Thursday, June 17, 2004
Cheney, Enron, and Grandma Millie -- What Did Dick Know and When Did He Know it?
There are so many scandals across the country that deal with Enron that it's hard to keep track of them. But recently released tapes of conversations between Enron traders may help connect the dots.
I have an op-ed here in today's San Francisco Chronicle asking Vice President Cheney to tell the American people if he knew about Enron's ploys to game the California energy market.
UPDATE: It appears that there is a lot of interest in this story and that there will be ongoing developments. Sign up here if you'd like to receive updates about Enron as they break.
Some background on these scandals (see also our fact sheet here for some background on Ken Lay and Enron):
1) It has long been speculated that the rolling blackouts and price spikes that California endured in 2000-2001 were not really a result of a shortage of electricity, but rather the result of intentional power shortages caused by energy companies in order to drive up the price (not unlike OPEC deciding to cut oil production to drive up gas prices.) In 2002, an internal Enron memo dated December 6, 2000 was released that described schemes named "Fat Boy," "Ricochet," "Death Star," "Get Shorty," and others for artificially creating congestion on California's power grid, basically proving these speculations as correct.
But, what's new in the past week is the release of tape transcripts that show just how brazen Enron traders were. They clearly knew they were ripping off consumers big time, talking about how they "stole" from "grandma Millie" in California, rephrasing things like "stealing millions" from California to "arbitraging" the market. It's pretty sick. You can read some excerpts from the transcripts here at the San Francisco Chronicle.
2) We've also known that Enron had groomed George W. Bush as their politician of choice and had used massive amounts of money to ensure that Bush got into positions of power where he could help Enron. The Washington Post reported that Ken Lay had known Bush since at least 1992, and that Lay and other Enron execs gave Bush $146,500 to help him unseat Ann Richards as Governor of Texas in 1994. Enron and their executives went on to become the biggest career patrons of Bush up until March of this year, when MBNA claimed that honor (Enron's contributions have taken a hit due to their bankruptcy you know, so it's tough for them to keep up.) So, its clear that the folks at Enron thought a Bush presidency would be a good thing for them. See my Feb 19 post here detailing the political contributions of Jeff Skilling, and Dec 15 post here about Enron's contributions to Connecticut's scandalous Governor just to give you and idea of how these guys used money to get and keep friends in office.
3) California started experiencing rolling blackouts on Jan 17, 2001. Three days later, George Bush took office. One of his top priorities was energy policy, and he put former energy CEO Dick Cheney in charge. By Feb 22, Cheney had pulled together a task force of other energy CEOs, including Ken Lay of Enron. We know that Cheney and Ken Lay met privately at least six times and that they discussed the California energy crisis. We know that Ken Lay gave Cheney a memo with Enron's suggestions for what would be great energy policy for them and that many of these suggestions wound up in the Bush energy plan.
4) We also know that Vice President Cheney isn't interested in disclosing who he met with in his energy task force and what they talked about. The Congressional General Accounting Office asked him, and he refused to say. So, our own Congress had to sue our own Vice President to find out what he was up to. They lost, and chose not to appeal. But, Judicial Watch (the same group that went after Bill Clinton about Gennifer Flowers, Paula Jones and other scandals of his) also sued, and their case was heard by the Supreme Court this April.
What we didn't know until recently is why Cheney was fighting so hard to keep from telling us what he and Ken Lay discussed. Investigative reporter Jason Leopold writes here and here that the tape transcripts clearly indicate that Enron Vice President of Regulatory Affairs, Richard Shapiro, was told by Tim Belden, head of Enron's Western Trading division about their efforts to game the California market. So, the question of the day is, "If Shapiro knew, did Ken Lay?" And the question of tomorrow is "if Ken Lay knew, did Dick Cheney know too?"
There are some reasons to believe that Lay would have known, he was the Chairman and CEO of the company after all. Leopold concludes that he did. Belden says on tape that his West Coast trading division was responsible for 80% of Enron's profits in 2000-2001, so it's likely that Ken Lay paid close attention. Leopold reports that Ken Lay flew to Portland to take Belden out to dinner and congratulate him on his work on March 9, 2001. If Lay didn't already know, seems like he would have asked Belden how he was doing it, doesn't it?
There are also reasons to believe that Cheney might have realized what was going on. I mean, if you were the Vice President and:
A) responsible for formulating our national energy policy, and
B) an expert on energy issues from all your years in government, and
C) a former energy services CEO yourself,
wouldn't you ask some questions about the biggest energy crisis in the country when talking to the head of one of the most important energy companies around? Cheney's task force report to the President mentions the California energy crisis some 110 times, so clearly it was on his mind. We know now that Enron and other companies were the real cause. The question is, did Cheney know this at the time? And if not, why didn't he press harder to figure this out?
There are so many scandals across the country that deal with Enron that it's hard to keep track of them. But recently released tapes of conversations between Enron traders may help connect the dots.
I have an op-ed here in today's San Francisco Chronicle asking Vice President Cheney to tell the American people if he knew about Enron's ploys to game the California energy market.
UPDATE: It appears that there is a lot of interest in this story and that there will be ongoing developments. Sign up here if you'd like to receive updates about Enron as they break.
Some background on these scandals (see also our fact sheet here for some background on Ken Lay and Enron):
1) It has long been speculated that the rolling blackouts and price spikes that California endured in 2000-2001 were not really a result of a shortage of electricity, but rather the result of intentional power shortages caused by energy companies in order to drive up the price (not unlike OPEC deciding to cut oil production to drive up gas prices.) In 2002, an internal Enron memo dated December 6, 2000 was released that described schemes named "Fat Boy," "Ricochet," "Death Star," "Get Shorty," and others for artificially creating congestion on California's power grid, basically proving these speculations as correct.
But, what's new in the past week is the release of tape transcripts that show just how brazen Enron traders were. They clearly knew they were ripping off consumers big time, talking about how they "stole" from "grandma Millie" in California, rephrasing things like "stealing millions" from California to "arbitraging" the market. It's pretty sick. You can read some excerpts from the transcripts here at the San Francisco Chronicle.
2) We've also known that Enron had groomed George W. Bush as their politician of choice and had used massive amounts of money to ensure that Bush got into positions of power where he could help Enron. The Washington Post reported that Ken Lay had known Bush since at least 1992, and that Lay and other Enron execs gave Bush $146,500 to help him unseat Ann Richards as Governor of Texas in 1994. Enron and their executives went on to become the biggest career patrons of Bush up until March of this year, when MBNA claimed that honor (Enron's contributions have taken a hit due to their bankruptcy you know, so it's tough for them to keep up.) So, its clear that the folks at Enron thought a Bush presidency would be a good thing for them. See my Feb 19 post here detailing the political contributions of Jeff Skilling, and Dec 15 post here about Enron's contributions to Connecticut's scandalous Governor just to give you and idea of how these guys used money to get and keep friends in office.
3) California started experiencing rolling blackouts on Jan 17, 2001. Three days later, George Bush took office. One of his top priorities was energy policy, and he put former energy CEO Dick Cheney in charge. By Feb 22, Cheney had pulled together a task force of other energy CEOs, including Ken Lay of Enron. We know that Cheney and Ken Lay met privately at least six times and that they discussed the California energy crisis. We know that Ken Lay gave Cheney a memo with Enron's suggestions for what would be great energy policy for them and that many of these suggestions wound up in the Bush energy plan.
4) We also know that Vice President Cheney isn't interested in disclosing who he met with in his energy task force and what they talked about. The Congressional General Accounting Office asked him, and he refused to say. So, our own Congress had to sue our own Vice President to find out what he was up to. They lost, and chose not to appeal. But, Judicial Watch (the same group that went after Bill Clinton about Gennifer Flowers, Paula Jones and other scandals of his) also sued, and their case was heard by the Supreme Court this April.
What we didn't know until recently is why Cheney was fighting so hard to keep from telling us what he and Ken Lay discussed. Investigative reporter Jason Leopold writes here and here that the tape transcripts clearly indicate that Enron Vice President of Regulatory Affairs, Richard Shapiro, was told by Tim Belden, head of Enron's Western Trading division about their efforts to game the California market. So, the question of the day is, "If Shapiro knew, did Ken Lay?" And the question of tomorrow is "if Ken Lay knew, did Dick Cheney know too?"
There are some reasons to believe that Lay would have known, he was the Chairman and CEO of the company after all. Leopold concludes that he did. Belden says on tape that his West Coast trading division was responsible for 80% of Enron's profits in 2000-2001, so it's likely that Ken Lay paid close attention. Leopold reports that Ken Lay flew to Portland to take Belden out to dinner and congratulate him on his work on March 9, 2001. If Lay didn't already know, seems like he would have asked Belden how he was doing it, doesn't it?
There are also reasons to believe that Cheney might have realized what was going on. I mean, if you were the Vice President and:
A) responsible for formulating our national energy policy, and
B) an expert on energy issues from all your years in government, and
C) a former energy services CEO yourself,
wouldn't you ask some questions about the biggest energy crisis in the country when talking to the head of one of the most important energy companies around? Cheney's task force report to the President mentions the California energy crisis some 110 times, so clearly it was on his mind. We know now that Enron and other companies were the real cause. The question is, did Cheney know this at the time? And if not, why didn't he press harder to figure this out?
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