Monday, April 10, 2006

Why Bush Loved Ken Lay

Enron czar Ken Lay hasn't testified in his own defense yet, but his chief hatchet-man, Jeff Skilling, took the stand Monday and will likely be there all week and possibly into next. In a copyrighted Enron-Trialwatch blog on the Houston Chronicle site, reporter John Roper captures the similarities between the Bush style and the Enron style.
'I was changed...'

Skilling said he changed in 2001 following an accident at an Enron plant where three men were killed and several injured.

"I was changed," he said.

Skilling described for jurors visiting a victim in the hospital and talking to families of the employees.

"It said to me that life is short," Skilling said.

He said that the incident drove home his desire to leave the company to spend more time with his family.

Positively Rovian in its mendacity, this doubletalk implies Skilling left Enron not in contemplation of its inevitable blow-up, but for purely human reasons. Here's a guy who never thought of anything but a pile of dollars (unless it was to humiliate his co-workers in public) all of a sudden waking up to wife-and-childer just in time to get out of the burning barn before the roof caves in.

Even if true, this ain't no Damascene conversion like St. Paul's. This is an obscene conversion. And the likelihood of its truth is down there with where Enron stock is today. Some Texican PR counsellor got to him and he paid attention. "Humanize yerself f'r th' jury, Jeffy. Don't let 'em think yew wuz ever in it f'r th' money. Yew jest went ta work ever' day outta pyore humility an' goodness."

Lay/Skilling have to pretend the company was just fine till those evil short-sellers on Wall Street started valuing Enron like a (gasp!) trading company, instead of like some kind of new business paradigm that sorta had a hedge fund and sorta had a pipeline and swapped assets around from division to division, not to (choke) hide any underperformance but to achieve (sob) business synergies...

Hey, for good Republicans like Lay, Skilling and Bush, the market can do no wrong. Except when it's inconvenient for them, like the time Bush went busted in Arbusto.

The background is that Lay was a junior-college business theorist looking for a way to use the Gingrich/DeLay/Bush hatred of government regulation to open up some otherwise unattainable cookie jars. Skilling was the hotshot consultant who helped him find those special chocolate chips iin those jars. The Bush Republicans benefited from their campaign contributions. All shared a cocky, hubristic attitude, feeling that until they came along, business was too stodgily focused on, you know, making things. They were out to change that. And they did.

A Financial Times article Monday compared the Lay/Skilling case to the great fraud trial of Samuel Insull, the Chicago electric-traction monopolist, in 1934. His interlocking series of companies and fronts laid off risk, and hid assets, so the electricity and tramcar customers of Chicago could be safely gouged with no one able to penetrate the accounting fog. Mister Dooley, Finley Peter Dunn's great Chicago Irish philosopher from the first quarter of the century, got it right. "There's no greater fortune to be made, Hennessy me lad, than by shaving quarter-cents off the poor day in and day out." Insull got off. Lay and Skilling are obviously hoping for a repeat.

But Insull's example may be trumped by the words of scaly, vicious Wall Street founder Daniel Drew, whose little lesson on the perils of (ironically) short-selling was coined somewhere around 1834: "Him that sells what isn't his'n, must buy it back or go to prison."

Ultimately Lay and Skilling were selling things they didn't have (broadband futures, Brazilian, Nigerian and Indian electric power) but making money fraudulently driving up the price of electricity in California and Oregon. Insull actually delivered something, though at a higher price. At the end of Enron, there was nothing left to deliver but its leadership over to justice.

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