Posted on 01/13/2002 4:47:12 PM PST by lewislynn
Newsweek Cover: 'Enron. Burned!'
Commerce Secretary Evans Phoned Lay on October 15, the Day Before
The Enron CEO Told Wall Street About the Company's Financial Troubles;
But Both Men Say They Did Not Discuss the Impending Crisis
Enron Bubble Bursting is Emblematic of Wholesale Systemic Failure;
Anderson Errors Could Cut Accounting's Big Five to Four
NEW YORK, Jan. 13 /PRNewswire/ -- Last fall, Commerce Secretary Donald
Evans, who was halfway around the world in Moscow on a trade mission, reached
out to Enron CEO Kenneth Lay in Houston to discuss with him Enron's
disastrously controversial, financially-draining electricity plant in India.
Specifically, Evans suggested that Lay consult with Sig Rogich, a veteran
Republican PR man (and another friend of the Bush family), who was on his way
to New Delhi to pitch his services to the government. Perhaps Rogich could
soothe the locals, who had been loudly accusing Enron of price-gouging, report
Chief Political Correspondent Howard Fineman and Investigative Correspondent
Michael Isikoff. While such calls are typical, what makes this one noteworthy
is the date on which it took place, October 15. On that day, Lay knew that his
world was about to fall apart.
(Photo: http://www.newscom.com/cgi-bin/prnh/20020113/NYSU004 )
In a conference call with Wall Street analysts the next day, Lay would
have to disclose that Enron, the largest energy trading company in the world,
had lost an astounding $618 million in the third quarter. More important, he
would be forced to admit that Enron had lost $1.2 billion in a labyrinth of
partnerships that hadn't been -- but should have been -- counted on the
company's books. The company was near collapse. In the January 21 issue of
Newsweek (on newsstands Monday, January 14). Fineman and Isikoff write that
while Evans was an old friend in the Texas energy business, he and Lay say
they did not discuss the impending crisis.
The company, which imploded last December 2, produced the largest
bankruptcy in American history and now the shockwaves have moved from Enron
headquarters in Houston and Wall Street to Washington. The Lay-Evans call, it
turns out, was the prelude to a flurry of others (all initiated by Lay) in
which the Enron chief executive emitted increasingly urgent distress signals
to Evans, Treasury Secretary Paul O'Neill and Federal Reserve Chairman Alan
Greenspan. But Lay apparently got no help, Fineman and Isikoff write. White
House officials insist that he never contacted them and they never contacted
him, even though he was running (into the ground) the seventh largest
corporation in the country and the second largest in Texas. They flatly deny
that President George W. Bush or Vice President Dick Cheney (or any aides) had
direct knowledge of Enron's predicament. No evidence surfaced last week to
contradict their story and the Bushies point out with relief that someone else
had called O'Neill on Enron's behalf: Robert Rubin, the highly-regarded
(Democratic) Treasury Secretary under Bill Clinton and now a leader of
Citigroup, one of Enron's largest creditors. And though Lay and Enron papered
the Congress with campaign donations to Republicans and Democrats alike, six
committees were planning to investigate.
Lay built his business by getting regulatory relief from Congress - from
Republicans, to be sure, but from the Democrats as well. There were silent
partners in the myriad Enron off-the-books secret partnerships. They might
include, inconveniently, a fair number of the Democrat's top donors. Numerous
officials in and around the White House have or had extensive financial ties
to Lay and Enron. They include political adviser Karl Rove, economic adviser
Larry Lindsay and GOP Chairman Marc Racicot, who last week declared that he
would cease lobbying work. Lay is also the biggest individual contributor to
President Bush's presidential and Texas gubernatorial campaigns. Investigators
will also have numerous contacts to examine. On October 29, Lay called Evans
and discussed with him the impending lowering of Enron's credit rating. Lay
talked with O'Neill twice, and Enron's president Greg Whalley, had several
conversations with Under Secretary Peter R. Fisher. Lay's attorney, Robert
Bennett, tells Newsweek that his client was merely "doing the responsible
thing" by informing officials of "the possibility of bankruptcy" at Enron.
Enron, writes Wall Street Editor Allan Sloan, turned out to be another
bubble. However, unlike a Pets.com or a Webvan, whose implosions did little
damage outside of costing dice-rolling speculators some money and techies some
jobs, the Enron bubble exploded like a grenade: stockholders and lenders are
out tens of billions of dollars; at least 20,000 Enron employees have lost
their jobs and many of them have lost their retirement savings too. And the
collateral damage keeps spreading. Prominent among the wounded is Arthur
Anderson, Enron's outside auditor, which admitted last week that some
employees destroyed documents, has been tarnished to the point that the Big
Five accounting firms might shrink to the Big Four. Wall Street's credibility
has been shattered. Utilities deregulation, for which Enron was the poster
boy, is now on the back burner. The spectacle of impoverished, unemployed
Enronites has thrown a harsh spotlight on the risks of 401(k) accounts stuffed
with company stock. And confidence in financial markets has been shaken too.
Sloan reports that Enron's end is emblematic of a wholesale systemic
failure. The multi-layered system of checks and balances that is supposed to
keep a company from running amok completely broke down. Executives of public
companies have legal and moral requirements to produce honest books and
records, but at Enron, they didn't do that. Outside auditors are supposed to
make sure that a company's financial reports not only meet the letter of
accounting rules but also give investors and lenders a fair and accurate
picture of what's going on, but Enron's auditor, Arthur Anderson, failed that
test. Regulators didn't regulate and Enron's board of directors didn't direct.
In reconstructing Enron's fall, Sloan, who first reported on Enron's demise in
the December 10, 2001 issue of Newsweek and again on December 17, 2001,
identifies the "too-clever-by-half" financial structures that Enron planted
that led to its undoing and how and why those off-the-books partnerships
worked for so long without detection.
(Read Newsweek's news releases at
http://www.Newsweek.MSNBC.com. Click "Pressroom.")
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No one? Oh, please bert.....you are looking a little silly.
Such as?
Volume was down, price was up.
I didn't mean literally no one was buying.
I don't understand your quarrel with me and I have got a clue as to what you driving at.
Go to Yahoo! Finance, get a stock chart, and at the bottom of that chart you will find a link to "historical quotes", daily, weekly, or monthly. You can plug into the dialogue box the range of dates you want and they will give you a table that you can download directly to a spreadsheet.
I forgot Yahoo!
That the government did nothing illegal to bouy the company?
Just a guess, that was when the war started.
It might have gone up in sympathy with other energy stocks.
Oh good, I sincerly hope you find what you were looking for to prove your point. Because I have to confess, I don't understand what it was.
And to repeat
Actually many things do
Such as?
. . .they continue to amaze. . .literally 'skulls full of mush'. . .
You are right, you did have a question. In which you had posted a chart with the very question you asked. I don't get what you are fishing for. Perhaps you care to enlighten us?
And to repeat
Actually many things do
Such as?
Precisely, you had a point with the answer, and NO I will not take the bait.
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