Democrat Byron Dorgan -- already has held a hearing on the loss of pension funds when the stock price collapsed. At that hearing, a top Arthur Andersen official said he thought there was a possibility that criminal acts had been committed by the company.
Dorgan plans more hearings into the loss of the retirement funds but so far has been unsuccessful in getting Lay to appear before the committee.
The Senate Government Affairs Committee also announced an investigation on Jan. 2 into the collapse, choosing to focus on whether government agencies failed to detect, or ignored, signs of the impending collapse. The committee plans a hearing on Jan. 24, according to Chairman Joe Lieberman, D-Conn.
The House Government Reform Committee has been slower to formally step into the fray, but its ranking member, California Democrat Henry Waxman, has been vocal about the possibility that Enron used undue influence on administration officials to avoid additional scrutiny of its finances and practices before the collapse. Waxman also has been engaged in a fight with the Bush administration over releasing details of meetings between Enron officials and high-ranking Bush administration officials, when the White House was preparing a national energy policy.
On Jan. 3 the vice president's office provided Waxman with a list of contacts between the vice president or his staff and Enron officials. The letter, from David S. Addington, the vice president's counsel, said that neither the vice president nor his staff had ever discussed Enron's financial status with the company's representatives.
(Mark Benjamin is UPI's chief congressional correspondent, and Nicholas M. Horrock is UPI's chief White House correspondent.)
Agree completely.
Too bad. I kinda liked Phil Gramm. Seems that everyone has their wife and kids involved in the political money grab. The whole system is corrupted. It is really way past time when we should have thrown out all the bums in Washington. Term limits would be a good start.
Richard W.
Finally, Wendy Gramm (wife of Senator Phil Gramm) joined Enron's Board of Directors in 1993 after she resigned from the Commodity Futures Trading Commission. This Commission, just days after Gramm's resignation, deregulated energy futures, thereby allowing Enron to earn 10% of its profits by adventures on the financial markets.
So it was apparently deregulation by the commission, not legislation by the Congress. And the deregulation was issued after Wendy Gramm left the commission. However, if it was issued only days after she left, it must have been in the pipeline to be issued before she left.
Have you seen the list of lawyers Enron's execs have lined up? Bob Bennett (Clinton's defense attorney), David Boies (Al Gore's attorney) and a third one who name escapes me. Interesting times.
1. In April, 1993, the CFTC, headed by Wendy Gramm, exempted a variety of over-the-counter energy derivatives transactions from some requirements under the commodity exchange act. This was part of a broader effort by the CFTC to eliminate legal uncertainty for over-the-counter transactions. The actions involving energy derivatives followed other CFTC actions involving OTC interest rate and currency derivatives. The CFTC granted no special favors to the energy industry in general or Enron in particular. The regulations in question had their origins in the 1920s and were completely inappropriate to modern financial markets.
2. Enron wasn't Enron in 1993. That is to say, it wasn't nearly as big, important, and influential back then. There is little reason to believe that the CFTC was unduly influenced by Enron. A lot of other firms favored the new regulatory structure.
3. Wendy Gramm's "big money job" in 1993 was $22,000 in director's compensation.
4. In 2000, Congress passed the Commodity Futures Modernization Act of 2000. This also revised the regulatory structure for energy and other OTC derivatives. Phil Gramm was involved in this as head of the Senate Banking Committee. So was Richard Lugar, head of the Senate Ag Committee (which has jurisdiction over the CFTC). It was passed as an attachment to a budget bill.
5. There is no evidence whatsoever that Enron's collapse was connected in any way to the 1993 exemptions or the 2000 Modernization Act. Enron didn't collapse because it speculated wildly in energy derivatives. It collapsed in large part because it speculated wildly in bandwidth, water, and foreign power plants. Although Enron is known primarily as an energy company, its demise is more directly attributable to the collapse of the telecom sector (think Lucent, Global Crossing, and on and on) than anything involving the energy markets or the regulation thereof.
I have little sympathy for Wendy Gramm. She headed the audit committee of a company whose audits were a sham. For this she should be held accountable. However, these dark hints that she participated in a conspiracy to change regulations to favor a firm that subsequently rewarded her seem wide of the mark. The regulatory changes were defensible--indeed, they were correct. What happened subsequently is a different story altogether. She failed in her responsibilities as a director.
In case anybody missed it, there's a full-scale, no-holds-barred air war going on right now. A massive one. Daisy-cutters, 2,000-pound bunker-busters -- you name it. Bombs are dropping faster than you can blink. Squadrons of B-52s -- AKA 'big ugly fat fellows' -- are prowling the heavens, pounding enemy positions, unleashing their fiery wrath, carpet bombing around-the-clock....the works.
What's that you say? Haven't heard of this? Thought the war was over, eh? Well Fuggedaboudit! Flick on the idiot box, kick up your feet, sit back and enjoy (Drum roll, please?) -- OPERATION ENRON!!! Yep, folks, it's Enron at dawn, Enron at noon, Enron at dusk. Enron 24/7. The media high command has declared an air war against the Bush administration; The White House, like the mountains of Tora Bora, has become ground zero for media strike bombardiers.
Kidding aside, never -- ever -- in my life have I seen anything quite like what we're witnessing right now.
Media bias is one thing. We've all seen it. We've all tasted it. Heaven knows we've all groused about it, perennially. Bernard Goldberg's bombshell has soared to near the top of the New York Times best-seller list, and for good reason.
But, Ladies and Gentlemen, what we're witnessing goes beyond simple 'bias' -- well beyond. This isn't bias, this is fraud. Wholesale fraud.
The media is perpetrating one of the greatest frauds ever: To wit, the fabrication of a pseudo-political "scandal" -- out of whole cloth.
This isn't "news" "reporting", this is orgy-making -- a veritable orgy of innuendo. It would take years to tally all the libel and slander, all the malicious rumor-mongering, all the baseless smears -- the torrent of lies, insults and calumnies spewed straight from the bowels of our "major media" these past two days -- alone.
Question: Why is the media doing this? That's simple: Because they can.
Any proof of administration wrongdoing? No, not the vaguest hint, not the slightest intimation of official wrongdoing nor impropriety -- and even the media jackals know it.
Any proof of malfeasance or criminal activity by anyone in the Bush White House? Nope. None has been shown, none has been presented. Nothing even remotely resembling an allegation, even. But heck, who needs proof, anyway? Washington craves a 'scandal', and Enron fills the bill nicely, thank you very much.
No proof of a 'cover-up'? Then fabricate some! Of course, we all know Bush had nothing to do with the shredding* of documents, the massive cover-up by Enron's auditor. But oh, yummy, yummy -- how exquisitely delicious to find ominous buzz phrases like 'document-shredding', 'cover-up' and the name George W. Bush jammed together in the same sentence, eh? Who cares if they don't belong together? Who cares if Bush did absolutely nothing wrong? This is not about truth or fairness or facts or evidence: This is purely -- first and foremost -- about vengence. Avenging whom or what, you ask? Why, the media's darling golden-boy, William Jefferson Clinton, who eles?
But the haters have a major problem on their hands, and it's this: Signs are this phony "scandal" is headed in the opposite direction -- away from implicating current administration officials.
Indeed, think of how ludicrous this sounds: Democrats want to know -- not why there were -- but why there weren't any quid-pro-quo shenanigans. Why didn't you do any special favors on behalf of your big campaign contributor, Mr. President? Why didn't you bail out your rich oil buddy when he came beckoning and calling?
In other words, what the heck is the matter with you, Mr. President? Why, O why, didn't you do something wrong? Lotting the treasury to bailout fat-cats; seedy backroom deals, bribery, extortion -- that's what we do here in Washington! How dare you be so ethical, so squeaky clean, Mr. President?!?!
Bottom line: Democrats want to know why Enron's generous contributions didn't buy it any favors from this administration. How utterly UN-Clinton-esque can this President get, eh?
This is the first "scandal" in history in which no wrongdoing IS the scandal du jour. No special favors, no shenanigans, no quid-pro-quo -- now that's an outrage!
The Attorney General recusing himself? What?! This is earthshaking! Explosive! How scandalous!
Why the AG recusing himself to avoid tainting the probe should be seen as "scandalous"? You go figure.
But that's the nub of the problem with Enron as political "news": Its string of farcical flaws and fallacies.
It's why "Enron" will soon be running on fumes -- politically worthless, just like the company's stock. Absent some 'hook' -- proof of government cover-up, official malfeasance, etc. -- "Enron" inexorably reverts to its rightful place in the business page of the newspaper.
Already people are asking: Where's the beef?
*Ironies of ironies: The wholesale document destruction by Enron's auditor, Arthur Andersen LLP, raises an interesting dilemma, particularly in light of the close ties between Ken Lay and the previous administration. Clinton was known to personally intervene on Enron's behalf on a number of occasions. Generous campaign donations would follow. The documents destroyed may have revealed a nexus.
My intrepid prediction: Enron will backfire on Democrats. Americans will see them as grossly over-reaching -- the "hearings" as sheer vindicativeness, an unwelcomed extention of Campaign 2000. Their vicious and spiteful crusade will be seen as bloodsport -- a thinly veiled, all-out effort to cripple this President; the Democrats' ultimate goal is to assassinate him, politically, with constant, deadly attacks and smears.
But it won't work, because it can't work. The public will not look to fondly at their "Wanted: Dead or Alive" modus operandi at politics (again, figuritively speaking).
A political party whose sole obession, whose only mission is to bring down the President -- come hell or high water -- is a party destined, rightfully, for the ash heap.
Fate will deal the Democrats, tone deaf and blinded by hate, a cruel blow, indeed. So let them nurse their hatred -- let them beat the dead horse of Enron: They will only bring down the wrath of a people, of a nation, still smoldering over September 11.
My two cents...
"JohnHuang2"
Just like the savings and loans scandals.
Sutton was hired in March of 2001 to serve on "onExchange Advisory Board". In addition to its technology solutions, onExchange operates a U.S. Commodity Futures Trading Commission-designated futures exchange and clearinghouse.
Nice Bio in the Press Release on their website. www.onexchange.com
sw
In 1998, Wendy Gramm cashed out over $280,000 of stock options that Enron awarded her for serving on the the Enron Board of Directors.
That means it's an F for you "financeprof".
Well that's normal.
When the Republicans screw up they have to pay a fine (lawyer fees, etc.) to the Democrates.
When the Democrates screw up they have to pay a fine (lawyer fees, etc.) to the Republicans.
Meanwhile the people lose.
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