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Archive for May 21st, 2021|Daily archive page

DE-REGULATION: LET PREDATORS BE PREDATORS

In Bureaucracy, Business, History, Law, Law Enforcement, Politics, Social commentary on May 21, 2021 at 12:09 am

This December 2 will mark the 20th anniversary of the death of a criminal empire. An empire that almost destroyed the Western United States.

The Enron Corporation.

Based in Houston, Texas, Enron had employed 22,000 staffers and was one of the world’s leading electricity, natural gas, communications and paper companies.

In 2000, it claimed revenues of nearly $101 billion. Fortune had named Enron “America’s Most Innovative Company” for six consecutive years.

But then the truth emerged in 2001: Enron’s reported profitability was based not on brilliance and innovation but on systematic and creative accounting fraud.

And, on December 2, 2001, Enron filed for bankruptcy under Chapter 11 of the United States Bankruptcy  Code.

Enron’s $63.4 billion in assets made it the largest corporate bankruptcy in U.S. history—until WorldCom’s bankruptcy in 2002.

The California electricity crisis (2000-2001) was caused by extortionate market manipulations and illegal shutdowns of pipelines by Texas energy companies.

California suffered from multiple large-scale blackouts. Pacific Gas & Electric, one of the state’s largest energy companies, collapsed, and the economic fall-out greatly harmed Governor Gray Davis’ standing.

The crisis was made possible by Governor Pete Wilson, who had forced the passage of partial de-regulation legislation in 1996. 

Enron seized its opportunity to inflate prices and manipulate energy output in California’s spot markets. The crisis cost the state $40 to $45 billion.

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The true scandal of Enron was not that it was eventually destroyed by its own greed.

The true scandal was that its leaders were never Federally prosecuted for almost driving California—and the entire Western United States—into bankruptcy.

Under the pro-oil company administration of George W. Bush, no such prosecutions ever occurred. But Americans had a right to expect such redress under “liberal” President Bill Clinton.

Once the news broke that Enron had filed for bankruptcy, commentators almost universally oozed compassion for its thousands of employees who would lose their salaries and pensions.

No one, however, condemned the “profits at any cost” dedication of those same employees for pushing California to the brink of ruin.

To put this in historical perspective:

  • Imagine a historian writing about the destruction of Adolf Hitler’s Schutzstaffel (Guard Detachment), or SS, as a human interest tragedy.
  • Imagine its Reichsfuehrer, Heinrich Himmler, being blamed for failing to prevent its collapse—as CEO Kenneth Lay was blamed for Enron’s demise.
  • Imagine that same historian completely ignoring the horrific role the SS had played throughout Nazi-occupied countries—and its primary role in slaughtering six million Jews in the Holocaust.  

Nor did anyone in the media or government declare that the solution to such extortionate activity lay within the United States Department of Justice via RICO—the Federal Racketeer Influenced Corrupt Organizations Act.

Seal of the United States Department of Justice.svg

Passed by Congress in 1970, this was originally aimed at the kingpins of the Mafia. Since the mid-1980s, however, RICO has been successfully applied against both terrorist groups and legitimate businesses engaged in criminal activity.

Under RICO, people financially injured by a pattern of criminal activity can bring a claim in State or Federal court, and obtain damages at three times the amount of their actual claim, plus reimbursement for their attorneys’ fees and costs.

Such prosecutions would have pitted energy-extortionists against the full investigative might of the FBI and the sweeping legal  authority of the Justice Department.

Consider this selection from the opening of the Act:

(1) “racketeering activity” means (A) any act or threat involving…extortion; (B) any act which is indictable under any of the following provisions of title 18, United States Code: sections 891-894 (relating to extortionate credit transactions), section 1343 (relating to wire fraud)Section 1344 (relating to financial institution fraud), section 1951 (relating to interference with commerce, robbery, or extortion), section 1952 (relating to racketeering)….

With the 20th anniversary of Enron’s demise coming up, the mantra of “de-regulation” should be ruthlessly turned against those who have most ardently championed it.

Republicans have ingeniously dubbed the estate tax—which affects only a tiny minority of ultra-rich—“the death tax.” This makes it appear to affect everyone.

With the 2022 midterm elections fast approaching, Democrats should recast de-regulation thus:

“Greed Relief” 

“Greed Protection” 

“Legalized Extortion” 

And here are some possible slogans: 

“The Energy Industry: Giving You the Best Congress Money Can Buy.” 

“De-regulation: Let Criminals Be Criminals.”

The coal industry has pumped millions into TV ads touting the non-existent wonders of “clean coal.” And Chevron has spent millions assuring us that all its profits go strictly toward making the world a better place for others. (Presumably not a penny is left for its altruistic executives.)

When faced with such outright lying by the most vested of financial interests, it’s well to recall the warning given by Niccolo Machiavelli more than 500 years ago:

All those who have written upon civil institutions demonstrate…that whoever desires to found a state and give it laws, must start with assuming that all men are bad and ever ready to display their vicious nature, whenever they may find occasion for it.  

If their evil disposition remains concealed for a time, it must be attributed to some unknown reason; and we must assume that it lacked occasion to show itself. But time, which has been said to be the father of all truth, does not fail to bring it to light.

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