Congressional Corruption and the Managing of the Enron Scandal

Published Feb. 28, 2002 /

IN watching the Enron hearings, it seems a shame that we do not have a live analyst like Olympic skating events to describe the sheer brilliance of some of the moves of the members. Without a guide, a viewer is often unaware of the level of difficulty of previously Enron-sponsored members performing demonstrations of public interest. For these members, the transformation from Enron advocates to public advocates is akin to a triple-axel jump while holding an over-stuffed bank bag.

The Enron hearings have actually shown Congress at the top of its game as the master of investigations. Just as some demolition companies are skilled in controlled explosions that can drop a building without touching adjoining structures on either side, Congress can control a scandal so that it implodes in just the right way to avoid any injury to its members in this case, members who were sitting on the laps of the designated defendants like Kenneth Lay.

Former advocates of Enron need these hearings for a dose of personal rehabilitation. For example, Rep. Sheila Jackson-Lee (D, Houston) was one of the greatest recipients of Enron largess. Jackson-Lee was one of Lay¹s “projects” when he served as her fund-raising chairman and kept her well-supported in contributions. Jackson-Lee, who is fighting an ethics controversy on a different front, has been busy reinventing herself from Enron promoter to converted reformer in media events around town.

Likewise, other members have expressed surprise that, after Enron successfully lobbied them for looser regulation, the company engaged in shady dealings. This included the so-called “Enron Exemption” that allowed companies to withhold reporting information on trades as well as accounting practices that allowed for conflicts in interest. Like Claude Rains in Casablanca, they are now all officially “shocked, shocked” to find Enron executives gambling with stockholders¹ money.

C-Span should publish a viewer¹s guide for citizens to understand the upcoming performances in these hearings. For the uninitiated, there are a few things to watch for. First, listen for “threats” of immunity. There is already some talk of “forcing” these men to testify with grants of immunity. Immunity grants can actually protect individuals like Lay from prosecution in the name of public inquiry. For example, a grant of immunity to Col. Oliver North ultimately led to the overturning of his criminal conviction.

Viewers should also look for the selection of “designated defendants,” including Lay, Andrew Fastow and Michael Kopper. This is why the public witnessed the largely empty exercise of forcing Lay to appear so that he would refuse to testify. Other executives like Enron¹s Jeff Skilling walked right into the trap and now appear the focus of possible criminal charges stemming from conflicts in their testimony.

Next viewers should look for the selection of the heroes who resisted the Enron cabal. These include figures like accountant Sherron Watkins, executive Margaret Ceconi, and lawyer Jordan Mintz. This may require a bit of rehabilitation since only Ceconi appears to have taken the step to notify federal authorities of possible fraud or to move meaningfully outside of the company to protect investors or employees.

Viewers should also listen for any reference to the “matrix,” a taboo subject for some members. Enron reportedly reduced political influence peddling to a science with a computer matrix that calculated the costs of changing rules and laws to advance its interests. Congress is not eager to reveal how easy it was for Enron to flourish in this environment, including significant changes that helped conceal or facilitate its activities.

Finally, viewers will see two different approaches to testimony emerge in the coming weeks. Designated defendants will continue to push the hearings into minutiae and detail. Except for CPAs on the edge of their seats last week, most Americans found the hearings to be a cure for insomnia in the complex dealings of this company. This is exactly what some witnesses will strive for. Members, however, will attempt to personify and simplify the nature of this conduct. This is why members will focus questions on certain people like Lay to create a reference points for the public to follow.

Of course, these hearings may come at a cost. There is little question as to which laws need to be changed or how Enron was able to commit these acts. Any true accountability will be found not in a committee room but a courtroom. However, Enron and Anderson committed the mortal sin of exposing their most intimate friends and they will be punished for their transgressions. Lay and other Enron executives are now learning the oldest rule of intimacy within the Beltway: scratch a lover, find a foe.