The trend toward offshore incorporation may be reversing. Stanley Works (the tool company) recently decided to drop their Bermuda incorporation plans. They are apparently expecting Congress to reform the offshore tax break system.
Dick Cheney's company, Halliburton, set up offshore tax shelters around the same time. Cheney wasn't in charge yet, but by the time he was, he kept up a prolonged fight with the IRS, which was trying to show that the shelter was bogus and Halliburton owed them back taxes. Cheney has been hiding from the press for more than two months, but is appearing at the Commonwealth Club of San Francisco on Wednesday and will dare to take questions.
In further Halliburton news, it's come out that one reason Dick Cheney had to cook the books at Halliburton in order to hide losses was because he had Halliburton buy Dresser Industries, a company that was saddled with a huge liability over asbestos. Halliburton claimed that at the time, the size of the asbestos problem could not have been foreseen. "The asbestos litigation environment deteriorated after 1998 in an extent we did not anticipate." In other words, they thought they had judges and juries under enough control so they wouldn't have to pay what the asbestos victims were entitled to. What it comes down to is that Cheney left his shareholders screwed, but came out with millions himself.
Halliburton's subsidiary, Kellogg Brown & Root, just won renewed contracts to supply support services and construction for the Army and Navy. The Army contract has an unusually long duration -- ten years -- and a payment structure that some say encourages open-ended inflation of costs. The auditing office of Congress recommended that new bids be sought (perhaps due to Brown & Root being under investigation for fraud), and the recommendation was ignored.
Memos have come out showing exchanges in 2001 between Enron and Energy Secretary Spencer Abraham. They show Ken Lay asking Abraham to hire a friend of his, and Abraham asking Lay to recommend names for an advisory council.
Treasury Secretary Paul O'Neill caused an international incident that caused the currency of Brazil to suddenly lose 5% of its value, just by not thinking before he spoke. This is one of a series of loose-lip gaffes he has committed. The Brazilians are demanding retractions, apologies, and so on. But I suspect that what he said -- that Brazil ought to make some effort to keep foreign aid from getting misdirected into corrupt officials' swiss bank accounts -- may be valid. Interestingly, Molly Ivins calls O'Neill "the only straight shooter in the cabinet." She must be describing a relative standard of straightness, not an absolute one, given his recent fib about never selling Alcoa stock.
Within hours of signing the new corporate responsibility bill, in which Bush tried to look like a leader of reform, the White House already started to water it down. They decided that protections for corporate whistleblowers apply only when the whistleblowers are coming forward to an official Congressional investigation, not when they approach an individual congressperson or staff aide. What this basically means is that only investigations sponsored by the current majority party have any protection. A spokesman for Senator Patrick Leahy (D-Vermont), the author of that section of the bill, said the White House's interpretation "is contrary to the plain language of the statute". Leahy's co-author, Chuck Grassley (R-Iowa) called the move "disturbing".
The House of Representatives is attempting to repeal the Public Utility Holding Act, a consumer protection measure that was passed the last time we went through a round of abuse from electricity companies. The measure requires utility companies to invest their profits only in areas that contribute directly to serving their customers and keeping prices dwn. To respond to the current mess by bringing back an old one shows, as the saying goes, enough gall to be divided into three parts. Meanwhile, the Senate is trying to pass a bill that provides taxpayer-funded insurance for the nuclear power industry, which can't get any insurance in the free market.
The Federal Energy Regulatory Commission has come out with a national "deregulation" plan that would carve the country into regions and create "competitive" markets for all electricity within them. The plan has been denounced by at least fifteen state governments. California Public Utilities Commission chair Loretta Lynch, for instance, called it "an astonishing usurping of states' rights," and her counterpart in Washington State, Marilyn Showalter, remarked that she thought such centralization "would have gone out with the Soviet Union's last five-year plan." Over and over, the "deregulation" plans that were supposed to increase competition and reduce prices have done the opposite, and yet they're still trying to add more.
Bill Simon, the Republican candidate for Governor of California, had a family business of his, Coinable Simon, found liable for fraud last Wednesday by a Los Angeles jury. A subsidiary of that company -- Pacific Precision Metals Inc. -- has also been accused of defrauding the U.S. Postal Service. Gray Davis's campaigners are saying that Simon has given them "an embarrassment of riches" of material to use against him. Simon's people are clinging to hope on the basis that Davis remains highly unpopular. People remember what a half-assed job he did during the electricity crisis. (Of course, many of those opposing him contributed no ass fraction at all.) They explain the fraud verdict like this: "The company was sued by a convicted drug lord, and it hit a runaway jury." Notably, the Coinable Simon company never appeared on Bill Simon's disclosure forms as a financial interest. Simon says his holdings were below the threshold that required it to be listed. The company actually named in the suit was Pacific Coin Management, which was partially owned by Coinable Simon.
The GOP has identified a Democratic target to stick some Enron mud onto: Clinton's treasury secretary Robert Rubin. Apparently, after leaving office, Rubin was part of Citigroup's effort to shore up Enron's stock after the company was falling apart, and made phone calls to his former treasury colleagues in an effort to get them to help Enron's credit rating. On the Citigroup / Morgan Chase front, it's also come out that the bank accepted bogus unrecoverable collateral when loaning Enron $1,000,000,000 in its final weeks.
But here's yet another tie between the Enron crowd and the Republican party: during the Florida recount fiasco, when the GOP needed lots of planes to ferry people around in response to events (such as flying in rent-a-mobs), they flew on corporate jets provided by ten companies, including Enron, Reliant Energy, and Halliburton. The campaign paid the companies a nominal fee for the use of the jets.
The National Enquirer is reporting that Enron funded the Taliban at the same time that Clinton was attacking Al Qaeda camps in Afghanistan, and had CIA agents on its payroll. They say that after 9/11, when Unocal announced they were dropping out of the Afghan gas pipeline deal that the Bush administration had been trying to promote, Enron stayed involved and kept greasing Taliban palms to get it to happen. File this under "interesting if true".
Among energy companies, Mirant (which I remember put a series of ads on the radio during the electricity crisis telling us that the shortage was real and they were working hard to alleviate it) has joined Dynegy, Reliant, and others in the list of those being investigated by the SEC for faking profits. Meanwhile, Dynegy is selling off a gas pipeline they bought from Enron at a $600,000,000 loss.
And back at Enron, federal prosecutors are investigating whether they bribed officials of foreign governments to get contracts, and also to buy land at discounted prices. This would violate the Foreign Corrupt Practices Act. Strikes me that we could use a better Domestic Corrupt Practices Act.
The former Controller at Dynegy, Bradley Farnsworth, claims in a lawsuit that he was fired for refusing to go along with illegal profit-inflating accounting. Dynegy denies it. Meanwhile, prosecutors say they may finally get around to filing a criminal indictment against Andrew Fastow, the crookedest of the chief crooks at Enron. Fastow is trying to plea bargain but the prosecutors have little interest.
The Financial Times of London is reporting that the U.S. power industry is saddled with $450,000,000,000 in debt, and there could be an industry-wide wave of bankruptcies... unless electricity prices go back up. They also report that executives of the 25 biggest American companies in bankruptcy managed to skim off a total of $3,300,000,000 into their own pockets as their companies failed.
Senator Joe Lieberman, whose recent pose as a corporate reformer is nearly a 180 degree reversal from most of his career, warned the Democratic party against making any kind of populist class conflict out of all these corporate scandals, and clarified that the newly populist rhetoric coming from Albert Gore should not be interpreted as meaning that their 2000 campaign was in any way anti-business. Way to go, Joe. Good to know that the American capitalist system can count on you in hard times.
Here's a new little corruption story: the government of Peru is trying to switch its government computers from Microsoft products to open source products. Microsoft first sent big donations to the president, and when that didn't work, the U.S. ambassador suddenly starts telling the Peruvians why they should keep buying Microsoft.
The bankruptcy reform bill that recently got out of conference committee is now apparently going to be delayed by the Senate until september. This may give us time to do something about it, I hope. Some are saying the whole thing might lose support in the House. Meanwhile, Mitch McConnell (R-KY), that stalwart foe of campaign finance reform, tried to amend the Senate's prescription drug bill with a measure to protect doctors, HMOs, and so on from malpractice suits. Like the Texas-style "tort reform" that George W. Bush has always been such a friend of, what they are trying to do is prevent their rich friends from being held accountable for anything they do wrong. The vote was expected to be close, but six republicans were embarrassed into voting against it.
The Bush administration has made a surprise move to clean up diesel engine emissions, earning the ire of the trucking industry, and also Speaker of the House J. Dennis Hastert. What is the world coming to, with a Bush being praised by environmentalists for standing up to a special interest?
(In other good transportation news, Ford is discontinuing production of their gigantic new SUV, the Excursion. The fucker weighs almost four tons. Good riddance.)
There has apparently been a spate of assassinations in
the Saudi royal family... but this can't be verified yet because the deaths
-- three in one week -- look like accidents. There are rumors that
Saudi Arabia may be taken over by a pro-terrorist coup. I've never
had much good to say about the House of Saud, but they're clearly better
than having the country run by something like Al Qaeda. I hope everyone
involved can hold things together for now. For the longer run, the
House of Saud had better get it through their heads that reform is needed,
that if they try to hang onto unpopular dictatorship they will go the way
of the Shah of Iran. This will bear close watching, especially as
the administration is trying to renew calls for a war with Iraq, and trying
to revive the theory (once considered discredited) that Saddam Hussein
had some direct link with the 9/11 attack. It doesn't help that Bush
recently made a slip of the tongue describing terrorists as "those who
kill in the name of some kind of false religion", which just makes the
average Saudi citizen more angry at Crown Prince Abdullah's pro-U.S. stance.
|< Previous||Next >|
back to the Enron & Friends main page
over to my original 2001 California electricity crisis page
back to my home page
send mail to Paul Kienitz