Special Privileges for Sale
What Enron Got For Its Political Contributions
Here is a summary of the special privileges that Enron purchased from governments. Do not consider this list to be final -- as the scandal continues to unfold, more corruption is likely to be uncovered.
1. Commodity Futures Trading Commission (CFTC) Gives Exemption From Oversight
Enron’s principal business, commodities trading, was successful largely because of deregulation of the commodities market. Wendy Gramm oversees deregulation of some types of commodity trading at Enron as Commissioner of CFTC. Several weeks after passing the exemption and resigning from CFTC, Ms. Gramm takes position on Board of Directors at Enron. Enron is also major contributor to husband, Senator Phil Gramm.
2. Congress Widens Exemption
Congress passes Commodity Futures Modernization Act of 2000 that further rolls back regulation of electronic trading of futures through what becomes know as the “Enron Exclusion” in the bill.
3. Special Provisions In National Energy Policy
The National Energy Policy calls for opening up access for energy traders to regional transmission lines and recommends breaking up monopoly control of electricity transmission networks, a longtime Enron goal. Kenneth Lay and/or representatives from Enron reportedly met at least six times with members of the National Energy Policy Development Group.
The Minority Staff of the Committee on Government Reform reported that at least 17 policies in the White House energy plan were advocated by Enron or benefited the company financially and many were virtually identical to the policies Enron advocated.
4. Tax Breaks
The House-passed stimulus package in 2000 secures a $254 million tax break for Enron by repealing the alternative minimum tax.
5. Export Promotion
In 1997, Lay asked then-Governor Bush to contact every member of the Texas delegation to explain how "export credit agencies of the United States are critical to U.S. developers like Enron, pursuing international projects in developing countries." These agencies provide risk coverage and financial support to U.S. companies abroad.
6. Foreign Contracts
In 1994, the Washington-based Export-Import Bank approved a $302 million loan toward a $3 billion Enron-controlled power plant in India. President Clinton took an interest in the deal, asking the U.S. ambassador to that country and his former chief of staff, Thomas F. "Mack" McLarty, then a presidential adviser, to monitor the proposal. Mr. McLarty - who later became a paid Enron director - spoke with Mr. Lay on several occasions about the plant. In 1996, four days before India granted approval for Enron's project, the Houston-based firm contributed $100,000 to the Democratic Party.
More recently, the Bush administration lobbied the Indian government on behalf of Enron to settle a dispute involving the power plant. Including calls from Vice President Cheney to an Indian official, the administration’s efforts intensified just as Enron’s financial condition became dire. In fact, President Bush’s National Security Council led a “working group” to help Enron resolve its problems in India.
The Clinton administration threatened to cut Mozambique’s aid in 1995 if the world’s poorest country did not award a pipeline contract to Enron.
7. Government Funded Loans (Corporate Welfare)
The Export-Import Bank and the Overseas Private Investment Corporation, both government bodies, made $1.2 billion in loans to Enron to help the company pursue projects overseas.
8. Favorable Treatment In Texas Supreme Court
Since 1993, Enron was a party to six petitions for review in the Texas Supreme Court. The court accepted two of the three petitions brought by Enron (66 percent) and denied all three petitions brought by its adversaries (100 percent). This is an incredible record in a court that accepts 11 percent of all petitions. In both Enron petitions that the High Court heard, the justices reversed lower appeals courts to rule in Enron’s favor. Texas High Court justices have taken $134,058 from Enron’s PAC and executives since 1993.
9. Exemption From Pollution Control
Enron plants around Houston -- which surpassed Los Angeles for the title to the nation’s worst air -- are “grandfathered” air polluters that exploit a loophole in state law to avoid installing modern pollution-control technologies.
10. Former Employees Hired Into Influential Government Positions
Texas Governor Rick Perry, who received $187,000 of Enron money, appointed former Enron de Mexico President Mario Max Yzaguirre as Public Utility Commission chair in June 2001. (Perry received his check from Enron one day after making the appointment.)
11. Corporate Welfare From Baseball Fans
In 2000, the Houston Astros inaugurated their new Enron Field, which was financed with $180 million in public tax dollars and $100 million from Enron. In return, Enron landed tax breaks and a $200 million contract to power the stadium.
For a list of sources on the above, as well as further information on the Enron scandal, visit the web site of Common Cause.
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