December 18, 2002:  Flash!  Generalissimo Francisco Franco is still dead, and the Federal Energy Regulatory Commission is still crooked.

On December 12, a FERC administrative law judge, Bruce Birchman, ruled that the energy companies that created the California electricity crisis overcharged the state not by $8,900,000,000 as claimed by the state, but by only $1,800,000,000.  This means that the refunds the state can collect according to the ruling are about $0, because this is less than the $3,000,000,000 or so that the energy companies are still waiting to collect in unpaid bills from PG&E and the defunct Power Exchange agency.  Governor Davis was blunt in describing the nature of this ruling: "FERC rigged the rules" so that the judge was unable to consider most of the money that the companies grabbed.  For instance, FERC blocked any consideration being given to money squeezed out of the California Department of Water Resources.  That excluded $3,400,000,000 right there.  And anything before October 2000 was excluded, though the rolling blackouts began earlier.  "These people are not on our side," noted Davis.  Duh.

This ruling is very much like the previous ruling on this point by judge Curtis Wagner a year and a half earlier, back when Enron was still going strong and evidence of market manipulation was mostly not acknowledged or admitted in Washington.  (It was only starting to be discussed even by state politicians, though it was obvious enough that I, as an uninformed ordinary citizen, began pointing it out six months earlier.)  But this time, FERC itself has "uncovered" extensive market manipulation by Enron and others.  So, given that FERC now knows that the high prices were the result of fraud, why did the new ruling still find most of it legitimate, just as before?  Simple: judge Birchman entirely disregarded the fact that the price gouging was fraudulent.  He came up with a number based solely on some weird formula written into FERC's rules.

I may have unfairly blamed Wagner himself, at the time, more than I should have.  The real problem comes from his superiors, who write the rules for him.

The state is setting out to prove fraudulency and market manipulation, which then can be part of the case it brings before the full commission, which has the final say.  Then we will see once and for all whether FERC is willing to be honest.  Chairman Pat Wood hopes to finish the case sometime next spring.

In itself, this doesn't sound so unhopeful, but look what FERC just did in the case of El Paso Natural Gas, which held back gas supplies and faked various numbers in order to drive up prices.  Judge Wagner had ruled that El Paso was guilty of this market manipulation, and had delivered 10% less gas than the contractual minimum they were obliged to ship, and attorneys for the state were asking FERC to make El Paso pay restitution.  El Paso's lawyers still denied everything, and urged the commissioners to just "ignore" the findings that they had cheated the state's power consumers.  And what is the end result?  The ruling isn't being overturned, but the result is not much different in effect:  it appears that FERC is allowing El Paso to settle the case, with an agreement to pay a refund of only $14,000,000.  That's only a few percent of what they earned with the scam!  (Nobody can name an exact figure, but according to Public Utilities Commission investigators, the bare minimum they made with the scammery is a dozen times that refund, and it could be as high as seventy times.)

Congress has found fault with FERC's way of doing business twice already this year: first the Government Accounting Office in June, and then the Senate Governmental Affairs Committee in November, have each pointed out that the California electricity crisis and the collapse of Enron could both have been handled a lot better if FERC had properly done the job that Congress mandated for it.

One of El Paso's vice presidents, Todd Geiger, has been arrested for fraud and has pled not guilty.  He is charged with reporting 48 fake trades to the FERC natural gas market report newsletter.  His sole defense is that the newsletter rejected his submission.

Ugh:  Williams Energy, which recently reached a settlement with the state of California, just started a big new image-enhancing ad campaign here, somewhat reminiscent of those Chevron "people do!" ads about how environmentally conscious they supposedly are... the ones where they would, like, spend some modest amount on a project to protect bald eagles, and then several times that amount on the advertisements patting themselves on the back for it.

In news about Enron itself, there have been some possibly new revelations that the involvement of J.P. Morgan Chase and Citicorp with Enron's swindles was deeper and more overtly criminal than was previously thought.  They actively helped Enron avoid taxes and conceal its debts from investors, working "aggressively" on this right up until the collapse.  Citicorp doesn't seem to be able to staunch the flow of embarrassing revelations about its operation lately, despite vigorous attempts to clean house.  They could end up having to pay $500,000,000 in fines.  Other firms are expected to be stuck with smaller amounts.

And somebody tried to set fire to the mansion of Andrew Fastow (Enron's CFO), unaware that Fastow had sold the place in order to pay restitution.  The suspect has a record of repeated drunk driving and has been eyeballed by the police in several other arson cases.

Here is a progress report on the prosecution of Enron executives.  They are concentrating at this point on the second tier of management: people who reported directly to Jeffrey Skilling and Andrew Fastow.  Another guy has pled guilty to tax evasion and agreed to cooperate: Lawrence Lawyer.  And here is a report that begins to explain how Enron managed to lose so much money: they took bigger and bigger leveraged risks in the power price speculation business, sometimes gaining or losing half a billion dollars in a single day.  They lied their asses off to companies like Moody's who were concerned about their level of risk, as well as to government agencies and to the public, and kept making bigger and bigger bets.  They became "a hedge fund disguised as an energy company".  During the crisis, they came out some $7,000,000,000 ahead overall on these speculative trades, and the winnings just whetted their appetite to bet more and more.  When the crisis suddenly ended, their betting strategy no longer worked.

Thomas White, now Secretary of the Army, allegedly wrote a smoking-gun email just before the Enron collapse telling others in the company to hide lost money by closing a bigger deal to cover it up with.  A reporter named Jason Leopold got a dozen sources to attest to this.  He wrote about it on Salon.  But something turned fishy: Salon pulled the story, saying it was unverifiable.  Paul Krugman at the New York Times picked up the story; here is a copy of his column on it.  After Salon pulled the story, Leopold got all his dozen sources to agree to talk to Krugman, who then verified the story independently.  Krugman decided to write a column questioning Salon's retraction and saying that the story was legitimate.  But the New York Times told Krugman they wouldn't print it, even with the sources verified.  Leopold was hung out to dry.  Here is Leopold's letter defending the article, saying the Times went back on its word; here is an anti-Leopold article viewing the whole fracas more skeptically.  Note how the bottom half of the latter article fawns unashamedly over White... it reports as hard news, not as editorial, that "White completely won over critics with his candid testimony [before Congress]."  They imply that, for instance, Barbara Boxer no longer believes White did anything wrong!  This is not so, of course.  This "news" organization turns out to be pure right-wing propaganda, using terms like "democrat dimwit" right on the front page...  So did White really write an e-mail that said "Close a bigger deal.  Hide the loss before the 1Q"?  I don't know, but it sure sounds like he did.

Public Citizen, by the way, reminds us that White's denial of having manipulated the California electricity market to drive prices up is provable perjury.

Lest you think I'm picking on Republicans here, here's a story about ties between Enron and the finance chairman of Al Gore's 2000 campaign.

The process of digging out Cheney's energy commission documents has hit a nasty snag: the suit by the General Accounting Office against Cheney's group has been thrown out by a judge named John Bates whom many say was far from impartial in the case.  Congressman Henry Waxman, for one, said "The decision is another Bush v. Gore.  It is a convoluted decision by a Republican judge that gives Bush and Cheney near total immunity from scrutiny....  It is inconceivable that the appellate court will uphold the embarrassing reasoning used by the district judge."  Bates has ties with some of Washington's most partisan judges (Scalia, Silberman) and was involved in the effort to prosecute Clinton for the nonexistent Whitewater scandal.

The precedent of this ruling (until overturned), plus the loss of Democratic committee chairmanships in Congress, means that Bush may be nearly immune from Congressional investigation for the next two years.

The Judicial Watch / Sierra Club suit plods on.  (Judicial Watch is also still pursuing some Clinton cases, and just won a ruling to see some Clinton-era e-mail related to the FBI.)

The latest twist on PG&E's bankruptcy: we just had a winter storm with high winds, causing many power outages.  PG&E, after having run TV ads about how hard they work to serve customers during hard times, just sent many of its line workers home during the outage because it didn't want to pay them.  They aren't answering customers' questions by phone, either.

What kind of system are we living in when it's front page news that a large private corporation doesn't get a handout from the government?  That was the headline of the San Francisco Chronicle on December 5.  The Air Transport Stabilization Board (ATSB) turned down federal loan guarantees to bail out United Airlines, and the company filed Chapter 11 soon after.  Now some in the pro-labor camp were in favor of the bailout -- Jesse Jackson for one -- but one of the people most offended by the board's failure to help United was Speaker of the House Dennis Hastert (R-IL, that being the state United is based in), whose people suggested that this is why Treasury secretary Paul O'Neill finally got booted out of the Bush administration.  Not, as is commonly assumed in the media reports on the subject, because the economy has turned to utter shit and Dubya has to be seen to be doing something about it... but because an appointee of his on the ATSB voted to block a $1,800,000,000 check for United.

By the way, it was shortly after the Chapter 11 announcement that the White House suddenly decided to ease up on those airline security measures that the airlines found most onerous and expensive.  As if they were throwing United a bone.  Of course, the administration has been trying for a while to find a way to help out the whole airline industry.  Sort of like the ways they and other Washington corporatists helped it before 9/11 by, for instance, quashing the push to strengthen cockpit doors.  (We need security, but not if it costs money!)  Anyway, United is planning to reapply for the loan after they finish a round of heavy cost-cutting, so they may still get it.  Maybe then they'll actually have a chance to pay it back someday, though airlines that go into Chapter 11 rarely come out again.

By the way, United's CEO, Glenn Tilton, stands to make more money in bankruptcy than he would if they'd gotten the bailout.  In the latter case he agreed to take a pay cut, but in the former case he's in line for hefty bonuses if he meets some recovery targets.  Tilton has already raked in millions in bonuses and options just for agreeing to take the CEO job.  Tilton is, I guess, used to this lifestyle: he's an oilman (Chevron), and was once the acting chairman of the Texas energy company Dynegy, a company which has gotten itself mentioned in this space quite a few times.

The new Treasury secretary nominee to replace O'Neill is John W. Snow of CSX Corp., who is described as being a "smoother" version of O'Neill.   (CSX is a major railroad company, currently somewhat troubled by safety problems, asbestos lawsuits, racial discrimination lawsuits, a too-expensive merger with Conrail, "runaway paychecks" for executives like Snow, and a few questions about how it managed to pay no taxes in some recent years despite significant profits.  The latter is especially reassuring, since the IRS reports to the Treasury secretary.)  O'Neill was known for shooting off his mouth.  Molly Ivins called him "the only straight shooter" in the Cabinet.  Is the state of the economy his fault?  Of course not.  In this administration, his job has been to advocate one economic policy: upper bracket tax cuts.  His replacement, Snow, is not a tax cut kind of guy, he's a balanced budget kind of guy...  but according to all media reports, it is expected that he is going to be putting aside his own beliefs and promoting a straight Bush program of tax cuts.  ("Bush Names His Man to Lead Tax Cut Fight," read one headline.)  Bush appointed Stephen Friedman of Goldman-Sachs to replace the also-booted Lawrence Lindsey as head of the National Economic Council, and supply-side ideologues attacked him for being another who favors a balanced budget over tax cuts -- to these guys, ideological purity is apparently the sole measure of moral worth -- but like Snow, he also is expected to toe the line and push the existing Bush plan.  Ironically, some are saying that one reason O'Neill was kicked out was because even he got cold feet about pushing the tax cut, despite having better credentials for ideological purity as a supply-sider than Snow and Friedman have.  In other words, Bush's economic housecleaning is all form and no substance -- he still wants to pursue the same recklessly irrational policies that have been failing so far.

Wall Street is noticing this.  The corruption of this corporatist regime has become so deep that even Wall Street investors, as a group, are finding it too greedy and shortsighted.  Things have now reached a point where the appetites of the CEOs who back Bush are not even compatible with the interests of stock market investors, let alone the interests of working people.  It's to the point where not only are corporate interests being put ahead of the broad public interest, but the interests of greedy executives are being put ahead of the interests of the corporations they run.  Not only have investors' calls for improved accountability been shined on with lip service and superficialities, but as a whole, Wall Street does not want this tax cut!  Many in the financial industry consider it grossly irresponsible.  But Bush is still going to push it anyway.  He's basically embracing the exact same Laffer-curve wishful thinking theory that his father famously called "voodoo economics".

Some on Wall Street are even starting to notice, with historical studies, that Republican administrations are not actually good for the market in the long run.  And the general thinking there now is that, rather than a long term tax cut for businesses and wealthy individuals, what the economy wants is a quick-acting short term tax cut or tax refund for the middle class.  The Democrats are working on such a proposal.  Their new leadership is starting to notice that they have to provide alternatives to Republican ideas -- something they forgot under the leadership of Dick Gephardt.

Bush's way of coping with the budget deficit, meanwhile, is to start making a bunch of Reaganesque cuts of social programs, none of which add up to much against the deficit.  School lunch money, heating oil assistance, housing aid, reduced cost of living raises for federal workers, and so on.  Senator Nickles, now chair of the Budget committee, warned Congress that they may soon need to go after the big bucks in Social Security and Medicare/Medicaid.

And some conservative pundits and think tanks are starting to send up trial balloons for the idea which is the logical endpoint of corrupt tax cuts for rich campaign donors: they're proclaiming that the working poor aren't paying their share of taxes, and that taxes ought to be raised on the lower brackets, and exemptions taken away.  I almost hope they go ahead and try to do this, because there would be nothing better to make clear to middle America just what they've voted into power.

During the height of the corporate crime scandal, Bush talked a lot about "restoring investor confidence".  But he never did it.  Even the measures he did take were often watered down, either by the Republicans in Congress, or by the White House itself after some time had elapsed.  Since Bush can't undo 9/11, or the bursting of the dot-com bubble in the spring of 2000, the single most important thing he could do for the economy in the short run probably is, indeed, to restore investor confidence.  The sharp loss of stock capital due to discouraged and disillusioned investors has a lot to do with why companies have to make so many layoffs nowadays.  Bush's choice to pursue a blatantly irresponsible fiscal policy, and his reluctant half-measures on corporate accountability (and come to think of it, his war push as well) are actively preventing a stock market recovery, and thereby reinforcing the economic downturn.

As another part of this process of showing us all a new economic team, Bush has named his replacement for Harvey Pitt at the SEC:  William Donaldson, co-founder of the investment banking firm Donaldson, Lufkin & Jenrette, who was once Chairman and CEO of the New York Stock Exchange.  He worked for the SEC once before, back in the '70s.  His first Wall Street job was working for Dubya's uncle Herbert Walker.  He worked for a while under Henry Kissinger.  Bush had previously floated a couple of trial balloons about appointing a real hardcore indisputable enforcer type to the SEC -- maybe even a Democrat -- but in the end, he eschewed such a bold choice.  Guess what: it turns out that Donaldson is a defendant in a stock fraud lawsuit.  The suit alleges that as chairman of Aetna, he concealed accounting misstatements.  Also, stories are coming out about corruption inside the New York Stock Exchange during his leadership there: the most pervasive problem perhaps being one where insider investors who agreed to share a percentage of profits with brokers were credited with profits that properly belonged to no-name investors who paid straight commission fees, sticking the latter with losing trades that really belonged to the insiders.  Now this guy's really going to turn around that slumping investor confidence, isn't he?

(Speaking of lawsuits, some woman in Texas just sued Dubya for orchestrating a campaign of harassment against her via police and government agencies, and alleges that she "dated" Dubya while still a minor.  Just random paranoia, or a scandal way bigger than any of the Paula Jones stuff they used on Clinton?  Hopefully, evidence will clarify things soon enough.)

One positive piece of news is that along with announcing the nomination of Donaldson, Bush reversed his effort to cut the SEC's budget to less than that called for by Congress.  That was itself a reversal from what Bush had publicly called for in his speech about corporate responsibility last spring, and got strong criticism from Congress.  Bush felt the sting, apparently, and then called for a budget a bit above Congress's, for 2004.

A couple of Pitt's underlings have also quit, as well as an official there who was apparently caught leaking semi-sensitive financial data to people in China.

The Republican desire to enforce a single top-down policy message on the party's rank and file, as manifested in Bush's economic policy non-changes, is also active in the House of Representatives: party leaders Tom DeLay and Dennis Hastert are pushing through rule changes that center the party power in the House in themselves, not in representatives with seniority.  They will appoint committee chairs, and so on, solely as they see fit.  It doesn't matter any more how distinguished your record is, it only matters whether you do what Hastert and DeLay tell you to do.  As an example of the new regime's criteria, freshman representative Katherine Harris -- yes, that Katherine Harris, the Florida secretary of state who worked so tirelessly to resolve the 2000 election mess in a fair and balanced way, as long as Bush won -- has been picked as an assistant majority whip before even serving one day in Washington.

And speaking of appointments that do nothing to restore public confidence, picking Henry Kissinger to head the commission investigating 9/11 pretty much speaks for itself, and there's not much more I need to say about it.  I'll just quote (as best I can from memory) the guy on the MacNeil/Lehrer report who compared it to "putting velcro-fingers Wynona Rider in charge of Bloomingdale's security, or putting Dracula in charge of the blood bank."  Someone else compared finding Kissinger back in government to finding maggots in one's sandwich.  Molly Ivins said "The only time I ever interviewed Kissinger, he told me three lies in the first sentence he spoke."  Someone else pointed out that the "realpolitik" that Kissinger famously practiced was not only free of ethics, it was mostly free of success.

Even many conservatives were rather appalled.  One interesting view on the appointment, publicized by Matt Drudge and others, is that Kissinger might see this as an opportunity to stab Donald Rumsfeld in the back with embarrassing revelations -- returning the favor that Rummy did him back in 1976.  This is the one scenario under which people are speculating that the commission might really uncover something good.  That right there speaks volumes about how much confidence Kissinger is inspiring.  Judicial Watch was muttering about a suit to investigate how and why Kissinger was picked.

Fortunately, Kissinger has dropped the appointment.  He was being pressured to list his consulting clients with middle-eastern ties, in order to reveal any conflicts of interest, and he wouldn't do it.  First he tried to claim attorney-client privilege, which is totally bogus, then when that didn't fly and the Senate Governmental Affairs Committee's legal staff reported that he was obliged to reveal the names, he refused the job.  (Another who has refused the job, for different reasons, is George Mitchell, who was invited to be the head Democrat in the group.)

I really have to wonder why there's so much activity that creates the appearance of hiding something about 9/11.  I never would have assumed there was any dark secret to cover up... but some people are sure acting as if there is.  For instance, the families of 9/11 victims got together and agreed that they wanted former senator Warren B. Rudman (R-NH) appointed to the commission.  They said that Rudman was the only Republican they felt to be both highly qualified and sufficiently independent to be thorough and impartial.  But the GOP leadership blocked the choice.  The visible resistance is coming from Trent Lott, but some suspect the White House.  The panel will have five democrats and five republicans, but it takes six votes to issue a subpoena, and they fear that without one active and independent republican, the commission will be easily hamstrung.  It took huge congressional pressure to even get this commission formed in the first place, against White House resistance...

But Dubya may have finally stopped fighting it:  Kissinger's replacement is Tom Kean, the former governor of New Jersey -- a moderate Republican (that is, way to the left of most of his party) who is actually a friend of Bill Clinton.  Unlike Kissinger, this guy seems to be getting some positive notices.  About the worst I've heard anyone say about him is that he's in the oil and gas industry.  And somebody mumbled that he may be gay and closeted, and therefore vulnerable to blackmail, but as far as I know that's pure speculation.  We'll just have to see whether he really does his job, or whether the fix is still in somehow.

Also named to the commission is former Illinois governor James R. Thompson.  He was picked by Dennis Hastert.  He also seems to be considered a Republican of above-average trustability.  Looks like the GOP heard the "No Kissingers" message loud and clear.  But oddly, I hear the same "closet case" rumor about him as about Kean.

Another appointment of the un-reassuring kind was, of course, picking John Poindexter -- the guy who was apparently the brains behind the Iran/Contra affair -- a few months ago to run the new Pentagon office that snoops on everyone's e-mail and even digs through people's medical records.  This is the fruit of passing the USA-PATRIOT act last fall.  Now the Fourth Amendment is trampled not just on paper but in practice.

And another Iran/Contra figure also got a new appointment: Elliott Abrams.  He's just been picked for a role on the national security staff, in charge of Near East and North African Affairs, for which he was legally qualified because he got a pardon from the previous President Bush.  And hey -- Richard Secord, another Iran/Contra figure, just got named in a case of insider stock dumping.

The elder President Bush, it's just been announced, is going to have a new aircraft carrier named after him, to be completed in 2009.  Which leads to...  well, it's very tempting to go on a rant about Trent Lott and Strom Thurmond -- about how Lott was already a favorite for claiming Thurmond's title of Most Disgraceful Senator even before he came out in favor of Thurmond's segregationism, and about how the Old South segregationists and white supremacists seem to have a continuing grip on the Republican party, like a bulldog whose jaws can't be pried open even after it's dead -- but that's not really on topic for a space focusing on corruption.  But I have to mention that Dubya is dubbing a C-17 cargo plane -- the 100th built -- as the "Spirit of Strom Thurmond".

Finally, an update on the status of the McCain-Feingold campaign finance reform law.  The Federal Election Commission is once again unilaterally loosening the new election rules without a congressional mandate to do so.  This time they relaxed the rules on coordination between candidates and outside interest groups to run unified ad campaigns.  (They also ruled that campaign funds can be used to pay a salary to the candidate during the race.  This is defended on the grounds that it makes it easier for non-millionaires to run.)  John McCain is still pissed at Bush for delaying the appointment of Ellen Weintraub to the Commission, and with good reason:  Bush finally allowed her appointment to go forward one day after the FEC was finished writing all these new rules for how it "interprets" the McCain-Feingold law.  McCain called this timing "cynical", called the White House's overall actions "orchestrated and systematic undermining" of the McCain-Feingold law, and said he will now "assume all future assurances and promises by this administration to be quite possibly insincere."

The law has hit its first court challenge, as long expected.  Opponents charge that regulating campaign contributions is a violation of free speech.  The case is expected to be fast-tracked to the Supreme Court some time in the spring, regardless of how the lower court rules.

It's been a while since we've caught up on minor corruption stories, and there are many that got missed in the last few months, so I'm going to make a big ole grab-bag list of brief story summaries.  There are so many that I have to divide them into categories.  Something for everyone!







Believe me, there's more.  Maybe I should just update a list like this every day or two.  I don't see how else to keep the quantity manageable.

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