Ken Lay convicted--Greg Palast
Lay Convicted, Bush Walks (and Arnold Gets Lay'd)Special For TruthoutWednesday, May 24, 2006by 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 sixmonths, 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 Governatorperformed 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. Enronpaid 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.
