Capitalist pigs

The sordid tales of Enron plutocrats looting the company of its treasure as their employees and shareholders faced ruin are enough to turn you into a class warrior.

Topics: Enron,

A showdown is brewing in a Houston federal district court that makes most classic western face-offs look like kindergarten pillow fights.

On one side huddle 29 top Enron executives and board members who unloaded stock worth $1.1 billion over the last three years — a period during which, we now know, Enron was grossly misstating its true revenue and profit figures in its publicly available financial filings.

On the other side swagger a gaggle of class action lawyers doing their best Clint Eastwood “hang ‘em high” imitations, hired by Amalgamated Bank of Chicago — “A Union Bank for Unions and Union Members,” no less! — on behalf of pension funds and other shareholders who lost hundreds of millions of dollars when Enron collapsed. Their immediate goal: to freeze the bank accounts of those 29 Enron honchos while they go about their business convincing the judge of their mildly worded claim that “Enron is a grotesque fraud — a financial monstrosity of manipulation and falsification.”

Does class warfare get any better than this?

OK, even with the union angle, it’s a stretch to cast a bunch of big pension funds and other institutional investors in the role of the little guy who has nothing to lose but his chains. But there’s still something about this particular tussle that gets the proletarian-rage juices flowing. Treasury Secretary Paul O’Neill says that Enron’s collapse is the free market in action, evidence of the “genius of capitalism.” But in an age where the workers’ paradise of communism is remembered about as well as Herman’s Hermits, the lords of Enron somehow managed to pull off a feat so stunning one can only gape: They made capitalism look bad.

For starters, the $1.1 billion in stock gains by Enron insiders is just a conservative estimate based on what the execs were legally required to report. There are plenty of ways to get around such requirements, if you’re willing to operate in the higher altitudes of imaginative stock manipulation — a nether region where people actually understand what “zero cost collar” deals and “equity swaps” mean.



And if there’s one thing we can say with confidence about Enron executives, it’s that they weren’t afraid of such heights: If there was a dodgy, cutting-edge, “innovative” way to get around the spirit and letter of the law to be found, they were looking for it. This is a company, after all, that, in order to avoid paying federal income taxes, set up more than 800 subsidiaries in the Cayman Islands alone.

Ouch! Hanging’s too good for the likes of these rascals. In their greed to cash in, Enron’s executives didn’t just screw their own employees, shareholders, and bankers (not to mention American taxpayers); they discredited the whole system. One wonders who would be more delighted to see Ken Lay, Jeff Skilling, Andrew Fastow and the rest of these bunglers locked up in a stockade — the investors who had no idea of the extent of Enron’s shell game, or the Enron bosses’ counterparts at other “innovative” corporations, who are shuddering at the thought that their books might now get a thorough going-over by the IRS, the SEC and a legion of securities analysts. Who knows — Lay might even go down in history as the man who broke Wall Street!

Well, that’s probably not too likely. But at least we can be confident of one thing: Enron managers such as Fastow, who appears to have been the mastermind of the “special purpose entities” through which Enron hid so much of its debt and fueled so much of its growth, are going to have a hard time doing more damage over the next decade or so — they’ll be too busy defending themselves from the cascading flood of class action suits and criminal investigations bound to dog them for years to come. But is that enough of a punishment?

Drastic measures are clearly called for, if only to prevent the working people of this country from rising up in a tidal wave of wrath and swamping brokerages everywhere. After all, when one hears Robert Bennett, Lay’s lawyer, brazenly declare, “I am unaware of any evidence that supports the allegation there was improper selling by members of the board or senior management,” who wouldn’t be hard pressed not to run screaming around the streets with a hammer and sickle looking for something, anything, to expropriate?

The evidence is rapidly piling up that Enron’s executives sold stock when they already knew hard times were coming, that they lied about the financial health of their company to their employees, their shareholders and the analysts responsible for covering them and that they ignored the entreaties of some of their own in-house colleagues who begged them to clean up the mess before it was too late. When a senior staff attorney goes to the extraordinary lengths of secretly hiring outside counsel to determine whether Enron’s accounting practices are legal, you know things are pretty rotten.

If ever there was a case where a class action suit appeared to have a slam dunk chance of success, this would be the one. It’s also inconceivable that there won’t be substantive changes to accounting regulations and SEC reporting requirements as a result of the Enron implosion. But what about the 29 executives and board members (who, by the way, include Wendy Gramm, Sen. Phil Gramm’s wife): Will they serve jail time? Will they be forced to pay fines that make any kind of dent in the millions they’ve socked away? Will their lives be ruined, like the thousands of their employees who’ve lost their jobs and life savings?

Or do they already have enough cash to keep them safe from harm, no matter what happens? The Aspen Times reported on Tuesday that Ken Lay has put two of his three Aspen homes, as well as an empty lot, up for sale — for a total asking price of $16 million. But he’s still keeping one — his personal residence. Yup, he’s really feeling the pinch.

It’s going to be a fun time in that Houston courtroom this spring and summer, as the more than 60 class action suits already filed join together, and congressional inquiries continue to heat up. At the very least, one hopes that the Enron 29 will start to sweat.

Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

More Related Stories

Featured Slide Shows

  • Share on Twitter
  • Share on Facebook
  • 1 of 22
  • Close
  • Fullscreen
  • Thumbnails

    Once upon a time on the Bowery

    Talking Heads, 1977
    This was their first weekend as a foursome at CBGB’s, after adding Jerry Harrison, before they started recording the LP “Talking Heads: 77.”

    Once upon a time on the Bowery

    Patti Smith, Bowery 1976
    Patti lit up by the Bowery streetlights. I tapped her on the shoulder, asked if I could do a picture, took two shots and everyone went back to what they were doing. 1/4 second at f/5.6 no tripod.

    Once upon a time on the Bowery

    Blondie, 1977
    This was taken at the Punk Magazine Benefit show. According to Chris Stein (seated, on slide guitar), they were playing “Little Red Rooster.”

    Once upon a time on the Bowery

    No Wave Punks, Bowery Summer 1978
    They were sitting just like this when I walked out of CBGB's. Me: “Don’t move” They didn’t. L to R: Harold Paris, Kristian Hoffman, Diego Cortez, Anya Phillips, Lydia Lunch, James Chance, Jim Sclavunos, Bradley Field, Liz Seidman.

    Once upon a time on the Bowery

    Richard Hell + Bob Quine, 1978
    Richard Hell and the Voidoids, playing CBGB's in 1978, with Richard’s peerless guitar player Robert Quine. Sorely missed, Quine died in 2004.

    Once upon a time on the Bowery

    Bathroom, 1977
    This photograph of mine was used to create the “replica” CBGB's bathroom in the Punk Couture show last summer at the Metropolitan Museum of Art. So I got into the Met with a bathroom photo.

    Once upon a time on the Bowery

    Stiv Bators + Divine, 1978
    Stiv Bators, Divine and the Dead Boys at the Blitz Benefit show for injured Dead Boys drummer Johnny Blitz.

    Once upon a time on the Bowery

    Ramones, 1977
    “The kids are all hopped up and ready to go…” View from the unique "side stage" at CBGB's that you had to walk past to get to the basement bathrooms.

    Once upon a time on the Bowery

    Klaus Nomi, Christopher Parker, Jim Jarmusch – Bowery 1978
    Jarmusch was still in film school, Parker was starring in Jim’s first film "Permanent Vacation" and Klaus just appeared out of nowhere.

    Once upon a time on the Bowery

    Hilly Kristal, Bowery 1977
    When I used to show people this picture of owner Hilly Kristal, they would ask me “Why did you photograph that guy? He’s not a punk!” Now they know why. None of these pictures would have existed without Hilly Kristal.

    Once upon a time on the Bowery

    Dictators, Bowery 1976
    Handsome Dick Manitoba of the Dictators with his girlfriend Jody. I took this shot as a thank you for him returning the wallet I’d lost the night before at CBGB's. He doesn’t like that I tell people he returned it with everything in it.

    Once upon a time on the Bowery

    Alex Chilton, Bowery 1977
    We were on the median strip on the Bowery shooting what became a 45 single sleeve for Alex’s “Bangkok.” A drop of rain landed on the camera lens by accident. Definitely a lucky night!

    Once upon a time on the Bowery

    Bowery view, 1977
    The view from across the Bowery in the summer of 1977.

    Once upon a time on the Bowery

    Ramones, 1977 – never before printed
    I loved shooting The Ramones. They would play two sets a night, four nights a week at CBGB's, and I’d be there for all of them. This shot is notable for Johnny playing a Strat, rather than his usual Mosrite. Maybe he’d just broken a string. Love that hair.

    Once upon a time on the Bowery

    Richard Hell, Bowery 1977 – never before printed
    Richard exiting CBGB's with his guitar at 4am, about to step into a Bowery rainstorm. I’ve always printed the shots of him in the rain, but this one is a real standout to me now.

    Once upon a time on the Bowery

    Patti Smith + Ronnie Spector, 1979
    May 24th – Bob Dylan Birthday show – Patti “invited” everyone at that night’s Palladium show on 14th Street down to CBGB's to celebrate Bob Dylan’s birthday. Here, Patti and Ronnie are doing “Be My Baby.”

    Once upon a time on the Bowery

    Legs McNeil, 1977
    Legs, ready for his close-up, near the front door of CBGB's.

    Once upon a time on the Bowery

    Suicide, 1977
    Rev and Alan Vega – I thought Alan was going to hit me with that chain. This was the Punk Magazine Benefit show.

    Once upon a time on the Bowery

    Ian Hunter and Fans, outside bathroom
    I always think of “All the Young Dudes” when I look at this shot. These fans had caught Ian Hunter in the CBGB's basement outside the bathrooms, and I just stepped in to record the moment.

    Once upon a time on the Bowery

    Tommy Ramone, 1977
    Only at CBGB's could I have gotten this shot of Tommy Ramone seen through Johnny Ramones legs.

    Once upon a time on the Bowery

    Bowery 4am, 1977
    End of the night garbage run. Time to go home.

  • Recent Slide Shows

Comments

0 Comments

Comment Preview

Your name will appear as username ( settings | log out )

You may use these HTML tags and attributes: <a href=""> <b> <em> <strong> <i> <blockquote>