Getting to the bottom of Enron

The Enron ironies just keep on coming. Take, for instance, the fact that the Office of Independent Counsel no longer exists, after Congress let the Watergate-inspired law lapse in 1999. Today, the job of appointing a special prosecutor belongs to Attorney General John Ashcroft. But whoops! Ashcroft just recused himself from anything to do with Enron, citing $50,000 of campaign contributions. Not only that, Ashcroft's chief of staff has also recused himself. As has the entire staff of the U.S. attorney's office in Houston, where it appears every other lawyer has a sister or husband either working for Enron or stalking the streets in blind fury brought on by the collapse of their Enron stock-dominated retirement funds.

At this rate, some junior Justice Department flunky in rural South Dakota will have to choose the prosecutor, and even then, options will be limited. If they aren't recusing themselves, name-brand lawyers are being snapped up by Enron execs faster than you can say "cooking the books." All-star litigator David Boies is representing Andrew Fastow, Enron's former CFO, while Robert Bennett, Clinton's old lawyer, is helping out Ken Lay.

Not all observers believe that an independent counsel, in the inimitable style of Ken Starr, is required in the case of Enron. Roger Porter, a professor of business and government at Harvard, says, "The independent counsel statute was set up to investigate actions taken by government officials. It's designed to say, 'Government officials have done something wrong and instead of having other government officials come in and investigate them, we should have someone independent.' But no one at Enron is a government official; no one at Arthur Andersen is a government official. If they've done something wrong, the government, not an independent counsel, should be the one doing the investigating. And that's what's happening."

Well, maybe. But a report released Friday by the Center for Public Integrity shows that at the time of their filings, 14 out of the top 100 Bush officials owned stock in Enron, worth anywhere between $284,016 and $886,000. The White House is full of appointees who served on Enron boards, as Enron advisors and consultants and even as Enron executives. So to say that no one at Enron is a government official is a shade inaccurate: There are plenty of people who were at Enron who are government officials.

But then again, who doesn't have a conflict of interest in the Enron scandal? No less than 71 currently serving senators (including 29 Democrats) received campaign contributions from Enron. One hundred eighty-eight representatives (including 71 Democrats) fed at Enron's trough. There's been talk of the Senate Banking Committee opening an investigation. But guess what? Phil Gramm, R-Texas, is on that committee, and his wife, Wendy, is a member of Enron's advisory board.

The more you look at how comfortably in bed politicians from both parties are with Enron, the more you wonder at the incongruity of Enron being considered an emblem of "deregulation" -- a cause that's ostensibly dedicated to keeping the affairs of business separate from those of government. Sure, Ken Lay talked a good game, particularly when the subject was California's "flawed" electricity deregulation plan. But as Peter Van Doren, editor of the Cato Institute's Regulation Magazine, notes, "The characterization of Enron being very much in favor of deregulation is incorrect."

"They are a company that got lots of its profits through gains that are politically created," says Doren. "They wanted restrictions on CO2 emissions and they wanted intervention on the electricity side. ... They were a very politicized firm."

And that gets right to the heart of the matter. There's a fundamental problem with a political system in which what gets deregulated and what doesn't is determined by politicians whose campaigns are largely funded by the companies who benefit from how regulations are enforced, applied and created. That's the opposite of both free-market and democratic principles.

Proponents of campaign finance reform have long decried the influence of money in politics. If there is a silver lining in the Enron debacle, it could be this: The disaster may finally be big enough to give reform the political backing it needs to pass.

There's nothing particularly new in a company attempting to influence legislation for its own purposes, nor is there anything new in a company fiddling with its numbers to boost its profits. What's so special about Enron and Bush is that, together, they managed to raise the art of government-business cooperation to a pinnacle so high that no one, no matter how blindered, can ignore it.

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