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22 January 2001

Guess who’s going to Dubbya’s party . . .

The US Presidency - Guess who's going to Dubbya's party . . . but they'd have been there fo

By Nick Cohen

The contest for the title “The World’s Worst Corporation” is stiff, and different judges will take different views of the competing merits of arms manufacturers, tobacco barons, the life-denying pharmaceutical companies and the infotainment monopolists in my own trade of journalism. As the members of every Booker jury know, picking a winner is an invidious task. If, however, you were forced to select one firm that made paranoid suspicion seem mild and reasonable, Enron of Houston, Texas, would demand your attention.

The angriest Seattle protester could not have invented a firm that better connected the greed of the first world to the exploitation of the third; the groovy PR of the “new economy” to lamentable service in the real one. The energy conglomerate Enron has the distinction of being the subject of Amnesty International’s sole condemnatory report on a corporation as opposed to a government.

California is staring at the hitherto unthinkable prospect of electricity blackouts because of a deregulation of its utilities that brought lavish profits to Enron and its competitors. Enron has been cursed in Bombay, San Diego, Shepton Mallet and many points in between. But the criticisms are rarely echoed in ruling circles.

Governments adore Enron, and the affection is reciprocated. Enron is the global leader in the political “influence” market.

George W Bush’s inauguration will be a corporate triumph. Kenneth Lay, Enron’s chief executive, has given $100,000 (£66,000) towards the cost of the bash, as has Jeff Skilling, the company president, who once told delegates to a management conference to: “Cut costs ruthlessly by 50 or 60 per cent. Get rid of people. They gum up the works.”

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Enron’s financing of the presidential celebration is merely the icing on a very large cake. Lay and Skilling took $330,000 from their personal fortunes and stuffed it into the pockets of the Republican Party during the campaign, the Washington Post reported. Enron added $620,000 from company funds. Its corporate jets were at the candidate Bush’s disposal. When the new president tours the tables of well-wishers – the minimum price for a seat was $25,000 – he will have a convivial word for Lay and Skilling as they lay off munching the hors d’oeuvres to gaze into the confused eyes of the new leader of the world.

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Bush has shown his respect already. After the American Supreme Court decided that, the popular vote notwithstanding, Bush should inherit his father’s throne, the president-elect invited three dozen corporate backers to an opulent Houston hotel. Lay and the rest agreed absolutely that their country faced disaster unless the taxes of the rich were cut.

Bush had assured them previously that he would “work with local jurisdictions using market-based solutions and not try to sue our way or regulate our way to clean air and water”. The American pressure group Corporate Watch has demonstrated why these sentiments endear him to Lay and Skilling. While he was governor of Texas, Bush gave energy-producers exemptions from environmental regulations. Those who suspected they had been afflicted by foul air were denied access to corporate documents that would support a claim for compensation. The Texas Natural Resource Conservation Commission says that Enron has claimed five immunities from prosecution for its plants.

So far, our story has had a predictable ring. Dumb Dubbya relies on multinationals to tell him what to do. Right-wing corporations buy a right-wing president and receive the most sympathetic of hearings in return. Isn’t this what Al Gore’s supporters were warning about when they told the followers of Ralph Nader not to hand the election to Bush?

Yet Enron is not prejudiced. It is not some reactionary ogre that Third Wayers can use to frighten their supporters back into line on election day, but a thoroughly consensual corporation. It will pay the campaign costs of all politicians and not be bothered by their trivial party labels. Nothing better illustrates the truth of the maxim that big business will win however you vote than Enron’s embrace of bipartisanship.

As well as picking up Bush’s bills, Enron gave $520,000 to the Gore campaign. In the 1990s, Bill Clinton invited Lay to be his golfing partner and ordered Mack McLarty, his chief of staff, to do all he could to support Enron. The president’s wishes were obeyed. Mozambique’s minerals minister said the Democrats had threatened to withdraw all aid if he did not allow Enron to exploit natural gas reserves. In the 1996 presidential campaign, Enron slipped Clinton $142,000.

From Britain, Enron has plucked Lord Wakeham, the former Conservative Secretary of State for Energy, and put him on its board. The old Tory is another bipartisan figure. He was asked by Tony Blair to investigate reform of the House of Lords, and produced reasons to deny the British an elected second chamber which were just what Downing Street wanted to hear. (Wakeham also chairs the Press Complaints Commission, which tells you a lot about the standard of self-regulation in Fleet Street.)

Enron sponsored the 1998 Labour Party conference, during which time the government was considering whether to block its plans to take over Wessex Water. The party’s subsequent annual report contained the cryptic statement that Enron had given it “£5,000 or more”. The Queen has been obliged to bestow her gracious recognition on Bush’s friends. In the New Year’s honours list, she elevated Ralph Hodge, the head of Enron’s European division, to the rank of Commander of the British Empire.

Enron says it merely wishes to support friendly politicians in a spirit of altruism. Cynics remain free to wonder why its favours are spread so liberally, and why it hired Karl Milner, a new Labour lobbyist who boasted of his access to confidential documents on energy policy, to help it woo the government. Even if we accept that new Labourites and old Conservatives would join new Democrats and old Republicans in doing what Enron wanted without receiving wheelbarrows filled with notes, Enron’s strange craving for the company of politicians still needs to be explained.

We are always being told that globalisation has stripped elected representatives – and, by extension, their electorates – of the power to control economies. We rarely hear the caveat that politicians are essential to corporations. Who else can hand them control and allow them to keep it? Governments and the World Trade Organisation must continue to force the sale of public utilities and to lift the burden of regulation if shareholder value is to keep growing.

Lay and Skilling could not have produced a turnover of $40bn last year without help. They have transformed Enron from a boring, old-economy supplier of electricity, gas and water into an exciting, wired-world dealer in derivatives. The firm makes billions by brokering packages of energy on the internet. Purchases can be hedges for buyers against violent changes in the weather – a cute example of a power company profiting from the global warming its core business exacerbates. Or they can offer a solution to energy shortages. (An American electricity supplier facing a surge in demand, for example, can log on to Enron and buy electricity to plug the gap.) And the market provides opportunities for pure speculation in energy futures.

Enron’s embrace of online dealing has brought delighted whoops from the boosters who puffed up the Wall Street bubble. “Imagine a country-club dinner dance, with a bunch of old fogeys and their wives shuffling around half-heartedly to the not-so-stirring sounds of Guy Lombardo and his All-Tuxedo Orchestra,” dribbled Fortune magazine. “Suddenly young Elvis comes crashing through the skylight. Half the waltzers faint . . . a very few decide they like what they hear, tap their feet, start grabbing new partners, and suddenly are rocking to a very different tune. In the staid world of regulated utilities and energy companies, Enron Corp is that gate-crashing Elvis.”

Enron’s website ( tops Fortune‘s gushes. It features a cool dude bellowing “Why?” at purblind politicians who wilfully refuse to deregulate or acknowledge that public “monopolies only see electricity as a way to light offices and power factories. WHY?”

California can provide good reasons for sticking in the old mud. In 1996, the state deregulated power supplies without a murmur of opposition from Republicans or Democrats. The centre of the net mania, the most hi-tech economy in the world, is in an extraordinary crisis as a result.

Prices have tripled in San Diego and other cities, and consumer activists are organising a “can’t pay/won’t pay” campaign. The state’s electricity bill has risen by $10bn in a year. Silicon Valley’s net wizards are threatening to emigrate because of the price hikes and the likelihood that power cuts will stop their terminals purring. The state’s electricity suppliers are on the edge of bankruptcy. They had produced and distributed power until deregulation compelled them to buy electricity on an “open” market dominated by Enron and a few other energy conglomerates at prices they could not afford or pass on in full to their customers. Enron’s profits have rocketed. California’s governor doesn’t know what to do apart from wail that deregulation has been a “colossal failure”.

Even Lay is getting nervous and calling on Bush to prevent the California power disaster discrediting deregulation as thoroughly as the privatisation of British Rail discredited privatisation in the UK.

At least the angry Californians can calm themselves with the thought that they have not been battered by the police. Hundreds of Indians have no such consolation.

Enron was denounced by Amnesty and Human Rights Watch after it built a power station at Dabhol near Bombay. I should mention, in passing, that the World Bank has said that the plant charges three times as much for electricity as suppliers in other Indian states. But it is not the prices that have provoked outrage. Villagers complained that their fisheries were being wrecked by Enron’s discharges. Ataman More described what happened when they took their grievances to Dabhol. “We told the police that we were peaceful demonstrators and would go to hold our rally. The police fired tear gas and lathi-charged us.” Women in their eighties were beaten and dozens were taken prisoner and held in the Enron site, which at this, and 30 other demonstrations in 1997, doubled as a private prison.

Indian law allows companies to hire police officers. Enron bought them at $2.50 per cop per day. They raided villages while the men were at sea and terrified women and children. When Professor Sadanand Pawar criticised the corporation, a police inspector threw him in a stinking jail and told him: “If you want to agitate, you must face these things.”

Human Rights Watch concluded: “The company, under provisions of law, paid the abusive state forces for the security they provided to the company . . . [and] refused to acknowledge that its contractors were responsible for criminal acts and did not adequately investigate, condemn or cease relationships with these individuals.”

Naturally, Enron’s behaviour provoked a scandal. The then US ambassador, Frank G Wisner, put enormous pressure on New Delhi to stop Enron being thrown out of the country. He succeeded and was given a seat on the Enron board when he retired.

In Britain, new Labour approved Enron’s takeover of Wessex Water with a shrug. Prices for consumers rose by 30 per cent. Wessex came fourth in the Environment Agency’s 1998 “polluters league of shame”, after sewage spilled into the Sheppey downstream from Shepton Mallet and diesel seeped into the chalk and contaminated Dorset’s water supply.

New Labour didn’t notice and went on to extend the company’s service from the water to the power market. Enron executives were worried by the government’s promise to help the coalfields by placing a moratorium on gas-fired stations.

Milner told them in a conversation leaked to the Observer that they had to respond by playing on “prejudices within the Cabinet for coal” and “prejudices with-in the Cabinet for competition”.

“You play the forces off against each other. It’s intimate knowledge of what’s going on that produces results in the end,” said Milner. The game was won, and the gov- ernment relaxed the ban.

As politicians around the world continue to grant this company honours and seats at the highest tables, the voters should follow the advice of the Enron PR department and ask: Why?

Capitol Curiosities

– Franklin Delano Roosevelt is the only president to have gone through four inaugural ceremonies (1933, 1937, 1941 and 1945). FDR was the first to break George Washington’s precedent by not stepping down after two terms in office. Dwight D Eisenhower was the first to be elected to the office after the passage of the 22nd amendment, which limits presidents to two terms in office.

– James Buchanan is the only president to have served out his term (1857-1861) as a bachelor.

– The state of Virginia has to date provided eight presidents, the most by any state. Ohio is second, having provided six, and New York and Massachusetts are joint third, having provided four each.

– George Washington, the first president of the United States, was actually inaugurated in New York. The second man to hold the post, John Adams, had his inaugural ceremony in Philadelphia. Thomas Jefferson, in 1801, was the first president to be inaugurated in Washington DC.

– George Bush’s inauguration in 1988 marked the bicentenary of the presidential office.

– The first inauguration broadcast on radio was that of Calvin Coolidge in 1923. The first televised inauguration was that of Harry Truman in 1949. Bill Clinton’s second inauguration as president, in 1997, was the first to be broadcast live over the internet.

– Harry Truman’s inauguration as president came only 82 days after he had become vice-president.

– Gerald Ford was inaugurated as the 38th president of the United States on 9 August 1974. He was the first president in US history to succeed to the nation’s highest office because of the resignation of a president. Ford is also the only man to have occupied the White House without being elected either president or vice-president.

– Upon his inauguration in 1901, Theodore Roosevelt wore a ring that contained a lock of hair cut from Abraham Lincoln’s head after he was shot.

– John F Kennedy was the youngest ever elected president (aged 43), but the youngest holder of the office was Theodore Roosevelt (aged 42), who took over after the death of William McKinley in 1901.