ENRON & FRIENDS

December 26, 2002:  Federal judge Melinda F. Harmon, in Houston, just made a very important ruling in a case arising from the Enron collapse: she ruled that banks, investment houses, and law firms can be held liable for their involvement in accounting flimflams, and can therefore be sued for damages by bilked investors.  This is significant, some say, because this ruling may accomplish more needed post-Enron reforms than anything Congress has managed to do.  In Enron's case, the ruling particularly applies to Citigroup, J.P. Morgan Chase, and Merrill Lynch.  Her ruling sidestepped a 1994 Supreme Court ruling that held that "advisers" aren't liable, by saying that such active participants in fraud are not merely advisers.  Unfortunately, we are still stuck with the Public Securities Litigation Reform Act of 1995, a piece of corporate liability protection that was part of the Gingrich "Contract with America", without which Enron might never have happened.  Some say that this act practically requires plaintiffs to nearly prove a criminal case before being allowed to subpoena any evidence.  Enron, and the large accounting companies, heavily backed the measure.  Harmon ruled that the plaintiffs could subpoena, apparently meaning that she believed they had met that standard.

This came just after the same companies have reached a settlement in their legal case with the SEC and other regulators.  They agreed to pay some substantial fines -- the largest at $325,000,000 to be paid by Salomon Smith Barney, owned by Citigroup -- and abide by extensive new rules designed to control conflicts of interest.  The fines may be big enough to hurt, but they are considered a drop in the bucket by representatives of investors who feel they have been defrauded.  Harmon's ruling eases that concern, though.

J.P. Morgan Chase, by the way, just got accused of helping Barrick Gold Corp. of Toronto carry out a scheme to hold down prices in the gold market, making $2,000,000,000 at the expense of ordinary investors by selling short.

The most entertaining development on the Enron front is the unearthing of a videotape of a party at Enron, held in honor of Rich Kinder, Enron's outgoing president, in 1997.  Both George Bushes attended -- virtually the only people seen on the tape who are not under criminal investigation.  Lame skits were performed and many jokes were cracked which, in light of later events, are now causing acute embarrassment.  Executives boasted jokingly about their prowess at cooking the books -- Jeffrey Skilling said he could "add a kazillion dollars to the bottom line" with "something I call HFV, or Hypothetical Future Value accounting."  The elder Bush got sappy over how much Kinder and other Enronies had done to support Dubya's gubernatorial campaign.  Prosecutors immediately began salivating to get a copy.

I reported last time that PG&E, faced with a big windy rainstorm in the week before Christmas, sent home line workers and didn't answer a lot of customer phone calls.  Well, PG&E is denying they worked any less hard than usual on the storm damage, though many customers were without power for days.  TURN, the California utility consumers' lobby, is jumping on them over this, trying to get the company fined.

Trent Lott's loss of the post of Senate Majority Leader has been big news for the last week or two.  First the hounds tore into him, letting everybody know what a racist he is and always has been, then a bunch of counterspin came out trying to defend and deny the visibly racist aspect of it (even National Public Radio did a piece about black Mississippians who vote for him) and turn it into another kind of issue...  I personally felt that Lott was already a disgrace before the incident, but we don't need to go into that.  There's something more interesting to take note of now.  I think what's going on now behind the scenes is essentially a turf battle within the Republican party.  The split is partly between northern and southern republicans, and partly between older and younger ones.  And also, it's between loyal followers of George W. Bush and everyone else.  The issue of the GOP's lingering ties with racism are being used as a lever to pry old hands loose from the levers of power, so that those levers can then be gathered into the loving embrace of the Bush team.

Lott grumbled that "political enemies" had been waiting for a way to take him out, but wouldn't say who he meant.  I note that these enemies have said not one word, not the slightest peep, about the many Washingtonians who loudly applauded Lott's famous pro-segregation statement.  As far as I've heard, this issue has never been raised in the media at all.

Some segregationist types will say or do the darndest things when caught looking racist -- like the North Carolina representative who made pseudo-amends for a questionable remark by painting a lawn jockey white.  My theory is that racists become so accustomed to dishonesty, even with themselves, that they have no idea how far out of line they sometimes wander while backpedaling.  It's at these times that they make some of their most absurd statements.  Some conservatives are now saying that it was Lott's overreaching in an apologetic interview with the BET network, not his original remarks, that got them to demand his removal.

Historian Ira Berlin, on MacNeil/Lehrer, acknowledged that the old-school southern racists are "an important Republican constituency" but says that many in the party find the association acutely embarrassing and want to be rid of it.  They hope to win over conservative black and latin voters, and they'll never do it as long as the Trent Lott types are visible as definers of GOP policy, or the party stands behind those who make the Confederate flag a campaign issue.  Ideally, they hope they can publically repudiate this agenda without actually losing the votes of those who support it.  (On the same show, Lee Edwards of the conservative Heritage Foundation said that this would give the GOP "a true governing majority", tacitly admitting that what they have now is nothing of the kind.)  Their hope is to get back to a sort of Goldwater conservatism that opposes affirmative action without trying to protect white privilege.  "We have just about maxed out on white men," said one anonymous Republican strategist, leaving them with little choice but to do what they can to pursue minorities.  This is why conservatives of the non-racist stripe were the first and the loudest to denounce Lott.  (The only democrats to really savage him have been those not running for any future office, notably Bill Clinton, who said the GOP is still trying to keep blacks from voting.)  And Bush is backing them, leaving Lott and those like him out in the cold.  Their chances of actually winning over minority voters, of course, are at best very long term.  They're a long way from fooling anyone now.  But they're trying:  it's been announced that the Bush family christmas dinner will include enchiladas.

The first real test will come when Lott-like judicial candidates Dennis Shedd, Michael McConnell, and Charles Pickering come up for approval.  Pickering was already voted down once before the Republicans gained a majority.  If the old guard pushes these guys through, the segregationist albatross will remain firmly tied to the party's neck.

Lott's replacement as Senate majority leader is apparently going to be Bill Frist of Tennessee, a surprisingly inexperienced junior member who has not previously been seen as a leader.  His main qualification appears to be his close ties to Dubya.  What Bush has done with this flap, it appears, is to use it to get someone as close as possible to being a White House puppet in Lott's place.

Frist is a heart surgeon by trade, and often focuses health care policy issues.  Some have accused him of conflicts of interest in doing so, or of caring first about the health of corporations in the field.  His rhetoric is friendly to the religious right, and he's been criticized for being a constant obstacle to family planning and women's health, working to block anything with the remotest connection to abortion, including embryonic stem cell research.  (And yet he has money, now placed in a blind trust, invested in a medical corporation founded by his father and brother that provides abortions.  For extra fun, the company is now settling a lawsuit for Medicare fraud.)  He supports the kind of sex education that attempts to teach abstinence and nothing else -- a proven failure.

Many of this younger generation of conservatives are counting on Bush for leadership.  He is younger and, if he has few other good points, at least he is clearly not racist... but if they follow him, their strategy of a more inclusive majority is going to backfire, because he is doing all he can to centralize power with the minority whose sole interest is in preserving privileges, and it's getting harder and harder for Republicans to explain this away even to each other.  If it weren't for 9/11 Bush would now be scrambling for any kind of popular support and making all kinds of moderate concessions.  That he's now having to do some of that even now, despite the boost in support from a more-or-less wartime state of crisis,  shows how far beyond the pale he has pushed his agenda.

Ex-conservatives of the David Brock stripe are growing more common in their renunciation of the right, or at least of Bushism.  We've already seen people like Marshall Wittmann of the Christian Coalition observe that "the only real heresy on the right is opposing the power of big money," and now Philip Gold of the American Spectator is handing in his silver wingnut: "I've become sadly convinced that American conservatism has grown, for lack of a better word, malign."  And, of course, there was John J. DiIulio Jr., the guy formerly in charge of Bush's effort to fund "faith based" social programs with federal money, which the White House is going ahead with even without congressional approval (let alone a finding of constitutionality from any court), who revealed in a David-Stockmanesque Esquire interview that "there is no precedent in any modern White House for what is going on in this one: complete lack of a policy apparatus....  What you've got is everything, and I mean everything, being run by the political arm."  They made him grovel and apologize, of course, and he said Esquire misquoted him, but he managed not to disavow any of  the substance of what he told them.

On the international front, the big news is North Korea, which has now started to resume operations at a nuclear plant that had been locked down by the UN as part of an anti-proliferation agreement.  They don't like the White House's "axis of evil" rhetoric, and say that they will cooperate with the UN program of de-nuclearization if we are willing to sign a non-agression pact with them, so they don't have to worry about being attacked by us.  The proper American response is that any such pact would be with South Korea, not with us... but the Bushies, specifically Donald Rumsfeld, are responding by boasting that they shouldn't get confident, because we're powerful enough to fight a war against both Iraq and North Korea and defeat both quickly, while still continuing the "war on terror" elsewhere.  (Our failure to defeat them in the past is not lost on the North Koreans, even if it is on Rumsfeld.)  Given the rhetoric against Iraq, it's utterly amazing how forbearing this administration can be with an "axis of evil" dictatorship that has nuclear bombs already and, with this plant operating, could soon make more.  I mean, the Pyongyang government actually threatened to "destroy the Earth" if we attempt a nuclear attack against them.  Vladimir Putin in Russia, helpful as ever, is telling us the current Korean crisis is Bush's fault.  It has to be admitted that part of the problem is that we are far behind schedule on meeting part of our agreement with North Korea: to build two light water moderated nuclear power plants -- a kind of plant that is much harder to extract weapons-grade material from than is the case with Korea's outdated graphite-moderated reactors.  We failed to provide the agreed carrot but we're still clutching the stick.

And nobody has said a word about the likelihood that both North Korea and Pakistan got their nuclear weapons built with Chinese help.

On the Iraq front, meanwhile, they tried to float a propaganda story about Saddam selling nerve gas to Al Qaeda, but the falsehood got exposed soon enough and apparently the story didn't sink in with the public.  Now Ariel Sharon is saying Saddam is moving his chemical and biological arsenals into Syria.  Iraq is pointing out that the inspectors have not found anything.

For those who think inspection is a joke, remember that the earlier rounds of inspection after Desert Storm succeeded in destroying far more weapons of mass destruction than the military attack did.  And Iraq has announced that they're willing to let their scientists be taken to other countries for interviews, which if they really have something to hide is a pretty risky step.

Meanwhile, the 12,000 page report in which Iraq denies having weapons of mass destruction is still being kept out of as many hands as possible by the US.  Even the UN Security Council only got to see a 4,000 page Readers Digest version.  The suspicion is spreading that this is due to the names of 150 or so American and European companies listed in the document as provoding materials useful for chemical, biological, and nuclear weapons manufacture.  This story is apparently making a splash in Europe, but not here.  Some companies that have been named there, I hear, are Honeywell, Spektra Physics, Semetex, TI Coating, UNISYS, Sperry, Tektronix, Rockwell, Leybold Vacuum Systems, Finnigan-MAT-US, Hewlett-Packard, Dupont, Eastman Kodak, American Type Culture Collection, Alcolac International, Consarc, Carl Zeiss US, Cerberus, Electronic Associates, International Computer Systems, Bechtel, EZ Logic Data Systems, Canberra Industries, and Axel Electronics.  Some reports even implicate the US weapons labs at Livermore and Sandia.

The Sunday Herald warns the British public that the United Kingdom has become a principal provider for most anyone wanting chemical weapons technology, including Iran, Lybia, and Syria.

Here's a report that Al Qaeda is regrouping in a mountainous hideaway on the Iran-Iraq border, in Kurdish territory.  But far from meaning they are allying themselves with Saddam Hussein, the report suggests that the UN-enforced no fly zone is protecting the Al Qaeda camp from Iraqi forces, rather than (as Donald Rumsfeld suggests) Saddam being guilty of granting sanctuary to them.  Some local Kurds are joining; others are fighting skirmishes with the group, and it's through prisoners they've captured that we know about what's going on there.  The locals have taken to calling the Al Qaeda-controlled area "Tora Bora", because many Afghans are present.  The Bush administration's policy appears to be that cleaning this out will be handled as a part of the war on Iraq; they don't see it as a separate and more immediate threat.

I'll throw in an odd item that I'm hearing on the radio right now: Jeremy Rifkin, author of a new book about the hydrogen economy and how it could replace oil, has a view I've never heard before about how the Roman empire collapsed: he says it wasn't foreign invaders, it wasn't the excesses of the ruling class (except partially and indirectly), and it wasn't lead poisoning.  They depleted their soil so their agricultural production couldn't be sustained.  This agricultural produce was the energy base of the society, as oil is for ours.  He says Rome fell because of an energy crisis.

Rifkin, by the way, says I'm wrong to suggest that the auto industry is talking about hydrogen fuel cells as a way to avoid dealing with fossil fuel conservation today.  That may have been true once, he says, but not now.  (Though it's true that Spencer Abraham tried to use these hydrogen plans as grounds to stop improving gasoline mileage.)  They're very serious about switching to hydrogen powered cars.  If we do that, then the Saudi Arabian joke could come true:  "My grandfather rode a camel, my father drove a car, I fly a jet, my son will ride a camel."

Here's a grab-bag of minor items, not so long this time...

• Nearly half of this year's newly elected congressional representatives are millionaires.  This means that conflicts of interest are going to be a serious issue when it comes to upper bracket tax cuts, shelters, and other matters that benefit the rich in general.  Many have some interest in banking and credit companies, yielding conflicts of interest on the bankruptcy "reform" measure.
• Speaking of which, some in the White House are proposing a tax cut on corporate stock dividend income.  This would affect primarily the wealthiest.
• Some activists are responding to the virtually unlimited surveillance mandate of John Poindexter's new Information Awareness Office by monitoring Poindexter and pulicizing information about his personal life.  This surveillance is conducted under the auspices of the John Poindexter Awareness Office.
• State and local officials are warning that Bush's massive smallpox vaccination program could undermine funding of other health and antiterrorism resources.  (I told you this before, you bozos: the terrorists don't have any smallpox!)
• One new anti-terrorism law is a requirement that noncitizens from countries connected to terrorism need to "register" with the INS.  Many registered, and then the INS blew it by staging mass arrests of many of those who had voluntarily reported themselves.  They mainly took Iranians, for some reason.  Conditions in the detention centers were said to be inhumane, especially in lack of heat or warm clothing.  There were large street protests by Iranian-Americans in Los Angeles, and the INS released most of those it had detained, admitting that they had nothing to do with terrorism.  They have now, of course, pretty much blown it in terms of getting future compliance with the "registration" requirement.  Several Muslim groups are now suing the INS and John Ashcroft.
• We've been hearing rumors for about a year that the US forces pursuing Al Qaeda have been using torture on captives, and keeping it sort of legal by doing it outside US borders.  Here's a report that confirms these stories.  "While the U.S. government publicly denounces the use of torture, each of the current national security officials interviewed for this article defended the use of violence against captives as just and necessary."
• Remember our past discussions of the weird stuff the White House was doing with various scientific advisory panels?  Well, here's a story about the questions a scientist being interviewed for a scientific panel on drug addiction got asked:  Do you support legal abortion?  Do you support the death penalty for drug kingpins?  Did you vote for George W. Bush?  Health and Human Services secretary Tommy Thompson, who most of these misused panels report to, still says he's just trying to "add balance".
• There was a commission to look into the issue of commercial genetic testing, which might have recommended some form of regulation on companies that try to sell you pointless genetic tests to tell you which of their products you "need" to buy.  (Several such companies have gone into business lately.)  Bush disbanded the commission entirely.
• The Centers for Disease Control are no longer endorsing the use of condoms as "highly effective against sexually transmitted diseases".  They also report to Tommy Thompson.
• Joe M. Allbaugh is stepping down as head of the Federal Emergency Management Agency.  This is significant because he was one of Bush's three top campaign brains for the 2000 election, and it's widely believed that his new job will be to begin early work on the 2004 campaign.
• Here's a report that the "compassionate conservatism" social measures that Bush campaigned with have been neglected; most of the things he promised in this area have not been enacted.
• The author of "Hiding Your Money" and his lawyer have been indicted for tax fraud.  Right on.
• The government of Turkey is complaining that the bribe package -- excuse me, I mean the military aid package that we offered them in order to encourage them to help us attack Iraq is turning out to be worth a lot less than the $3,500,000,000 to $5,000,000,000 they were expecting.  It might only amount to $1,000,000,000.  They say we haven't exactly lived up to our promises to them.
• Dick Cheney's former company Halliburton, allegedly one of the more prominent outfits doing covert business with Iraq in recent years, is now being investigated by the SEC over more accounting irregularities.  This comes just after settling its asbestos lawsuit troubles for $2,775,000,000.
• The airline companies, already begging for welfare handouts from the government, are now pressuring Congress to rewrite the rules for how they negotiate union contracts.  They say openly that the purpose is to pay their workers lower wages.
• You think our campaign finance laws are tough?  Jean Chrétien, the PM of Canada, has proposed banning all corporate donations to political parties.
• By the way, Chrétien recently signed Canada's agreement to abide by the Kyoto Protocol, after its passage by parliament.
• The EPA reports that in 2001, the US production of greenhouse gas declined, despite the lack of any effort on our part.  One of the biggest factors in this decline was just due to economic slowdown, though.
• The EPA has officially abandoned a Clinton administration rule that would force farms, cities, and timber companies to control toxic runoff into stagnant or constricted waterways.
• Congressman Bernard Sanders (I-VT) is making a first effort at repealing some of the more draconian aspects of the USA-PATRIOT act.  May momentum gather about him.
• Sen. Richard Lugar (R-IN), the incoming chair of the Foreign Relations Committee, says we need a new US Envoy to deal with Venezuela's crisis.  The existing nominee is Otto Reich, an alumnus of the Iran/Contra affair.  He's been appointed to a special artificial position to do this job, because there's no way in hell that he could win senate approval for the genuine post.  Lately he's been shut out of power just as informally as he was previously routed into it.
• The pro-coup forces in Venezuela are still trying to claim they have a general strike going.  They don't.  Yet many in the US media are reporting the largely nonexistent strike as real, to the point of calling it "a nationwide shutdown".  (The strike is real in one industry: oil.  These workers are directly employed by the people backing the general strike.)
• They do, however, have some friendly help from the World Bank, which offered to resume loaning money to Venezuela if President Chávez continued to institute certain "reforms" desired by the coup bloc.  Chávez replies that the World Bank and the International Monetary Fund are still trying to impose monetary policies which we know don't work.
• Senator Lugar is backing the calls for Chávez to resign or hold early elections -- a call that Bush made earlier but had to back down from.
• Venezuelans, meanwhile, are demanding that we take a closer look at what shadowy CIA-backed groups are doing to support the coup effort.  They say that outfits like the National Endowment for Democracy, "nothing more than a plausible deniability arm of the CIA", are involved both financially and tactically.
• The Bush White House has once again scuttled an international deal that would have allowed poor countries to buy medication at non-monopoly prices.  There are about 140 countries in the World Trade Organization, and every single one of them except us was ready to approve this.
• The Archdiocese of Boston just filed a court motion arguing that the First Amendment separation of church and state means that they should be exempt from any civil lawsuits arising from how they chose to "supervise" rapist priests.

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