CITIGROUP BOMBSHELL: HELPED ENRON HIDE FINANCIAL CONDITION

http://www.drudgereport.com ^ | 7/21/02

[The Chief]

Intentionally manipulated written record of dealings with Enron: Senior Citigroup credit officers misrepresented '99 transaction in records of deal; Enron could ignore accounting requirements and hide true financial condition, the NY TIMES is planning to report on Tuesday, say sources... MORE... 'The paperwork cannot reflect their agreement,' according to one e-mail message written by James F. Reilly, a senior Citigroup loan executive in Houston, 'as it would unfavorably alter the accounting'... MORE...

[Mo1]

It was on that thread Howlin started

[Helix]

They certainly seemed to have plenty of money to contribute to "charity" in 1999. Following are some interesting tidbits from http://www.activistcash.com about The Citigroup Foundation ( a non-profit organization).

Citigroup Foundation

Formerly Citicorp Foundation

Finances

Assets In 1999
$100,257,394.00

Grants Awarded In 1999
$42,679,085.00

Original Funding Source
The Citigroup Foundation is a corporation-administered project, run by the officers of the Citigroup (formerly known as Citibank) financial empire.

Their second highest donation that year went to the Tides foundation. The Activistcash website has this to say about the Tides Foundation:

"Now comes the Tides Foundation and its recent offshoot, the Tides Center, creating a new model for grantmaking -- one that strains the boundaries of U.S. tax law in the pursuit of its leftist, activist goals.

Set up in 1976 by California activist Drummond Pike, Tides does two things better than any other foundation or charity in the U.S. today: it routinely obscures the sources of its tax-exempt millions, and makes it difficult (if not impossible) to discern how the funds are actually being used.

In practice, “Tides” behaves less like a philanthropy than a money-laundering enterprise (apologies to Procter & Gamble), taking money from other foundations and spending it as the donor requires. Called donor-advised giving, this pass-through funding vehicle provides public-relations insulation for the money’s original donors. By using Tides to funnel its capital, a large public charity can indirectly fund a project with which it would prefer not to be directly identified in public. Drummond Pike has reinforced this view, telling The Chronicle of Philanthropy: “Anonymity is very important to most of the people we work with.” "

You can also go to http://www.guidestar.org to review 2001 form 990 for Citigroup foundation. For previous years; use Citicorp for the search term. They've give money to many other foundations (United Way and the Red Cross, of course) and to such interesting places as The American University of Cairo and The American University in Beirut.

If we're really concerned about fraud, it seems to me that we need to focus on the movement of funds among these "non-profit" organizations.

[swheats]

This appears to update existing laws and increases penalties. Seems they are needed considering the brazenness of the crimes.

U.S. lawmakers target corporate wrongdoers
The U.S. House and U.S. Senate passed bills last week that include tougher penalties for corporate fraud. A conference committee has until next month to pass a compromise measure. Here's a comparison of the two bills:

HOUSE

• Creates new penalties for corporate fraud and document shredding, including prison terms of up to 25 years for securities fraud. Company chairmen, CEOs and chief financial officers who certify false company financial reports would face prison terms of 10 to 20 years and fines of $1 million to $5 million.
  
  
• Increases sentences for mail and wire fraud from five years to 20 years.
  
  
• Creates criminal penalties for company officials who retaliate against whistle-blowers.
  
  SENATE
  
  
• Creates new penalties for corporate fraud and document shredding, including 10-year prison terms for securities fraud. Chief executive officers and chief financial officers who certify false company financial reports would get prison terms of five to 10 years and fines of $500,000 to $1 million.
  
  Also doubles sentences for mail and wire fraud, blocks payments to company officials suspected of wrongdoing, extends the period of time in which defrauded investors can bring lawsuits against companies and gives federal protection to company whistle-blowers.

  U.S. lawmakers target corporate wrongdoers

[terilyn]

I knew I read it on one of these LOL! I liked it enough to save it.

[TLBSHOW]

The Private Government of Citigroup

In 1998, Travelers CEO Sandy Weill and Citicorp head John Reed announced plans to merge their two financial powerhouses. There was one problem: U.S. law prohibited the merger of commercial banks with insurance companies and securities firms. The two companies were not deterred. A loophole in the law barring such combinations gave the two companies a two-year window before the merger ban would kick in. That would be plenty of time, they figured, to change a centerpiece of U.S. banking laws that had stood in place for more than 50 years.


There already was momentum in Congress in support of the financial deregulation that proponents supported under the misleading banner of “financial modernization.” But there were also major legislative blocks and hurdles, and no assurance of passage.


Enter Citigroup. Though Citicorp has opposed the deregulation bill, the merged Citigroup became its most important advocate, with Sandy Weill pitching a tent in the halls of Congress to lobby legislators.


Still, the bill remained mired in Congress, thanks to jurisdictional disputes among federal agencies, intra-industry conflicts and consumer group opposition.


Former Clinton Treasury Secretary Robert Rubin sealed the deal. After having left his Treasury Department post, but amidst negotiating his new terms of employment as chair of the management committee at Citicorp, Rubin brokered the final compromise to ensure passage of the financial deregulation bill.


While Citi’s top priority was an after-the-fact legalization of the tainted Citicorp-Travelers merger, much more was at stake — for both the financial industry and consumers. The bill has enabled not just this particular corporate combination, but the intermingling of businesses that were formerly, properly and prudentially, kept apart.

http://multinationalmonitor.org/mm2002/02april/april02editorial.html

[kcvl]

Enron, which closed a deal, backed by the U.S. Export-Import Bank, to develop European markets for Russian gas, has been one of the biggest beneficiaries of the Administration's export policy. During the past two years, the Ex-Im Bank has supported Enron's agreements with Turkey, India, the Philippines and China - deals worth nearly $4 billion. Kenneth Brody, head of the Ex-Im Bank, is a close friend of Treasury Secretary Robert Rubin, having worked with Rubin at Goldman, Sachs. Enron is listed on Rubin's 1993 financial disclosure statement as one of the forty-four companies with which Rubin had "significant contact" during his years at the investment firm. (Brody, by the way, is said to be a leading candidate to take over at Commerce if Brown, under investigation for everything from slumlording to collecting $400,000 for his "share" in a company in which he had invested nothing, is forced to resign.)

Like Boeing, many companies have larded the Democrats after being helped by the Administration on the export front. Westinghouse executives have traveled with Brown to South America, Russia and China, where the company racked up $430 million in sales. It also received Ex-Im backing for a $300 million plan to complete and upgrade the Temelin nuclear power plant in the Czech Republic. (When that deal was originally hatched in 1993, Warren Hollinshead, Westinghouse's chief financial officer, chaired the Ex-Im Bank's nonvoting private advisory committee.) Westinghouse has traditionally favored the G.O.P. for political contributions, but during the last election cycle the company gave $149,350 to the Democrats, compared with $78,825 to the Republicans.

Given these kinds of disparities, it's no wonder some Republicans are now talking about shutting down Ron Brown's export-boosting operation. It would be surprising if they moved very far on that front, though, since their bread is buttered on the same side as Brown's. As James Treybig, who negotiated a $100 million joint venture agreement for Tandem Computers while in China with the Commerce Secretary, told the Wall Street Journal, "Whether you're a Democrat or a Republican, you really have to respect this guy for what he's done for corporate America."

[kcvl]

Ron Brown's V.I.P. Junkets

Flying For D.N.C. Dollars
by Ken Silverstein

The cries of outrage coming from the White House over Republican threats to eliminate the Commerce Department have as least as much to do with self-interest as with fealty to the corporate cause. Through the department's efforts to promote exports, the Clintonites argue, American businesses landed foreign deals worth $47 billion last year. But a little cross-referencing of the companies thus helped and of campaign contribution records and internal Democratic Party fundraising memorandums shows that for both corporations and the Administration, to give is truly to receive.
Early last year, for example, Saudi Arabia was looking to expand its commercial air fleet and examined proposals from U.S. and European aircraft makers. After being furiously lobbied by President Clinton and Secretary Ron Brown, the Saudis placed a $3.6 billion order with Boeing. Within six months of closing the deal, the company had laden Democratic National Committee (D.N.C.) coffers with $65,000, four times more than it had donated during the previous three years.

At about the same time, Administration pressure won Raytheon a $1.4 billion deal with Brazil for building a satellite surveillance system in the Amazon. In the 1992-94 election cycle, Raytheon donated $175,110 to Democratic candidates.

Export promotion - precisely what the Republicans have singled out for cutting - is at the heart of Brown's strategy at Commerce, and indeed of Clinton's strategy in foreign policy. When it comes to drumming up commerce for U.S. corporations, this Administration has outstripped its two wildly pro-business Republican predecessors. In Brown's "War Room," bureaucrats monitor bidding on dozens of global deals, gathering intelligence (with help from the C.I.A.) and coordinating financing from government sources to give U.S. firms an inside track. More directly, Brown leads select groups of executives on commercial trips abroad. Last year corporations fought to accompany the Commerce Secretary to Brazil, Argentina, Chile, China, Hong Kong, South Africa, Russia, India and the Middle East. Some 300 C.E.O.s applied for seats on the trip to Russia alone; only twenty-nine were chosen.

Details of those trips have been obscure because Commerce has been stingy about providing information. That will soon change, since in mid-May the courts forced Commerce to turn over to Judicial Watch 30,000 pages of documents concerning which companies were picked, which were left behind and what the basis for the decision was. But from what I have been able to piece together from Ron Brown's V.I.P. Junkets

published reports and from various internal documents (including some now ordered for release), it is already clear that the relationship of donations to access is like that of spring rain to garden blooms.

Melissa Moss, head of the Commerce Department's Office of Business Liason, decides who accompanies Brown. She has said firms "are chosen on merit and real business consideration." But, like her boss, she is also intimately familiar with party money matters. Prior to joining the Administration, Moss was a top fundraiser for the D.N.C. under Brown, and before that, for the Democratic Leadership Council, which Clinton helped found and once chaired.

The group she assembled for Brown's September 1994 trip to Beijing is revealing. Embarking three months after Clinton extended most-favored-nation trade status to China, Brown's entourage included:

¡ Lodwrick Cook of Atlantic Richfield, which gave $201,500 to the Democrats between 1992 and 1994. Cook is also close to Clinton, who last June presented the Arco chief with a birthday cake during a White House lunch for executives.

¡ Edwin Lupberger of Entergy, who closed an $800 million deal to build a power plant in China. Lupberger is a personal friend of Clinton, and in the last election cycle Entergy donated $60,000 to Democratic candidates.

¡ Bernard Schwartz of the Loral Corporation, who negotiated deals that will net his telecommunications company $1 billion over the next decade. Three months before the trip Schwartz donated $100,000 to the D.N.C.

¡ Raymond Smith of Bell Atlantic, which has given nearly $200,000 to the Democrats since 1991. According to Democratic fundraising memos I obtained, Smith is also a party "trustee," meaning he has personally helped raise $100,000 or more.

¡ Leslie McGraw of Fluor, which came through with $108,450 for Democratic candidates in the last election. McGraw, like several of the executives who have been picked to accompany Brown, is also a donor and board member of the Democratic Leadership Council.

All told, at least twelve of the twenty-five firms whose officials made the trip to China are major donors or fundraisers for the President's party. Those companies gave almost $2 million to Democratic candidates during the last election cycle. "I only believe in coincidences occasionally," says Chuck Lewis, head of the Center for Public Integrity. "Here you see consistent patterns."

It's the same with Brown's other trips. Traveling with the Commerce Secretary to South Africa were Donald Anderson, an adviser to the president of Time Warner, which donated $508,333 to the Democrats between 1992 and 1994, and Ronald Burkle, C.E.O. of the Yucaipa Group and a "managing trustee" of the D.N.C. The title designates him as having helped the party raise $200,000 or more.

Even some of the smaller businesses that have had access to Brown's expeditions have paid their dues in advance. Robin Brooks, director of Brooks Sausage Company out of Kenosha, Wisconsin, got to go to South Africa. In 1992 she organized a fundraiser for Clinton, and in the last election cycle, her firm gave $23,000 to the Democrats.

The currency of influence is not limited to cash. For instance, the chances that a U.S. firm seeking business in Russia will receive official support seem to grow in direct proportion to that company's links to Democratic power broker Robert Strauss. A senior partner at the law firm Akin, Gump, Strauss, Hauer & Feld - where his colleagues include Vernon Jordan, President Clinton's friend and golfing partner - Strauss served as U.S. Ambassador to Russia from 1991 to 1992. Two years ago he set up the U.S.-Russia Business Council, which has received government funds to promote commerce between the two countries.

At least eight of the twenty-nine companies that were invited to go to Russia are linked to Strauss and his firm. AT&T, Westinghouse, Dresser Industries (a Dallas-based oil equipment company) and Enron (a Houston-based natural gas conglomerate) are all Akin, Gump clients. Litton Industries and General Electric have representatives on the board of the U.S.-Russia Business Council. Rockwell International and Bristol-Myers Squibb are former clients of Strauss.

Several of those companies are also major contributors to the Democrats. AT&T alone gave the party's candidates $765,763 over the past two years. Among high-donor companies represented on the Russia trip were Occidental Petroleum ($152,549 over the same period) and US West ($147,667).

US West signed a telecommunications agreement while in Russia that will be backed by a $125 million loan guarantee from the U.S. government's Overseas Private Investment Corporation. OPIC is headed by Ruth Harkin, wife of Senator Tom Harkin and, prior to joining the Administration, a top corporate lawyer at Akin, Gump.

[tgslTakoma]

I thought I remembered reading something about some Saudi buying a lot of Citigroup stock... Saudi billionaire investor Prince Alwaleed bin Talal is Citigroup's largest shareholder since 1991 (AP story, FR thread)

Does this mean that the poor (peaceful Muslim) ba$tard's gonna lose his shirt? One can hope, unless he's already been tipped off and has made changes to his "portfolio."

I don't know nuthin' about stock market, but think my tiny IRA money market's probably gone belly-up. Sometimes I'm glad I'm dirt poor and hide my cash in an old sock hidden in my pink flamingo yard ornament.

[kcvl]

*** TIME, 1997 - For a man who had supposedly vanished from
> the corridors of power, Mack McLarty was the man to see in
> 1996. Bill Clinton's former chief of staff, now a White
> House counselor tucked away in the basement, provided
> assistance to businessmen who ponied up $1.5 million for the
> Democrats in the last election. On Nov. 22, 1995, for
> example, Clinton scrawled an FYI note to McLarty, enclosing
> a newspaper article on Enron Corp. and the vicissitudes of
> its $3 billion power-plant project in India. McLarty then
> reached out to Enron's chairman, KEN LAY, and over the next
> nine months closely monitored the project with the U.S.
> ambassador to New Delhi, keeping Lay informed of the
> Administration's efforts, according to White House documents
> reviewed by TIME. In June 1996, four days before India
> granted final approval to Enron's project, Lay's company
> gave $100,000 to the President's party. Enron denies that
> its gift was repayment for Clinton's attention, and White
> House special counsel Lanny Davis says McLarty acted out of
> concern for a major U.S. investment overseas. Nevertheless,
> there does seem to be a McLarty pattern . . . DRUDGE REPORT
> - McLarty was later hired by Enron. Lay also played golf
> with President Bill Clinton and slept in the Clinton White
> House. A master of political manipulation of both parties,
> Lay served as an adviser to the Clinton White House on
> energy issues. The Clinton administration, in turn, helped
> Enron get a contract for a gas pipeline in Mozambique and
> other projects, according to reports.
>

[Digger]

Geesh people. Go to bed. This is a one day blob. Nothing in this corrupt society is going to happen to these elites. Don't you know America was stolen from the people starting with LBJ. Worry about your kids & mortgage when the socialists take over because the pubbies sat on their arsces, played along so they could get invited to those DC social events led by Bob Dole & became fullfledged members into the fiefdom. If you want your country back don't plan on a voting booth to get it done because that also is corrupted.

[kcvl]

Recent reporting has brought to light one example of Enron's successful control of elections. Brody Mullins in Congress Daily has demonstrated that Kenneth Lay recruited Rep. Sheila Jackson Lee to challenge former Rep. Craig Washington in 1994.* Lay took issue with Washington's vote against NAFTA and sought to replace him with someone more sympathetic to his "free trade" principles. According to Mullins, "Enron and its employees pumped $24,000 into Jackson Lee's campaign, helping her raise nearly $600,000-three times as much as Washington raised for his previous reelection." The result was an overwhelming victory for Jackson Lee in the Democratic primary and an easy win in the general election. This is a perfect example of how large, early hard money contributions are decisive in most elections.

Representative Jackson Lee might never have granted any access to any Enron lobbyist, or returned a single phone call. However, as a result of their political contributions, Enron was able to change the vote of the 18th district of Texas from an anti-NAFTA position to a pro-NAFTA position. Their money did buy the result they wanted, even though there may never have been a quid pro quo with Representative Jackson Lee.

[E=MC²]

Along the same lines, I remember a story of a man in Nevada connected with the gun industry who was denied a business bank account by Citicorp because of that. (Caused such a ruckus and so many gun owners threatened to close their accounts that Citicorp relented...but it did reveal their liberalism.)

[Mo1]

I saved it too

I put it in such a safe place I can't find it .. LOL

Could ya help me with a link

[kcvl]

||| HERE'S THE SORT OF THING that may be holding the Democrats back from pressing the Enron scandal too hard. Six days after the company donated $100,000 to the Democratic National Committee, its officials took off with Commerce Secretary Mickey Canton on a trade mission to Bosnia and Croatia.

Writes David Brooks in the Weekly Standard, "With Kantor's support, Enron signed a $100 million contract to build a 150-megawatt power plant. Enron, then a growing giant in energy trading, practically had a reserved seat on Clinton administration trade junkets.

Commerce Secretary Ron Brown, who egregiously linked political donations to government assistance, accompanied Enron Chairman Ken Lay on a mission to India.

Enron President Joseph Sutton was on the trip to Bosnia during which Brown lost his life in a plane crash [although Sutton was not on the plane at the time of the crash]. After Brown's death, Enron's Terence Thorn, a $1,000 donor to the Clinton-Gore campaign, traveled with Commerce Secretary William Daley to South Africa.

Ken Lay also traveled with Energy Secretary Hazel O'Leary on her trade trips." All told, Enron received over $4 billion from [the federal Overseas Private Investment Corp.] and the Export-Import Bank for projects in Turkey, Bolivia, China, the Philippines, and elsewhere" during the Clinton administration . . . Then there are the troublesome contributions to people like Rep. Sheila Jackson Lee ($38,000) and Senator Charles Schumer ($21,933) . . .

[kcvl]

Jackie Marie Clegg, was recently married to U.S. Senator Christopher Dodd of Connecticut. A native of Orem, Clegg has served as an aide to former U.S. Sen. Jake Garn, and was a staff member to the Senate Banking Committee and the special assistant to the chairman of the Export-Import Bank. She now serves as vice chair and chief operations officer of the Export-Import Bank of the United States, which provides export financing for U.S. goods and services. As a student here, she was a member of the forensics squad and served as sports editor for the student newspaper. Following her graduation from SUU, Clegg earned a master's degree in national security studies from Georgetown University. She and her new husband currently live in Washington, D.C.

[swheats]

Unless you're being sarcastic this is way bigger than a one day blob. Due to the Dems going on talk shows complaining about nothing happening, and now the whole world looking to see how tough Bush is on home grown terrorism; there will be folks going to jail. That is if they don't kill themselves.

We're all watching to see what the Bush Administration is going to do. August the 14th can't get here soon enough.

[TLBSHOW]

Former Clinton Treasury Secretary Robert Rubin sealed the deal. After having left his Treasury Department post, but amidst negotiating his new terms of employment as chair of the management committee at Citicorp, Rubin brokered the final compromise to ensure passage of the financial deregulation bill.

[kcvl]

Isn't that cozy?! Robert Rubin, Bill & Hillary Clinton, the most ethical administration on the face of the earth surely couldn't have LIED ABOUT THE ECONOMY TO KEEP HIM IN OFFICE during the MONICA fiasco, now could they?!

These crooks are all going to "clean up Wall Street"!!! ROFLOL!!!

[TLBSHOW]

1. Government records reveal the awarding of seats to Enron executives and Ken Lay on four Energy Department trade missions and seven Commerce Department trade trips during the Clinton administration's eight years.

a. From January 13, 1995 through June 1996, Clinton Commerce Secretary Ron Brown and White House Counsel Mack McLarty assisted Ken Lay in closing a $3 billion dollar power plant deal with India. Four days before India gave final approval to the deal, Enron gave $100,000 to the DNC. Any quid pro quo?

b. Clinton National Security Advisor, Anthony Lake, threatened to withhold aid to Mozambique if it didn't approve an Enron pipeline project. Subsequent to Mr. Lake's threats, Mozambique approved the project, which resulted in a further $770 million dollar electric power contract with Enron. Perhaps, if NSA Advisor Lake had not been so busy strong-arming for Enron, he might have been focused on something obliquely related to national security like, say, Mr. Bin Laden? Could it be that a different, somewhat related, investigation is warranted?

c. In 1999, Clinton Energy Secretary Bill Richardson traveled to Nigeria and helped arrange a joint, varied, energy development program which resulted in $882 million in power contracts for Enron from Nigeria. Perhaps if Energy Secretary Richardson had been more focused on domestic
energy, we might have avoided:

i. The severe loss of nuclear secrets to China and concurrently
ii. developed more domestic sources of energy.

d. Subsequent to leaving Clinton White House employ, Enron hired Mack McLarty (White House Counsel), Betsy Moler (Deputy Energy Secretary) and Linda Robertson (Treasury Official). Even a person without a high school diploma (no disrespect to airline security screeners) can see that this looks like Enron paying off political favors with fat-cat corporate jobs, at the expense of stockholders and Enron pension employees.

e. Democratic Mayor Lee P. Brown of Houston (Enron headquarter city), received $250,000 just before Enron filed Chapter 11 bankruptcy. Isn't that an awful lot of money to throw away right before bankruptcy?

The Democratic National Committee was the recipient of hundreds of thousands of dollars from 1990 through 2000. The above matters appear to be very troubling and look like, smack of, reek of, political favors for campaign payoffs. I know you will find out.

2. Recently, former Clinton Treasury Secretary Robert Rubin called a top U.S. Treasury official, asking on Enron's behalf, for government help with credit agencies. As you well know, Rubin is the chairman of executive committee at Citigroup, which just coincidentally, is Enron's largest
unsecured creditor at an estimated $3 billion dollars.

3. As you well know, Mr. Leiberman, Citigroup is Senator Tom Daschle's largest contributor ($50,000) in addition to being your single largest contributor ($112,546). This fact brings to mind some disturbing questions I feel you must answer.

a. Have you, any member of your staff, any Senate or House colleagues, any relatives or any friends of yours, been asked by Citigroup to intercede on their behalf, in an effort to recover part or all of Citigroup's $3 billion, at the expense of Enron's shareholders, employees and or Enron
pensioners?

b. Did your largest contributor, Citigroup, have anything to do with the collapse of Enron?

c. Enron has tens of thousands of employees, stockholders and pensioners who have lost their life savings. How will you answer their most obvious question? Do you represent Citigroup, your largest contributor, or do you represent the Enron employees, et al, who stand to lose if Citigroup
recovers any of its $3 billion?

During Sunday's Face the Nation, both you and Senator McCain praised Attorney General Ashcroft for recusing himself from the Justice Department investigation because he had once received a contribution from Enron. I know in my heart, that, being the honest gentleman you are, you will now recuse yourself because of the glaring conflict of interest described above. I also know that you will pass this letter to your successor for his or her attention.

http://www.elpasogop.org/opinion/2002Enron.htm

[Fracas]

Good point. Have you heard Lieberman say much about the market drop? I will admit I avoid listening to him unless I have to (grin).