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Political News--April & May of 06

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Ken Lay convicted--Greg Palast

Lay
                           Convicted, Bush Walks (and Arnold Gets 
Lay'd)
Special For Truthout
Wednesday, May 24, 2006
by Greg Palast
 But is is not what he was convicted of that is important, 
but what has been undone by Bush and gang.
They have undone the Ro0svelt protections from 
price gouging.  
 
TRIPOD again screwed up the formating 
in a way that cannot be unraveled.
                           
In 1933, President Roosevelt made Insull's power
                           
piracy a crime. FDR signed the Public Utility
                           Holding 
Company Act and laws that capped
                           the profit of 
electricity monopolies. The
                           act required them to 
keep lights on by accounting
                           for all maintenance 
expenses, barred "trading"
                           electricity and, most 
important, banned donations
                           by the power giants to 

politicians.

 

 

Fast-forward to January 2001. The George W. Bush 
administration, within 72 hours of his inauguration, 
issued
                           an executive order lifting the Clinton Energy 
Department's effective ban on speculative
                           trading in 
the California power market.
                           The state was still in 
crisis, facing blackouts and 300 percent increases 
in power bills, the result of "deregulating" its 
electric
                           system, as first suggested by Lay. 
 
Instead of a "free" market, California's electricity 
bidding system became a fixed casino where Lay's 
operatives
                           and a tight-knit cabal of corporate 
cronies jacked up prices through such
                           tricks as 
"death star," "ricochet" and "kilowatt laundering." 
In one instance, Enron "sold" the state 500 megawatts 
of
                           electricity to go over a 15-megawatt line. Enron 
knew that sending that much power through
                           those 
wires would have burned them to a crisp. To prevent this 
Enron-designed blackout, the state scrambled for other 
sources
                           of electricity, which Enron and friends sold 
them at a big mark-up. 

 

California's Independent
                           System Operator put the 
cost to consumers of this "gaming" at $6.3 billion 
in a six-month period. Under the Roosevelt rules, 
when utilities were regulated to a fare-thee-well, 
the
                           gaming rooms would have been busted.  Instead, 
the games have been institutionalized. For 
example,
                           TXU, the corporate alias of Texas Utilities, 
has seen earnings per share rise 500
                           percent in five 
years. The reason: So-called deregulation allows the 
company to sell electricity at a price based on the 
sky-high
                           cost of oil although much of its power is 
produced from cheaper coal or uranium.
                           In effect, 
deregulation has become de-criminalization of price 
gouging. 
 
Even
                           more sinister than Bush's hasty executive 
order allowing Enron to resume speculation
                           in the 
California power market
                           was his appointment 
of Pat Wood as chairman of the Federal Energy 
Regulatory Commission, the government's 
electricity
                           cops. The choice of Wood was 
suggested, in secret, by Enron. This
                           put Lay 
one step ahead of Al Capone who had to buy the 
cops. Lay just had them appointed. 
 
Wood may have been as honest as the day is long, 
but on his
                           watch, Enron and the industry 
treaded through the power market like
                           Godzilla 
through a kindergarten. And it continues under 
a new chairman, also suggested by Enron. What 
about the
                           $6.3 billion filched from the wallets 
of California consumers,
                           let alone the larger 
sums taken in by power profiteers nationwide? 
The Lay-blessed federal regulators barely 
batted an
                           eye. 
 
Lay's
                           brainchild of deregulation was coupled with 
his other grand idea: a massive increase
                           in 
industry largesse to politicians. By unsubtle, 
but perfectly legal, means around FDR's prohibition 
on
                           political donations, Enron PACs and its executives 
became the top Bush funders. Capone never
                           lived to 
see armed robbery made legal. But Lay, even if 
convicted, can leave the courthouse for the Big House 
knowing
                           power profiteering is now as legal as prayer. 
On July 14, 2005, Roosevelt's Public Utility Holding 
Company Act, bulwark of consumer protection, was 
repealed
                           by a Congress fattened with utility industry 
cash. 
 

Don't kid yourself. If you think the conviction of 
Ken
                           Lay means that George Bush is serious about going 
after corporate bad guys, think again. 
 
First, Lay got away with murder -- or at least grand 
larceny. Like Al Capone convicted
                           of failing to file 
his taxes, Ken Lay, though found guilty of stock fraud,  
is totally off the hook for his BIG crime: taking down 
California and Texas consumers
                           for billions through 
fraud on the power markets. 
 
Lay, co-convict Jeff Skilling and Enron did not act alone.
                           
They connived with half a dozen other power companies 
and a dozen investment banks to manipulate both the 
stock market
                           and the electricity market. And though 
their co-conspirators have now paid $3
                           billion to 
settle civil claims, the executives of these other corporations and
                           banks 
get a walk on criminal charges. Furthermore,
                           to protect 
our President's boardroom buddies from any further 
discomforts,
                           the Bush Justice Department, just days ago,
indicted Milberg, Weiss, the law firm that nailed
                           
Enron's finance industry partners-in-crime. The timing 
of
                           the bust of this, the top corporation-battling 
law firm, smacks of political prosecution
                           -- and 
a signal to Big Business that it's business as usual. 
 
Lay and Skilling have to pay up their ill-gotten gains
                           
to Enron's stockholders, but what about the $9-plus 
billion owe electricity consumers?  The Federal 
Energy Regulatory
                           Commission, Bush's electricity 
cops, have slapped Enron and its gang of power pirates
                           
on the wrist. Could that have something to do with 
the
                           fact that Ken Lay, in secret chats with Dick 
Cheney, selected the Commission's chairmen?
                           
 
Team Bush
                           had to throw the public a bone -- so 
they threw us Lay and Skilling
                           -- for the crime, 
note, not of ripping off the public, but ripping 
off stockholders, the owner class. 
 
This limited conviction, and the announcement of only 
one more
                           indictment -- of the crime-busters at 
Milberg-Weiss -- is Team Bush's "all
                           clear!" signal 
for the sharks to jump back into the power pool. 
 
That leaves one question: if Bush's Justice Department
                           
let Ken and company keep the California loot, what
                           
about that state's own government? If you want 
to know how Californian's $9 billion went bye-bye, 
read on ...
 
 
WHEN
                           AHNOLD GOT LAY'D
[From Armed Madhouse , Greg Palast's new book out 06-06-06.  
Order it now at www.GregPalast.com]
 
Peninsula Hotel, Beverly Hills. May 17, 2001. The 
Financial Criminal of the twentieth
                           century, 
not long out of prison, meets with the Financial 
Criminal of the twenty-first century who feared 
he may also have to do hard time.
                           These two, 
bond-market manipulator Mike Millikin and Ken lay,
not-yet-indicted Chairman of Enron Corporation, were 
joined by a selected group of movers and 
shakers -- and one movie star. 
 
Arnold Schwarzenegger had been to such private parties 
before.
                           As a young immigrant without a nickel to his name, 
he put on private displays of his musculature
                           for guests 
of his promoter. As with those early closed gatherings, 
I don't know all that went on at the Peninsula Hotel 
meet, though
                           I understand Ahnold,_ this time, did 
not have to strip down to his Speedos.
                           Nevertheless, 
the moral undressing was just as lascivious, 
if you read through the 34 page fax that arrived at 
our office. 
 
Lay, who convened the hugger-mugger, was in a bit of 
trouble. Enron and the small oligopoly of other 
companies that ruled California's electricity
                           
system had been caught jacking up the price of power 
and gas by fraud, conspiracy and manipulation. A billion 
here, a billion there,
                           and pretty soon it was real money 
- $6.3 billion in suspect windfalls in
                           just six
months, May through December 2000, for a half-dozen 
electricity buccaneers, at least $9 billion for the 
year. Their
                           skim would have been higher but the tricksters 
thought they were limited by the number
                           of 
digits the state's power-buying computers could read. 
 
When Ken met Arnold in the hotel
                           room, the games 
were far from over. For example , in June 2003, Reliant Corporation
                           of Houston simply turned 
off
                           several power plants, and when California cities 
faced going dark, the company sold them a pittance of 
kilowatts
                           for more than gold, making several 
million in minutes. 
 
Power-market shenanigans were nothing new in 2000. 
What was new was the response of Governor Gray Davis. 
A normally
                           quiet, if not dull, man, this Governor 
had the temerity to call the energy sellers
                           "pirates_" -- 
in public! -- and, even more radically, he asked them 
to give back all the ill-gotten loot, the entire $9 
billion.
                           The state filed a regulatory complaint with 
the federal government. 
 
The Peninsula Hotel get-together was all about how to 
"settle"_ the legal actions in such a way that Enron and 
friends could
                           get the state to accept dog food 
instead of dollars. Davis seemed unlikely
                           to see things 
Ken's way. Life would be so much better if California 
had a governor like the muscle guy in the Speedos. 
 
And so it came to pass that, in 2003, quiet Gray Davis, 
who had the cojones to stand up to the electricity
                           
barons, was thrown out of office by the voters and 
replaced by the tinker-toy tough guy. The Governator
performed as desired. Soon after Schwarzenegger
                           took 
over from Davis, he signed off
                           on a series of deals 
with Reliant, Williams Company, Dynegy, Entergy 
and the other power pirates for ten to twenty 
cents on the dollar, less than you'd tip the waitress. Enron
paid just about nothing. 
 
 
Palast,
                           an internationally recognized expert on Enron 
and electricity market manipulation, is co-author of 
"Democracy
                           and Regulation," the United Nation's guide 
to control of the utility industry.  
 
Special
                           thanks to the Foundation for Taxpayer and 
Consumer Rights, Los Angeles, www.ConsumerWatchdog.org, 
who first uncovered the confidential Peninsula Hotel documents. 
 
View Palast's investigative reports for 
Harper's Magazine and BBC Television's 
Newsnight at
                           www.GregPalast.com.
 
 

 

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