As a Top Enron Exec Pleads Guilty, Journalist Robert Bryce Discusses the Death of Enron and the Firm's Close Ties to President Bush
Thursday, December 29th, 2005http://www.democracynow.org/article.pl?sid=05/12/29/151216
Enron's former chief accountant Richard Causey may now testify against Kenneth Lay and Jeffrey Skilling. We look at the fate of President Bush's biggest corporate campaign donor with the author of "Pipe Dreams: Greed, Ego, and the Death of Enron." [includes rush transcript]
Enron's former chief accountant -- Richard Causey -- has pleaded guilty to securities fraud. Causey was scheduled to go on trial next month along with Enron's founder Kenneth Lay and ex-Chief Executive Jeffrey Skilling. But now Causey is expected to cooperate with government prosecutors during the trial.
- Reid Weingarten, attorney for Richard Causey
ROBERT BRYCE: Well, here is one of the things that, you know, is still so galling to so many of the employees at Enron, was that the insiders, particularly the executives, were selling huge amounts of stock. And going back to Rick Causey -- I think this is one of the things that makes him an effective witness for the prosecution -- Causey was chief accounting officer. He sold $13 million worth of Enron stock. Well, that's nothing when you compare it to Ken Lay, sold $184 million worth of Enron stock. Jeff Skilling sold $70 million worth of Enron stock. And many of these sales were happening at the same time that Ken Lay was telling his own employees, ‘Oh, Enron is a great bargain. Buy the stock at this price.’ At the same -- in some cases, that very day, Lay was selling some of his own stock, because he wasn’t limited in the same way that the people who owned Enron stock in their pension plans were limited. So, Lay was in some cases saying one thing and telling employees to buy the stock, while he was, in fact, himself, selling it.
AMY GOODMAN: Robert Bryce, I want to thank you very much for being with us, Texas-based journalist covering U.S. energy issues, his books, Pipe Dreams: Greed, Ego and the Death of Enron and Cronies: Oil, the Bushes, and the Rise of Texas, America’s Superstate, joining us from Austin, Texas.
That was Richard Causey's attorney Reid Weingarten. Causey had been facing more than 20 years in jail but under the terms of the plea deal he will serve no more than seven. He also admitted that he and other Enron executives had made false public filings and statements.
Four years ago Enron filed for bankruptcy after years of defrauding its own employees and investors. The bankruptcy put over 4,000 people out of work. The value of the company's stock dropped from ninety dollars to about 30 cents. Thousands of Enron employees lost their lifesavings. The opening of Lay and Skilling's trial has now been pushed back to January 30. Up until yesterday, Causey's attorneys were working directly with them on a joint defense.
- Michael Ramsey, attorney for Kenneth Lay
It remains unclear how the upcoming trial will affect President Bush - who was closely linked to the Texas-based firm. The family of Enron founder Ken Lay was one of President Bush's biggest financial backers. It donated about $140,000 to Bush's political campaigns in Texas and for the White House. The president personally nicknamed Ken Lay "Kenny Boy." Overall Enron employees gave Bush some $600,000 in political donations. According to the Center for Public Integrity this made Enron Bush's top career donor - a distinction the company maintained until last year. Shortly after Bush took office in 2001, Vice President Cheney reportedly met with Enron officials while he was developing the administration's energy policies.
- Robert Bryce, investigative reporter based in Austin, Texas. He has been covering U.S. energy issues since 1989 and is the author of two books: "Pipe Dreams: Greed, Ego, and the Death of Enron" and "Cronies: Oil, the Bushes, and the Rise of Texas, America"s Superstate."
This transcript is available free of charge. However, donations help us provide closed captioning for the deaf and hard of hearing on our TV broadcast. Thank you for your generous contribution.
Donate - $25, $50, $100, more...
AMY GOODMAN: This is Causey's attorney, Reid Weingarten.
REID WEINGARTEN: To the extent he has any involvement in upcoming legal proceedings, he will do one thing: He will tell the truth, because that's who he is, that's what he should do, and that's what he is going to do. Thank you very much.
AMY GOODMAN: That was Richard Causey's attorney, Reid Weingarten. Causey had been facing more than 20 years in jail, but under the terms of the plea deal, he will serve no more than seven. He also admitted he and other Enron executives had made false public filings and statements.
Four years ago, Enron filed for bankruptcy after years of defrauding its own employees and investors. The bankruptcy put over 4,000 people out of work. The value of the company stock dropped from $90 to about 30 cents. Thousands of Enron employees lost their life savings. The opening of Lay and Skilling’s trial has now been pushed back to January 30. Up until yesterday, Causey's attorneys were working directly with them on a joint defense. This is Ken Lay's attorney, Michael Ramsey.
MICHAEL RAMSEY: Speaking for Ken Lay, it’s a tragic day for Mr. Causey. His heart goes out to Mr. Causey. Ken has been under the same stress that Causey has been under and can understand and sympathize with a man with a family who is broke, making peace with the government.
AMY GOODMAN: That was Ken Lay's attorney, Michael Ramsey. It remains unclear how the upcoming trial will affect President Bush, who was closely linked to the Texas-based firm. The family of Enron founder Ken Lay was one of President Bush's biggest financial backers, donating about $140,000 to Bush's political campaigns in Texas and for the White House. The President personally nicknamed Ken Lay “Kenny Boy.” Overall, Enron employees gave Bush some $600,000 in political donations. According to the Center for Public Integrity, this made Enron Bush’s top career donor, a distinction the company maintained until last year. Shortly after Bush took office in 2001, Vice President Cheney reportedly met with Enron officials while he was developing the administration's energy policies.
To talk about the latest news on Enron, we are joined from Austin, Texas, by investigative reporter, Robert Bryce. He has been covering U.S. energy issues since 1989. He’s the author of two books: Pipe Dreams: Greed, Ego, and the Death of Enron, and his latest, Cronies: Oil, the Bushes, and the Rise of Texas, America's Superstate. Welcome to Democracy Now!, Robert Bryce.
ROBERT BRYCE: Hi. Thank you for having me.
AMY GOODMAN: It’s good to have you with us. Well, let's start off with this latest development. Can you talk about Causey?
ROBERT BRYCE: Well, sure. Rick Causey was fairly typical of the accountants who went to work at Enron in that he came to Enron from Arthur Andersen, which was Enron’s longtime accounting firm. After working at Andersen for a time, then he agreed to come on full-time at Enron and then rose to the level of chief accounting officer.
As I write in Pipe Dreams, it was Causey who, according to my sources within Enron, was among the first to go to Jeffrey Skilling and say, ‘Look, we need to worry about our cash position.’ Companies go bankrupt because they run out of real money. They run out of cash, and that's, of course, what happened at Enron. Causey was among the first to go to Skilling and say, you know, ‘We’re not making enough real cash to keep the company going.’ And Skilling's response to Causey at that time was ‘Don't worry. We can always find cash. This isn't a big problem. You know, don't bother me with this.’
So Causey clearly, I think, in terms of now siding with the feds or agreeing to cooperate with the feds to get a lighter sentence is very bad news for Skilling, in particular, and Ken Lay, more generally, because he understands the situation from the inside out, and I think he would make a very credible witness.
AMY GOODMAN: Can you explain the rise of Enron, and what Enron is really being charged with now, and these chief executives, Skilling and Lay?
ROBERT BRYCE: Well, most of the charges for all of the executives at Enron have not been on -- necessarily on accounting fraud or on creating off-balance sheet issues. They have gone after these executives largely on the issues that are easier to prove -- securities fraud, wire fraud, mail fraud, these kinds of things -- because they are easier to explain to a jury. Going to a jury and trying to explain some very complicated off-balance sheet corporation and how, you know, they substitute warrants or stock warrants at given stock prices, and so on, is extremely complicated. So they have largely stayed away from those things.
But, briefly, to explain who Enron or how the Enron company came about, it really begins in the earliest days of the oil fields in Texas at Spindletop. In its very early days, Enron was an oil company. It then got into the pipeline business. It changed its name in the 80s and became Enron. And then, under Lay and Skilling, it really became a trading company. Before it went bankrupt it was trading in hundreds of different commodities, from copper and steel to paper and oil and natural gas, and ultimately, as I’ve written several times, that trading business became so unwieldy and really was unprofitable that that was one of the key reasons why the company failed.
AMY GOODMAN: Can you now put it in the context of the rise of the Bushes in Texas? In your book, Cronies: Oil, the Bushes, and the Rise of Texas, America’s Superstate, you really paint a picture of how they are all intertwined.
ROBERT BRYCE: Well, sure. One of the reasons I wrote Cronies was simply because it was, as I finished my book on Enron, I thought, well, what made Enron so powerful, and it was that it was an energy company. I mean, this was the premiere, most famous, most powerful energy company in Houston, which, of course, is the center of the global energy business. So, the rise of Enron was a reflection of the go-go style in Houston and, of course, the Bushes were in Texas largely because of the energy business. George Bush, Sr., of course, was in the oil business, as was George W. Bush.
And recall that Enron had a hand in many of the Bushes' efforts to get into public office. Ken Lay was one of the first donors to George H.W. Bush's campaign when he made his first run for president. When George W. Bush ran for governor, one of his first stops was at Enron, and he convinced Rich Kinder who was, at that time, Enron’s president to be his finance chair in Harris County, where Houston is located. So, Enron and the Bushes have -- I think it’s safe to say that no other company in America had closer ties to the Bushes when George W. Bush decided to run for president in the 2000 campaign and, in fact, the overall numbers for George W. Bush's campaign in 2000 from Enron, the total contributions to both his personal campaign and to the Republican National Committee, was well over a million dollars, and that money bought Enron then, in the first Bush administration, unprecedented access.
AMY GOODMAN: You also talk about another person of certainly a powerhouse in Texas, Tom DeLay, about his rise in Texas and how this all connects.
ROBERT BRYCE: Sure. Well, DeLay, like the Bushes, he is from -- his hometown is Sugarland, where a lot of oil money is concentrated, and DeLay, like the Bushes, has relied on the energy business, petrochemical refining businesses, for a lot of his campaign money, and that’s just -- I mean, that's the way it works in Texas. Texas has long been a dominant state when it comes to energy politics. It still is. Texas still continues to produce more oil and natural gas, refine more oil and natural gas than any other state in America, and that power -- it’s been that way for decades, and I think it will likely stay that way for decades. And that means it’s a source of campaign funds for politicians.
AMY GOODMAN: And what about James Baker and how he fits into this picture about oil, the Bushes, the rise of Texas? And also relate it to Enron.
ROBERT BRYCE: Well, I mean, Baker doesn't have many ties to Enron that I know of. But what is interesting about James Baker and Baker Botts is that Baker Botts now represents Halliburton. Baker Botts has been representing Halliburton for several years now. So we have Baker Botts and James Baker playing multiple roles, in terms of dealing with the federal government on issues of substantial policy. You have James Baker's firm representing Scooter Libby in his trial. A lawyer from the Washington office of Baker Botts is representing Libby at the same time that it’s representing Halliburton. So you have these multiple connections that are, I think, indicative of the kind of influence that Baker Botts has had within the Bush administration, this current Bush administration, the prior Bush administration, and really, in terms of Texas history, Baker Botts’s history and its history of influence goes back to the days of big railroads.
AMY GOODMAN: Do you think, Robert Bryce, that President Bush would have become governor and then president if it weren’t for Enron?
ROBERT BRYCE: That’s a good question. I think given his last name, in Texas he was going to succeed regardless of how powerful or rather how popular Ann Richards was at the time. His name was George Bush, and that’s always been his, I think, his most bankable commodity. So, in Texas, I think that he clearly would have become governor whether Enron was in the picture or not.
As far as being president, I think that’s also a little bit hard to say. Of course, with the 2000 election disputed with Baker Botts, in fact, riding to the rescue -- James A. Baker III riding to the rescue in the Florida recount, sending his own lawyers from Baker Botts to fight key legal battles during the recount effort. I think, in some ways, Baker Botts was more important to Bush's campaign in 2000, ultimately, than Enron. That said, Enron was a key supplier of airplanes to Bush’s campaign and was a huge donor. So, clearly, I mean, these are key players in the rise of the Bushes.
AMY GOODMAN: And one of the things you point out in Cronies is when President Bush was running for governor and then was re-elected as governor, he was raising millions, many more millions than he actually needed, especially in the second campaign. And so he had a war chest after his second gubernatorial campaign.
ROBERT BRYCE: Sure. And that was one of the key reasons why Bush, once he actually began as a formal candidate for president, he had such a commanding advantage over his other potential opponents. He could look at his war chest and say, “Don't even try it. I’ve got too much money, I’ve got too much power, I’ve got too many people backing me already to allow any viable candidate to come up and oppose me.” So, clearly, that ability to raise vast amounts of money while he was governor during his second term was a key to his successful presidential campaign then in 2000.
AMY GOODMAN: Robert Bryce, we have to break. When we come back, I want to ask you about the workers at Enron and what has happened to them. Robert Bryce is a Texas-based journalist. He’s joining us from Austin. Author of Pipe Dreams: Greed, Ego and the Death of Enron. His latest book is Cronies: Oil, the Bushes, and the Rise of Texas, America’s Superstate.
AMY GOODMAN: We are talking to Robert Bryce, Texas-based journalist covering U.S. energy issues. His latest books: Pipe Dreams: Greed, Ego and the Death of Enron and Cronies: Oil, the Bushes, and the Rise of Texas, America’s Superstate. The workers at Enron, Robert Bryce, can you talk about them and what has happened to them?
ROBERT BRYCE: Well, I mean, some of them have gone on and found other jobs that pay well and have been quite successful. But, you know, I just had lunch in Houston a few weeks ago with a gentleman who is a little older than I am, in his 50s; he can't find work. He is very qualified, spent decades in the energy business, but having Enron on his resume has been really a limiting factor in his ability to find work. He has lost his pension. He’s, you know, he’s getting by, but he’s not happy. He doesn’t have satisfying work.
AMY GOODMAN: Can you talk about that, the loss of the pensions? What happened to the workers' pensions? How many were there, by the way?
ROBERT BRYCE: Well, there were thousands. I don't know the exact number, but, I mean, these were people who -- in fact, one of the people that I write about in Pipe Dreams, Sherry Saunders, a wonderful woman who worked as a secretary, never made the big money at Enron, she had all of her -- virtually all of her pension tied up in Enron stock, and as we know, Enron, while its stock was in freefall in the summer and fall of 2001, it locked its pension so that no one could sell Enron stock that was a company employee. So, she sat by helplessly and watched her pension shrink from, you know, tens of thousands of dollars down to single digits. When the pension plan was finally unlocked, she was able to manipulate it herself, but the damage had been done. So here is a woman who is married, you know, has been married for a while, but she has no savings, and so she’s going to be working probably until the day she dies. But that’s not an uncommon story.
AMY GOODMAN: Robert Bryce, can you remind us what happened when Enron was in freefall, the issue of investing in the stocks, what the executives did and what they told the workers, and what the workers did?