Aug 12, 2002
Over the last few weeks, the Bush administration and Congress have gone to great lengths to prove that they are cracking down on corporate corruption. On July 30, President Bush signed “a sweeping corporate fraud” bill. At the signing, Bush proclaimed, “No more easy money for corporate criminals, just hard time.”
Bush’s Justice Department also showed that it was acting in this new “spirit.” It arrested and charged several top corporate executives, including David F. Myers and Scott Sullivan from MCI-WorldCom, John Rigas and his two sons from Adelphia Communications, and Samuel Waksal from ImClone. The Justice Department made sure that they all were shown in handcuffs, doing the same “perp walk” as ordinary criminals.
But while all this was going on, Enron, the granddaddy in this outbreak of corporate scandals, kept on making headlines. Congressional investigations and news reports revealed that three of the biggest financial behemoths in the world, Citicorps, J.P. Morgan, and Merrill Lynch were instrumental in working with Enron to create private, offshore partnerships that Enron used to hide its profits and losses. These partnerships allowed Enron to avoid paying taxes and boosted its stock price. According to one revelation, in January 2000 Merrill Lynch engineered a series of phoney trade with Enron, that resulted in Enron reporting a phoney 60 million dollar profit. This 60 million dollars then allowed Enron to boost its stock price. Immediately afterwards, Enron executives exercised their stock options and cashed in. Of course, Enron richly rewarded Citicorps, Merrill Lynch and J.P. Morgan for their services.
So, why hasn’t the Justice Department yet announced any arrests at Enron or at all those financial companies that have been instrumental in allowing Enron – and who knows how many other companies – to fabricate their profits? According to the Wall Street Journal, making a case against Enron and the financial companies is much more complicated. Undoubtedly what is meant by “complicated” are not just the crooked financial maneuvers, but all of Enron’s links to the upper reaches of the business world as well as the government. What especially counts are the Enron links to the Bush administration, the very people in charge of prosecuting Enron. Enron’s former chairman, Ken Lay, or as George W. Bush affectionately called him, “Kenny-Boy,” has been doing business with the Bush family for a long time. Among other things, Lay provided Bush with a private plane for his 2000 presidential campaign. Besides that, key members of the Bush administration either came out of Enron, such as Secretary of the Army Thomas White and Bush’s top economic adviser, Lawrence Lindsey, or received big bucks from Enron, such as Attorney General John Ashcroft, who received $58,499 in campaign contributions.
The benefit of all the corporate scandals is that it brings out in the open what usually goes on behind closed doors. The passage of a few laws and the arrests of a few executives will not change that. On the contrary, this supposed crackdown is a mere show, meant to protect the bigger and better connected players and institutions. The entire capitalist system is rotten and corrupt. It always has been. And it always will be.