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Skyline - Houston, Texas

Thursday, May 25, 2006

Lay and Skilling Guilty!! Update


Bush and Co have issued a statement congratulating themselves.

Republicans are jumping on board.

While I wonder if they'll receive as much prison time as Martha or if they'll be given community service.


Update - Here's more from Truthout today

Lay Convicted, Bush Walks
By Greg Palast
t r u t h o u t | Perspective

Thursday 25 May 2006

Don't kid yourself. If you think the conviction of Ken Lay means that George W. Bush is serious about going after corporate bad guys, think again.

First, Lay got away with murder - or at least grand larceny. Like Al Capone convicted of failing to file his taxes, Ken Lay, though found guilty of stock fraud, is totally off the hook for his BIG crime: taking down California and Texas consumers for billions through fraud on the power markets. Lay co-convict Jeff Skilling and Enron did not act alone. They connived with a half dozen other power companies and a dozen investment banks to manipulate both the stock market and the electricity market. And though their co-conspirators have now paid $3 billion to settle civil claims, the executives of these other corporations and banks get a walk on criminal charges. Furthermore, to protect our president's boardroom buddies from any additional discomfort, the Bush Justice Department, just days ago, indicted Milberg-Weiss, the law firm that nailed Enron's finance industry partners-in-crime. The timing of the bust of this firm - the top corporation-battling law firm - smacks of political prosecution, and is a signal to Big Business that it's business as usual. Lay and Skilling have to pay up their ill-gotten gains to Enron's stockholders, but what about the $9-plus billion owed to electricity consumers? The Federal Energy Regulatory Commission, Bush's electricity cops, have slapped Enron and its gang of power pirates on the wrist. Could that have something to do with the fact that Ken Lay, in secret chats with Dick Cheney, selected the Commission's chairmen? Team Bush had to throw the public a bone, so they threw us Lay and Skilling for the crime - note - not of ripping off the public, but of ripping off stockholders - the owner class. This limited conviction, and the announcement of only one more indictment - of the crime-busters at Milberg-Weiss - is Team Bush's "all clear!" signal for the sharks to jump back into the power pool.

That leaves one question: If Bush's Justice Department let Ken and company keep the California loot, what about that state's own government? If you want to know how Californians' $9 billion went bye-bye, read on...

When Ahnold Got Lay'd

Peninsula Hotel, Beverly Hills. May 17, 2001. The Financial Criminal of the twentieth century, not long out of prison, meets with the Financial Criminal of the twenty-first century, who fears he may also have to do hard time. These two, bond-market manipulator Mike Millikin and Ken Lay, not-yet-indicted Chairman of Enron Corporation, were joined by a selected group of movers and shakers - and one movie star.

Arnold Schwarzenegger had been to such private parties before. As a young immigrant without a nickel to his name, he put on private displays of his musculature for guests of his promoter. As with those early closed gatherings, I don't know all that went on at the Peninsula Hotel meet, though I understand Ahnold, this time, did not have to strip down to his Speedos. Nevertheless, the moral undressing was just as lascivious, if you read through the 34 page fax that arrived at our office.

Lay, who convened the hugger-mugger, was in a bit of trouble. Enron and the small oligopoly of other companies that ruled California's electricity system had been caught jacking up the price of power and gas by fraud, conspiracy and manipulation. A billion here, a billion there, and pretty soon it was real money - $6.3 billion in suspect windfalls in just six months, May through December 2000, for a half-dozen electricity buccaneers, at least $9 billion for the year. Their skim would have been higher, but the tricksters thought they were limited by the number of digits the state's power-buying computers could read.

When Ken met Arnold in the hotel room, the games were far from over. For example, in June 2003, Reliant Corporation of Houston simply turned off several power plants, and when California cities faced going dark, the company sold them a pittance of kilowatts for more than gold, making several million in minutes.

Power-market shenanigans were nothing new in 2000. What was new was the response of Governor Gray Davis. A normally quiet, if not dull, man, this Governor had the temerity to call the energy sellers "pirates" - in public! - and, even more radically, he asked them to give back all the ill-gotten loot, the entire $9 billion. The state filed a regulatory complaint with the federal government.

The Peninsula Hotel get-together was all about how to "settle" the legal actions in such a way that Enron and friends could get the state to accept dog food instead of dollars. Davis seemed unlikely to see things Ken's way. Life would be so much better if California had a governor like the muscle guy in the Speedos.

And so it came to pass that, in 2003, quiet Gray Davis, who had the cojones to stand up to the electricity barons, was thrown out of office by the voters and replaced by the tinker-toy tough guy. The Governator performed as desired. Soon after Schwarzenegger took over from Davis, he signed off on a series of deals with Reliant, Williams Company, Dynegy, Entergy and the other power pirates for ten to twenty cents on the dollar, less than you'd tip the waitress. Enron paid just about nothing.


On June 6, Penguin Dutton will publish Greg Palast's new book, Armed Madhouse: Dispatches From the Front Lines of the Class War, from which this is taken. Armed Madhouse includes the Project Censored Award-winning story of George Bush and the Enron chief, "Power Outage Traced to Dim Bulb in White House." Order it today.

Palast, an internationally recognized expert on Enron and electricity market manipulation, is co-author of Democracy and Regulation, the United Nation's guide to control of the utility industry.

Special thanks to the Foundation for Taxpayer and Consumer Rights, Los Angeles,, who first uncovered the confidential Peninsula Hotel documents.

View Palast's investigative reports for Harper's Magazine and BBC Television's Newsnight at



  • At Thursday, May 25, 2006 7:17:00 PM , Blogger JBlue said...

    Never thought it would actually happen.

  • At Thursday, May 25, 2006 7:26:00 PM , Blogger Granny said...

    It hasn't happened yet. I'm waiting for the sentencing and then the 20 years of appeals.

  • At Friday, May 26, 2006 1:20:00 AM , Blogger David Cho said...

    I dunno, Granny. The truthout piece seems rather petty to me. I don't expect it give Bush props, but no matter how you look at it, these two guys are done.

    I am certain that some shinanigans that went on during the California energy fiasco, but certainly California politicians have not articulated what allegedly took place and if crimes took place at all. They exploited loopholes created by deregulation, and proving if crimes took place would have been a monumental task.

    And this is Noticed their "partial apology" for the premature announcement of the Rove indictment which has yet to pan out.

    There are tons of reasons to criticize the Bush administration, and we can do without the petty shrillness from a site devoid of credibility.

  • At Friday, May 26, 2006 1:34:00 AM , Blogger Granny said...

    You could be right. Evidently truthout jumped the gun with Rove. We may never know where the actual truth lies. In the past, they've been okay, at least on the things I've quoted (which have usually been reprints, not original articles).

    In any event, I have no problem believing, even if it's never proven, that politicians + huge corporations = monkey business. The executives usually go unscathed while the vast majority of working people are hurt and in Enron's case, almost ruined.

    They will always find loopholes and call it doing business. Legal doesn't equal ethical, no matter which party or which corporation is involved.

  • At Friday, May 26, 2006 12:04:00 PM , Blogger David Cho said...

    I agree with you on the toxic combination of politicians and huge corporations. Big Business and Big Government go hand in hand which is why I have come to distrust both parties.

    However in Enron's case, the executives have not gone unscathed. So far, three of the major players are behind bars, and more will be joining the big house. As imperfect as our system is, we still far better than the rest of the world especially third world countries. I was born and raised in one of those. Wanna talk about Mexico? But I know. Bush is looking increasingly like a third world country despot.

    As to the Rove indictment, it's either happened, or it hasn't. There is no such thing as a secret indicment, and I think it is safe to say that Truthout has blown it. It has been two weeks since they made that announcement.


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