Enron And The Obama Scandals

One of the things that has always perplexed me about the Enron story is how little skepticism the public and the press have shown toward the misconduct of the Feds, even in the face of obvious evidence of such abuse. For example, Enron Task Force (ETF) prosecutor, John Kroger, admitted in writing that the ETF was told to “get scalps quickly” and that the Feds used “questionable tactics” in attempt to do so. For heavens sake, on the witness stand, under oath, defense witness Larry Ciscon told the court and the jurors that he had been threatened by the federal prosecutors in at attempt to prevent him from testifying.

Well, for all those people who seem to trust the Feds more than businesses and private individuals, I assume that the recent avalanche of scandals in the federal government is making you reconsider. Among the recent spate of revelations are these:

The DOJ accused a journalist of being a criminal simply for doing his job (as they did to lots of Enron executives).

In violation of legal process, the DOJ secretly seized two months of phone records from at least twenty AP journalists without notifying the AP.

The IRS targeted conservative groups in a systematic scheme to prevent them from getting non-profit status.

The White House and the State Department not only held back information about the Benghazi terrorist attack from the press and public, they also allowed inaccurate information to be repeatedly disseminated.

Whether you consider these actions intentional wrongdoing or colossal incompetence, they should, at a minimum, make every American skeptical of the federal government. The kind of arrogance we see in these scandals is exactly like the arrogance we see in the federal government’s systematic misconduct during the Enron prosecutions.

As I have written before, it is sickening how selective people are about their outrage over injustice. When the injustice affects people or organizations they care about, they are huffy with indignation. But when the injustice affects people they don’t care about, they see it as “no big deal”. I guess this is just one of those sad aspects of human behavior.

Pre-Order At Any Cost on iTunes

Squeee! Just in time for the weekend, my first print book, At Any Cost, is now available to pre-order on iTunes! The release date in May 28. (Oh. Mah. Gawd. I’m all twitterpated from the excitement!)

Enron Task Force Record Worsens

In light of Jeff Skilling’s pending plea deal, it is time to update this 2009 article, The Complete Humiliation of the Enron Task Force. Things have gotten worse for the prosecutors of the Enron Task Force and their successors in the Department of Justice since that article was published.

We now know that the Feds have managed to achieve only one conviction at trial that has held together without reversal — that of Jeff Skilling. And Skilling has already had one of his counts dismissed outright and was planning a motion for dismissal of all counts and a re-trial based on prosecutorial misconduct. I suspect that the strength of that motion is why the Feds have agreed to a deal that will reduce Skilling’s sentence by more than half.

I need to double check my numbers, but if you score this in terms of number of defendants tried, the record or trial wins is something like Enron 22, Feds 1 (if I give the Feds full credit on Skilling). If you score this in terms of counts tried, the record is even worse, something like Enron 400, Feds 18 (all Skilling).

So, this is what the Feds have achieved after spending tens of millions (at least) of taxpayer funds and, worse, after hounding innocent people for years. Now, I bet that the majority of the people reading this post are surprised by this record because it does not fit into the simplistic Enron narrative that we have been fed by most of the media.

Now, come on, Enron haters, doesn’t that record make you at least a little bit skeptical? Doesn’t it make you want to learn more about the real Enron?

The Cost of Criminalizing Business Decisions

The topic of criminalizing business decisions has been elegantly addressed by many professionals, including Tom Kirkendall on his his blog, Houston’s Clear Thinkers — here is one example of his excellent posts on the topic. Although the human costs are staggering (see for example, this earlier post on this blog), the financial costs can also be huge. The pending Jeff Skilling plea deal highlights how even American taxpayers lose out when the federal government indicts executives for business decisions instead of actual crimes.

Apparently, the Skilling plea deal would require Skilling to play a penalty of $40 million. This is a staggering sum of money, but how does it compare to taxpayer funds the Feds spent in getting it? Well, I have been trying to ascertain what the government actually spent on the Enron prosecutions for a long time — the Feds do not report such costs, so I have had to use the best estimates I can get from people familiar with the process and the Enron cases. Conservative estimates put the cost to the American taxpayer of the Skilling prosecution at a sum of at least twice what the Feds are recovering from Skilling. I wonder if the Enron bashers feel that this was taxpayer money well spent?

The reason the Skilling case was so costly to the taxpayer is not because Skilling could afford good attorneys — lots of people have good attorneys. The reason it was so expensive is because the government had no real criminal case. Lacking criminal wrongdoing, the Feds were reduced to trying to criminalize Skilling’s business decisions. That was an expensive undertaking because it consisted of a contrived case full of prosecutorial misconduct and legal shortcomings that made it open to rational appeals which, in turn, gave Skilling leverage in negotiating his plea deal.

Indeed, as best I can estimate, all the Enron-related cases that went to trial cost the Feds much more than they recovered in penalties from the defendants. So, not only is the human cost of indicting innocent men staggering, but so is the cost to the American taxpayer.

10 Reasons Why Houston (And America) Still Cares About Enron

I mentioned the strange article, “Ten Reasons Houston No Longer Cares About Enron”, in this previous post. The author of that article reminds me a bit of Hillary Clinton saying, “Why does it matter?” about the four Americans killed by terrorists in Benghazi. None of that author’s ten reasons have much to do with the topic of Enron directly — his attitude seems to be, “I don’t care about Enron, so I’m just not going to think about it.”

First, it is easy to show that Houston does, in fact, still care (a lot) about Enron. In addition, the shallowness of that article is a great reminder of why we should care even more about Enron than we do — the last thing we want is that kind of hollowness to be the only lessons we learn from Enron.

So here are my “Ten Reasons Why Houston (and America) Still Care About Enron”:

1. Houstonians are demonstrably interested in Enron. I’m not sure who the writer of that article hangs with, but my friends in Houston tell me that the topic of Enron comes up constantly, in a variety of contexts, in day-to-day conversations. Enron is a ubiquitous topic in Houston.

2. If this blog is any indication, interest in Enron has broadened with time rather than contracted. I now have more readers from more places, asking better questions than ever before.

3. Few people really know much about the real Enron — most people, such as the writer of that article, seem to have been taken in by the Enron Myth. We are now beginning to see the stirrings of the deconstruction of that hollow narrative — this new, more skeptical analysis of Enron makes the topic seem fresh and new.

4. A new generation of Americans is taking on the topic of Enron. I am being contacted by more and more university students seeking information about Enron for class projects and theses, and these people are less mired in the false Enron Myth than the previous generation.

5. With the passage of time, the Feds are losing their stranglehold on the participants in the Enron prosecutions. Enron defendants, attorneys, witnesses, and others are slowly emerging to finally tell us the real story of the Enron prosecutions. I personally know of a number of projects quietly underway. I think we will see a renaissance of information about Enron within the next few years that will enlighten us all.

6. Witch hunts are always important to remember and to teach. The story of the Enron Task Force, the coven of federal prosecutors who used “questionable tactics” (this is prosecutor John Kroger’s own words), has not been told. But as the American public is becoming more willing to address the topic of prosecutorial misconduct, a whole new aspect of the Enron story is emerging.

7. There are victims of the Enron witch hunt whose stories have not been told. Their stories are compelling, and people will most definitely be interested in what they have to say as they begin to speak out.

8. Enron is not a single story. There were several different Enron prosecutions, each with its own background and storyline. For example, Enron Broadband Services (EBS), in some ways the most interesting of all the Enron-related tales, is all but unknown to the American public. I predict that people are going to find the EBS saga fascinating as that story is finally told by its participants.

9. Enron lives on in Houston and America in the many businesses who have adopted business models, products, services, and technologies pioneered by one of the Enron business units.

10. The topic of Enron still fascinates. The name is well known, even if the actual facts of the Enron story are largely unknown to people. Mention Enron, in almost any setting, and you will get an attentive audience. Tell that audience a few actual facts about Enron, and you will get a fascinated audience. People are attentive when they begin to learn that they have been hoodwinked and misled. As the real story of Enron emerges, any loss of interest will quickly reverse.

Bonus point: Enron is important. Check out this recent blog post to see the many ways in which this is so.

I suspect that I am preaching to the choir to the readers of this blog. The very existence of this blog and its readers are evidence that America still cares about Enron.

10 Reasons Houston Doesn’t Care About Enron Anymore

Forbes has published an article titled Why Houston Doesn’t Care About Enron Anymore.

On the face of it, it is good news. It’s over: hooray! But there are also some really cruel remarks about Ken Lay, which are just inappropriate.

Houston healed up, as did the rest of the country, so I guess we can all put away our Ask Why stickers and go home. Oh, except for the Jeff Skilling and the other innocent people who went to prison for nothing more than the aggrandizement of the DOJ.

Time does heal the collective. We don’t sit around and bawl our eyes out over 9/11 every day, or malinger over a loved one who passed away when we were 6 years old. But the individuals of the injustice – Jeff Skilling, Rex Shelby, Scott Yeager, Andy Fastow and many others – can hardly be expected to simply shake it off. It is their life we’re moving on from, and whatever scars they have won’t go away so easily.

The world really is moving on. I was a decade younger when I began writing about Enron, and I am not the same person I was. Yet the agony and injustice of it still eats at me. That angst is precious to me; it is what I have instead of justice. It reminds me of how brilliant some human beings are, and what can be accomplished with skill and competence instead of glamour and glitz. It motivates me to do better. To reach farther. And it reminds me to quietly whisper to myself, every once in a while, “fuck the police.”

How Time Off Works

I was chatting about Jeff Skilling with an Enron exec who has served time in prison and this is what he told me about prison’s time off system:

You get 12.5% (not 15% as widely reported) off for good time behavior, one year off for the drug program, and usually up to six months off (although it can be up to one year) for the halfway house. So, if re-sentenced to 14 years, he has about 4.25 years in prison remaining.

For the love of fruit loops, this is crazy. To think Jeff has already spent so much time behind bars, and he has to spend even more… it just feels so infuriatingly wrong.

However, I don’t think he could have done any better. I’m just not sure the DOJ would have bent much more than they did; they have to save face.

Meanwhile, at least Jeff Skilling now has a horizon. He knows there is an end to this madness.

My friend also mentioned:

He will be eligible to move to prison camp now, which will make it much better for him and for anyone that visits. But the pain comes from the separation, not from the conditions.

That last line has stuck with me all day. It hurts more every time I look at it.