The Whistleblower #5
Foundation for Taxpayer & Consumer Rights Corporateering
  Home | Volunteer | Donate | Subscribe | FTCR Websites | Books | Site Map   
Main Page
Press Releases
In the Media
The Whistleblower
Meet Our Staff
Books from FTCR
Job Opportunities
 - Corporate Accountability
 - Healthcare
 - Insurance
 - Citizen Advocacy
 - The Justice System
 - Billing Errors
 - Energy

home / ftcr / the whistleblower

The Whistleblower

The Whistleblower #5 - Feb 25, 2002

Less bull from the marketers. Although it was obvious during the height of the California electricity crisis that power companies and traders were making a killing from manufactured supply shortages, industry shills liked to claim that they were just trying to keep the lights on. But an online trade journal recently published a more candid view of how the mind of an electricity trader works. According to Energy Info Source: "Marketers were thrilled at the prospect of over one thousand megawatts coming offline at once," referring to the temporary shutdown of Washington state's nuke plant 10 days ago. The shortage was "bullish news," one industry insider was quoted as saying. As long as energy remains deregulated, the power traders will want shortages.

Does Governor Davis finally see the forest? On June 14, 2001 we pointed out that the Governor's long-term energy contracts should be invalidated (see Bailout Watch #53). These contracts were negotiated with power companies that had the state over a barrel as a result of the deregulation debacle. The contracts do not meet the federal legal standard that says that prices must be just and reasonable. After months of waffling on these power contracts, on Sunday Governor Davis announced he would request that federal regulators throw out the contracts. Separately, last Friday the head of the state's grid operator called on the feds to extend the price controls over wholesale power that were an important part of stanching the Cal. energy crisis last year. (Federal Energy Regulatory Commission chairman Pat Wood, recently called for the end of the price caps.) The abrogation of the contracts and the extension of price controls would place California on the path out of the deregulation disaster.

The Bank of Enron. Until recently, it was believed that during 2001, Enron chief Ken Lay sold $20 million worth of Enron stock before the company tanked. That's the amount disclosed through requisite insider trading filings. But Enron advanced Ken Lay millions more as part of a revolving credit card program, in which the company would loan him $4 million (at one point he received four such loans in one week), and he would immediately repay the company with Enron stock. Thus, Ken Lay dumped an additional $70 million dollars worth of Enron stock last year, according to a New York Times report. Had Lay sold these shares on the open market, as he had with the previously reported $20 million worth of Enron stock, he would have been required to disclose the sale within weeks of the transaction. Since, instead, the stock was sold back to the company to repay the loans, disclosure was not required until this year. That gave Lay plenty of time to convince investors that the company was still strong without them realizing that the captain was jumping into the last lifeboat.

Enron's enablers. Some of the largest banking firms privately claim to have been bullied by Enron, according to the Houston Chronicle. First Union Corp., Chase, Bank of America, and Credit Suisse/First Boston supposedly felt "pressured" by Enron officers, who the bankers described as "threatening," to invest in the shady private partner companies known as special purpose entities, or else be blackballed from lucrative bond deals. One firm called the behavior "improper," and refused to take part. But did any of these companies report Enron to regulators? On the contrary, most went along with the racket and ponied up the investments. And none, as far as we can tell, reported the behavior to regulators. Like the Enron employees hailed as "whistleblowers" who only went public after the damage was done, the banks probably expect to find a shoulder to cry on if they ever make public their private allegations. But if it comes out that these banks knew of illegal behavior and did nothing, then they should be prosecuted as accessories to Enron's crimes.

Family ties to Enron. Florida Gov. Jeb Bush invested in one of Enron's infamous partnerships before he was governor, raising a question: did brother George invest in any of the shifty schemes? How about Mom and Dad? Previously, The Whistleblower asked if Enron partnership investments is the reason VP Cheney has refused to talk about his meetings with Ken Lay (WB#1).
The Foundation for Taxpayer and Consumer Rights (FTCR) is a non-profit, non-partisan advocacy organization. For over a decade FTCR and its advocates have exposed and challenged injustices that betray the public trust. The Whistleblower newsletter addresses core issues of the corporate and governmental crises of today and blows the whistle on the brewing fiascos of tomorrow. FTCR does not take a position on candidates for any elected office.
For more information about FTCR's work, to DONATE, to join the fight, or to comment, visit our web site at 310-392-0522 xt.309.
2002 FTCR

back to top

©2000-2004 FTCR. All Rights Reserved. Read our Terms of Use and Privacy Policy | Contact Us