The Indictment of Enron’s "Kenny Boy" Lay

Jul 19, 2004

On July 8, federal prosecutors indicted Kenneth Lay, the former chairman and chief executive of Enron. Lay was finally shown on television in handcuffs, doing the perp walk.

The timing of the indictment, right before the election, was hardly a coincidence. Obviously, Bush is trying to show how "even-handed" and "fair" he is about cracking down on corporate crime. After all, who was closer to Bush than Lay, or, as Bush affectionately called him in the not so distant past, "Kenny Boy."

The indictment was also timed to ensure that the trial can’t be held until well and safely after the November election and therefore not be a constant reminder of the role Bush played in the rise of Enron and other rip-offs.

Up until Enron crashed and burned three years ago, Lay wielded enormous power in several Bush administrations: under Bush the father, the younger Bush as governor of Texas and today in the White House. Lay was one of the main architects of the deregulation of energy markets, gas pipeline, electricity, energy trading, etc. He also put his own people in key Bush administration posts, including the head of the Federal Energy Regulatory Commission (FERC) and George W. Bush’s first secretary of the army, who was a former Enron executive.

Of course, the indictment itself is very telling. Lay is charged with lying to stockholders and banks in the months and weeks before Enron went bankrupt. But Lay has not been charged with Enron’s business practices, that is, all the ways that Enron ripped off the public and its workforce, especially how Lay’s Enron and other big companies profited mightily from deregulation and privatization of energy and other services in this country and all over the world, by buying up, for example, water systems and electricity power companies for a song and then boosting the rates sky high to consumers.

Most famously is the case of how Enron, other "trading" companies, banks and utility companies made billions out of the California electricity crisis of 2000-2001, in effect, holding the entire state hostage by using blackouts and brownouts to push through enormous rate increases–the profits from which these companies then pocketed. For these companies, it was like found money. They didn’t even have to invest or produce anything to get it.

But have these companies, among which Enron was just one, been forced to give any of this money back? No, they haven’t even been forced to give up future profits that have been built into the energy deals that were made during the electric crisis. As a result, the people of California are still paying the same outrageously high electric bills, as they are expected to pay for decades to come.

Obviously, the other capitalists do not want this can of worms to be opened up in Lay’s trial or any other, especially since the California crisis was not an isolated case. There are plenty of other "deregulation," "privatization" and "energy crisis" schemes, that is, other rip-offs of the public. Just look at how the big oil companies got together to boost energy prices in the last year.

In fact, the Lay indictment is just a whitewash, not just for the Bush administration, but the rest of the capitalist class that it serves.