Wendy L. Gramm, the top commodities regulator in the first Bush administration and the wife of Senator Phil Gramm (R-TX) was invited to serve on Enron's board in 1993. She accepted a seat on the board five weeks after she pushed through a ruling at the Commodity Futures Trading Commission that would exempt Enron from regulation.1

1 "Electricity, Commodities Deregulation Allowed Enron to Loot Billions from Lenders, Shareholders, Employees and Consumers: Tangled Web of Deceit, Political Influence Must be Unraveled by Congress." Public Citizen (www.citizen.org). Dec. 21, 2001.

United States Trade Representative Robert B. Zoellick served on the Advisory Council of Enron Corporation.2 His income included $50,000 in advisory fees from Enron.3

2 www.ustr.gov
3 http://www.essential.org/monitor/mm2001/01may/may01bushcc.html

Political Advisor Karl Rove owned as much as $250,000 in Enron stock.4 Rove also reported investments in BP Amoco and Royal Dutch Shell.5 Mr. Rove also took part in meetings to shape the energy policy while he still owned his energy company stock.6

4 Polaris Institute, Enron Corporate Profile
5 "Will Bush be tarnished by Enron's collapse?" Andrew Leonard. Salon. Nov. 30, 2001.
6 "Enron's Influence Reached Deep into the Administration: Ties Touched Personnel and Policies" Dana Milbank and Glenn Kessler. The Washington Post. Jan. 18, 2002.

Lawrence B. Lindsey, President Bush's Chief Economic Advisor, received $50,000 last year from Enron for consulting.7 In 1999 and 2000, Lindsey attended meetings of Enron's economic advisory board. Mr. Lindsey later incorporated some of the ideas from those meetings into the Bush campaign's energy policy. Besides that connection, Lindsey's consulting firm had an Enron unit among its clients.8

7 Polaris Institute, Enron Corporate Profile
8 "Enron's Influence Reached Deep into the Administration: Ties Touched Personnel and Policies" Dana Milbank and Glenn Kessler The Washington Post. Jan. 18, 2002.

Undersecretary of State for Public Diplomacy Charlotte L. Beers had holdings of more than $100,000 in Enron.9

9 "Enron's Influence Reached Deep into the Administration: Ties Touched Personnel and Policies" Dana Milbank and Glenn Kessler The Washington Post. Jan. 18, 2002.

Gov. George W. Bush made a telephone call in October 1997 on behalf of Ken Lay to Pennsylvania Gov. Tom Ridge to help Enron gain entry into strictly regulated electricity market in Pennsylvania.10

10 "Connect the Enron Dots to Bush" Robert Scheer. Los Angeles Times. Dec 11, 2001

The Minority Staff of the Committee on Government Reform reported that at least 17 policies in the White House energy plan were supported by Enron and/or benefited the company financially.11

11 "What has Enron gotten for its political contributions?" www.commoncause.org. Jan. 18, 2002.

In 1994, Enron's pipeline project with Florida Gas Transmission Co. was found to be in violation 109 times for wetlands destruction, improper land clearing and damaging waterways. Enron paid $575,400 in fines.12

12 Oregonian, August 6, 1996 and Southeast Energy Power Report, December 16, 1994 cited on corpwatch.org.

The Enron Methanol plant in Pasadena, Texas, won special concessions from Governor Bush, allowing the company to pollute without a permit, as well as giving it immunity from prosecution for violating some environmental standards.

The plant emits twice as much nitrogen oxides as do all nine million cars in Texas. Only seven percent of the nitrogen oxide emitted by the Enron Methanol plant in 1997 would have been permitted if had Enron not been exempted under the "grandfather clause" of the 1971 Texas Clean Air Act.13

13 "Meet Enron, Bush's Biggest Contributor", Pratap Chatterjee, The Progressive 2000 www.progressive.org.

Enron Corporation's Dabhol power plant in India, run by the Enron Power Development Corporation along with General Electric and the Bechtel Corporation, was associated with a series of human rights abuses from 1992 to 1998, according to Human Rights Watch.

Departments that lobbied the Indian government on behalf of the Enron Dabhol Project were the Department of Energy, the Department of State, the Department of Commerce, and the Central Intelligence Agency. Ambassador Frank Wisner was an especially strong lobbyist for Enron on this issue.14 Frank Wisner was later appointed to the Enron Board of Directors upon leaving his government office.15

14 "The Enron Corporation: Corporate Complicity in Human Rights Violations" Report by Human Rights Watch

15 "The Enron Corporation: Corporate Complicity in Human Rights Violations" Report by Human Rights Watch Jan. 1999. Cited "Enron Oil & Gas Company Elects Frank Wisner, Three New Enron Corporation Representatives to Board," Enron Corporation press release, October 28, 1998.

The Dabhol Power Corporation (comprised of Enron, GE, and Bechtel) employed the local police force to suppress local protestors in India.16 In June 1997, there is an account of police raiding a village where many of the protesters lived. They beat and arrested dozens of villagers, including the wife of a well-known activist. The police broke down her door and dragged her naked out into the street, beating her with batons. She was three months pregnant.17 Enron denied any connections with human rights abuses and any responsibility for the actions of the police.18

16 "The Enron Corporation: Corporate Complicity in Human Rights Violations" Report by Human Rights Watch. Jan. 1999.

17 "Enron: History of Human Rights abuse in India" www.hrw.org New York. Jan. 23, 2002. www.hrw.org

18 "The Enron Corporation: Corporate Complicity in Human Rights Violations" Report by Human Rights Watch.

Enron has paid no income taxes in four of the past five years. The company distributed its assets among 881 subsidiaries that were set up in tax-sheltered countries.19

19 "The Cheating of America: Think Enron and Arthur Andersen Are Exceptions? Think Again." Tompaine.com

Enron failed to disclose half of their $1.6 million in lobbying expenditures for the first part of the year 2001.20

20 "Group finds discrepancy in Enron costs: Bill for lobbying could total $1.6m" Associated Press, Jan. 30, 2002

Ken Lay and top Enron executives encouraged their employees to hold on to their stock when the company first started to falter and then prevented employees from selling their stock, causing 15,000 Enron workers to lose $1.3 billion of the $2.1 billion that was in the company's 401(k) plan in 2001.21

21 "The Rich Are Different. They Know When to Leave." Louis Uchitelle The New York Times Jan 20, 2002

From 1989-2001, Enron contributions to members of Congress included contributions to 71 current Senators and 188 current House members.22

22 www.opensecrets.org

The Commodity Futures Modernization Act would have created more regulation for Enron's energy trading activities. Enron lobbied to exempt certain types of derivative trading, in which they were heavily engaged, from the bill. The exemption, which passed, was known as the "Enron exclusion." The bill was introduced June 8, and by the end of the month, Enron's political action committee had contributed $220,000 in soft money to both the Republican and Democratic national parties.23

23 "Enron executives who dumped stock were heavy donors to Bush" John Dunbar, Robert Moore, and MaryJo Sylwester. http://www.public-i.org/story_01_010902.htm. Jan.. 9, 2002.

Republican National Committee Chair Marc F. Racicot was an Enron lobbyist.24

24 "Enron's Influence Reached Deep into the Administration: Ties Touched Personnel and Policies" Dana Milbank and Glenn Kessler The Washington Pos., Jan. 18, 2002.

Ken Lay and other Enron officials interviewed several candidates to fill vacancies on the Federal Energy Regulatory Commission, which regulates Enron's main markets. President Bush selected two people for the panel who were favored by Enron.25

25 "Enron: Washington's Number One Behind-the-Scenes GATS Negotiator" By Tony Clarke Oct. 25, 2001, www.corpwatch.org

Ken Lay personally contributed $882,580 to federal candidates in the 2000 election cycle.26

26 www.opensecrets.org

From 1989 through 2001 Enron contributed nearly $6 million to federal candidates and parties.27

27 www.opensecrets.org

Enron spent $1.9 million lobbying the federal government in 1999 and $2.1 million in 2000.28

28 www.opensecrets.org

Since 1993, Enron has contributed $736,800 to George W. Bush.29

29 www.opensecrets.org

Enron and Dutch Shell's pipeline in Bolivia ruptured in January 2000, spilling 29,000 barrels of crude petroleum. The spill contaminated hundreds of acres of farmland, killed fish and birds in the Andes' Lake Poopo, and destroyed the livelihood of a 5,000 year old native tribe, Uru Morato.30

30 "Friends of the Poopo and the Uru Morato", Vermont, USA and Platt's Oilgram News, March 23, 2000 cited at www.corpwatch.org.

The Enron case isn't the first time that employees have brought their 401(k) grievances to court. Most recently, employees at Lucent Technologies sued after the company stock in their 401(k) plunged about $900 million. According to one study by Hewitt Associates, a consultant based in Lincolnshire, Ill., about one-third of assets in 401(k)s are in company stock. The figures are based on a survey of 1.5 million plan participants.31

31 http://money.cnn.com/2001/12/10/401k/q_401k_lawsuits/

At the end of 2000, nearly 21,000 current and former Enron employees participated in the company's 401(k) plan, the Labor Department said. About 63 percent of the $1.6 billion worth of assets in the plan at that time were invested in Enron stock, the vast majority of which were non-matching shares employees had purchased on their own.

Only 14% of companies restrict the amount that employees can invest in employer stock, according to a 2001 survey by Hewitt Associates.32

32 http://www.usatoday.com/money/finance/2002-01-11-retirement-plans.htm

A survey of 25 large companies by Hewitt Associates showed that roughly 30 percent of their $71 billion in their employees' 401(k) accounts was held in company stock, both given by the company and purchased by the employees themselves.33

33 http://abcnews.go.com/sections/business/DailyNews/Enron_401(k)_01124.html

When former President Bush took a Gulf War victory tour in 1993, Enron paid members of his entourage -- including former Secretary of State James Baker and Gulf War Lieutenant General Thomas Kelly -- to lobby Kuwait for contracts to replace its destroyed power plants. 34

34 (Multinational Monitor, January/February 2002)

Clinton cabinet members -- including National Security Advisory Anthony Lake -- threatened to cut off U.S. aid to Mozambique if the country failed to give Enron a pipeline contract. 35

35 (Multinational Monitor, December 1995)

In 1996, Texas Supreme Court justices--who received more money from Enron than any other corporate donor--slashed $224,989 off the taxes that a lower court said Enron owed to a school district. 36

36 (Multinational Monitor, January/February 2002)

In the case of Arthur Andersen, during the last year that it represented Enron, the firm received $27 million for auditing services and $28 million for management advisory services. In contrast, the classic auditor fo 20-30 years ago was a firm that had 1,000 clients, each of them paying between one-tenth of one percent to one percent of the firm's overall revenues. 37

37 John Coffee, Law Professor at Columbia University Law School.

Since 1992, at least 21 agencies representing the U.S. government and multilateral development banks helped leverage Enron's global reach by approving $7.2 billion in public financing toward 38 projects in 29 countries.38

38 "Enron's Pawns," Institute for policy Studies, March 2002

Enron's chief risk officer, Richard Buy, summed up the role of Enron's auditor: "Arthur Andersen's penetration or involvement in the company is probably different than anything I've experienced. ... They are kind of everywhere and in everything."39

39 Wall Street Journal, "People at Andersen, Enron Crowed On Camera About Their Close Ties," April 15, 2002

Three out of four of the largest corporations in northern New York were audited in FY 2000. During the same year in Delaware and Maryland, however, only one out of ten of the largest corporations were targeted. Even more surprising, the additional taxes recommended for the heavily-audited corporations in northern New York was only $390,000 per return. This compared with an average additional tax of $28 million per return recommended for the corporations in Maryland and Delaware.40

40 Transactional Records Access Clearinghouse

A former executive at onetime high-tech powerhouse Critical Path, Inc. pleaded guilty in April 2002 to insider trading, admitting he sold stock while knowing that financial trickery would soon bring the high-flying company down. Timothy Ganley, the former vice president of strategic sales at Critical Path, faces a maximum of 10 years in prison and a $1 million fine, although prosecutors said his punishment might be reduced in recognition of his cooperation in the case. Critical Path's former president, David Thatcher, pleaded guilty in February to securities fraud, admitting that he participated in a criminal conspiracy with other top officers of the company to inflate revenues to meet targets for its financial performance.41

41 http://news.findlaw.com/business/s/20020411/techcriticalpathdc.html

Xerox Corp. agreed to settle Securities and Exchange Commission accusations that it improperly recognized lease revenue over the last five years and said it will pay a $10 million fine. The company also will restate its financial results for 1997 through 2000 and adjust its previously announced 2001 results.42

42 Wall Street Journal, April 1, 2002

Lynn Turner, former chief accountant of the SEC, estimated that investors have lost more than $100 billion since 1995 because of earnings restatements as a result of fraud. This is the result of a small number of auditing failures.43

43 Jeremy Kahn, Fortune, One Plus One Makes What?; The Accounting Profession had a Credibility Problem Before Enron. Now it has a Crisis, 7 January 2002.

Much of the 1990s stock market boom was fueled by Enronesque accounting tricks that are perfectly legal. More than a third of corporate earnings growth from 1995 to 2000 stemmed from the practice of not treating stock options as expenses. For example, Lucent's earnings would have been reduced by 30% from 1996 to 2000 if stock options had been expensed.44

44 "Titans of the Enron Economy," United for a Fair Economy, www.ufenet.org/press/2002/Enron.pdf.

According to a bipartisan Senate Finance Committee investigation, the Clinton administration gave more than $650 million in Export-import Bank loans to Enron-related companies. The classic case is a September 1994 Ex-IM direct loan of $302 million ($175 million of which remains unpaid) to Dabhol Power Co. in India, then 80 percent owned by Enron. In this deal, Enron was the "foreign" company, and its allies, Bechtel Group and General Electric, were the exporters. With an Indian utility that could not pay its bills (and was pressured by the Bush administration to do so) as its only customer, Dabhol went bankrupt even before Enron.45

45 Washington Post, April 29, 2002

A Senate Finance Committee investigation found that the Export-Import Bank provided $135 million in loans (only $4 million of which has been repaid) to Enron's Accroven partnership for a natural gas plant in Venezuela. Nearly half the company's stock was owned by Enron while Enron also was the exporter. Thus, the U.S. taxpayer was paying Enron money so that Enron could buy gas from Enron.46

46 Washington Post, April 29, 2002

More than three-quarters of large employers that made matching contributions in the form of their stock had curbs on when workers could sell those shares, according to a survey by Hewitt Associates, a benefits consulting firm based in Lincolnshire, Ill. Now, 62 percent of the firms that had limits either have eased them or are considering doing so, according to Hewitt. For example, Gillette Corp., which had previously required employees to hold company-contributed shares until age 50, lifted all restrictions at the beginning of April 2002.47

47 Washington Post, April 22, 2002

According to internal Enron documents released on May 6, Enron Corp. manipulated the California electricity market with such maneuvers as transferring energy outside the state to evade price caps and creating phony "congestion" on power lines. The "ricochet" strategy was used to evade wholesale price controls on California electricity by transferring power out of the state and then back in.48

48 Washington Post, May 7, 2002

According to internal Enron documents released on May 6, Enron used a strategy it dubbed the "Death Star" to permit Enron to be paid "for moving energy to relieve congestion without actually moving any energy or relieving any congestion."49

49 Washington Post, May 7, 2002

Arthur Andersen agreed on May 6, 2002 to pay $217 million to compensate investors in the Arizona Baptist Foundation, whose financial statements Andersen had certified despite a series of questionable deals executed by the charity. Three people, including the foundation's former treasurer, have pleaded guilty to criminal fraud charges, and several others, including the charity's top two officers, have been indicted.

In December, Enron laid off 4,250 workers. The laid-off workers received $4,500 severance pay while several executives were given six and seven-figure bonuses as incentive to stay with the company.

So-called independent Enron board members included the past and present directors of the University of Texas M.A. Andersen Cancer Center, to which the Lays and Enron contributed more than $1.9 million.

Enron paid Arthur Andersen $27 million in consulting contracts and $25 million in auditing fees.

From 1995 to 2000, Enron reported $1.8 billion in profits. Under the federal corporate tax rate of 35 percent, they should have paid a total of $625 million. Instead they received a $381 million rebate from the U.S. Treasury.

Dynegy Inc. chairman and chief executive Charles L. Watson, who agreed this week to leave the troubled energy company, is set to receive at least $33 million more in severance payments than he would have had he served out his contract. Dynegy began to unravel about the time that Watson made an aborted bid to buy troubled rival Enron Corp. last fall. Dynegy's stock tumbled further amid questions about possible phony trades designed to puff up the Houston-based company's revenue.50

50 Washington Post, May 30, 2002

The U.S. government and Enron Corp. have a stake in a power plant in the Dominican Republic that is $27 million in debt, the U.S. Maritime Administration revealed in a letter released May 29, 2002. The agency said it has a total of $135 million in federal loan guarantees involving Enron.51

51 Washington Post, May 30, 2002

The Overseas Private Investment Corp. still is owed $453 million from Enron-related projects, and the Export-Import Bank is due $512 million.

The Halliburton Corporation altered its accounting policies in 1998 so it could report as revenue more than $100 million in disputed costs. Vice President Dick Cheney was the company’s CEO and Arthur Andersen was the company's auditor at the time.52

52 Alex Berenson and Lowell Bergman, “Under Cheney, Halliburton Altered Policy On Accounting,” The New York Times, 22 May 2002.

So far, nearly 350 of Andersen's 2,300 audit clients have abandoned ship, taking almost $1 billion worth in billings with them. And as the trial's proceedings grow more damning, the exodus is snowballing. Hundreds of other clients that are still working with Andersen to wrap up their 2001 audits have already informed the firm of their intent to leave, although they have yet to file the official documents with the Securities and Exchange Commission.53

53 Forbes, May 2002, http://www.forbes.com/2002/03/13/0313andersen.html

For months, the skies over Capitol Hill have rained post-Enron reform proposals, but the legislation effort is slowly evaporating under the heat applied by business opponents. So far, not one of over 50 proposed reforms, from changes in pension rules to stronger oversight of accountants, has become law.

Various Enron executives, including former Enron CEO Ken Lay, attended numerous White House functions in 2001. These functions included the 2001 inaugural, the Easter Egg roll, T-ball games, speeches and social events. 54

54 Richard A. Oppel Jr., "White House Acknowledges More Contacts With Enron," The New York Times, 22 May 2002.

Ken Lay recommended 21 people for jobs in the Bush administration.55

55 Richard A. Oppel Jr., "White House Acknowledges More Contacts With Enron," The New York Times, 22 May 2002.

There were at least 19 meetings between White House and Enron officials—including five meetings with Vice President Cheney's energy task force in 2001.56

56 Richard A. Oppel Jr., "White House Acknowledges More Contacts With Enron," The New York Times, 22 May 2002.

The S.E.C. first notified Enron that they would be conducting an informal investigation on Oct. 17, 2001. Enron executives then told Andersen about the inquiry two days later. Billing records show that over the next 11 days, Andersen billed Enron almost $540,000 under a line item called "S.E.C. Inquiry." 57

57 Kurt Eichenwald, "Andersen Auditors Knew About Federal Inquiry, Records at Trial Show," The New York Times, 14 March 2002.

Enron made large sums trading electricity in California. One internal note reads: "Bought power cheap a long time ago—sold expensive. We made so much money." At another point, the handwritten notes state: "Schemes = $10 million total." 58

58 Richard A. Oppel Jr., "U.S. Regulators Are Requiring Full Details Of Energy Sales," The New York Times, 14 May 2002.

Texas state legislators learned that Enron and five other energy companies drove prices higher during a market test last summer by consistently overstating their demand for electricity—one of the tactics used in California during the energy crisis.59

59 Joseph Kahn, "Will It Be California Redux?," The New York Times , 12 May 2002.

During the California energy crisis, Enron bought power in California, resold the power out of the state and then bought the power back and resold it back into California. This tactic allowed Enron to avoid price caps meant to reduce costs.60

60 Richard A. Oppel Jr. and Jeff Gerth, "Enron Forced Up California Prices, Documents Show," The New York Times, 6 May 2002.

Enron regularly bought power in 2001 from a state-run exchange for $250 a megawatt-hour and resold it outside California for almost five times as much. "Thus, traders could buy power at $250 and sell it for $1,200," according an internal memo. In that document, the Enron lawyers acknowledged that such activity could be playing a big role in causing electricity shortages in the state.61

61 Richard A. Oppel Jr., "Enron's Many Strands: The Strategies; How Enron Got California To Buy Power It Didn't Need," The New York Times, 7 May 2002.

The Death Star strategy that Enron used during the California energy crisis allowed Enron to be paid "for moving energy to relieve congestion without actually moving any energy or relieving any congestion." 62

62 Richard A. Oppel Jr., "Enron's Many Strands: The Strategies; How Enron Got California To Buy Power It Didn't Need," The New York Times, 7 May 2002.

A group of former Enron workers announced at the beginning of June that they had reached a tentative agreement with their former company over disputed severance pay. The company has agreed to provide severance payments averaging $7,000 to each of the 4,200 former employees. Critics of the settlement, including the AFL-CIO, say that those responsible for Enron's collapse walked away with hundreds of millions of dollars in compensation, leaving little or nothing on the table for its now out of work employees.

Andersen partners working on the Enron account ignored the advice of their own technical specialists when taking it would have prevented Enron from doing as it pleased. The specialists had concluded that some of Enron's most questionable accounting practices were improper, but had their conclusions overridden by Andersen's Houston office.63

63 Kurt Eichenwald and Floyd Norris, "Andersen Trial Shows Enron Team Missteps," The New York Times, 5 June.

During June 2000, El Paso Electric sold 527 megawatts of power into California markets at $750 per MWh for power that it bought at an average cost of $52.50 per MWh.64

64 Chris Baltimore, "Enron Client Gained on Soaring California Power Prices," Reuters, 7 June 2002.

CMS Energy is under investigation for round-trip trading, which involves simultaneously selling and buying back electricity at the same price, while reporting revenue from the transactions. These energy swaps allegedly inflated CMS Energy’s revenues and expenses by more than $4.4 billion from May 2000 through mid-January 2002.65

65 “Berger & Montague, P.C. Sues on Behalf of Investors Who Purchased CMS Energy Corporation Securities Between August 3, 2000 and May 10, 2002.” Press release, Berger & Montague. July 8, 2002.)

On July 16, 2002, Duke Energy admitted to completing 23 round-trip trades—the simultaneous buying and selling of power with the same counterparty for the purpose of inflating volumes or revenue—amounting to $126 million. Duke says these trades were intended to raise volume on the electronic trading platform Intercontinental Exchange.66

66 Paul Thomasch. "Duke Admits to 23 Round-Trip Power Trades." Reuters Business Report. July 16, 2002.

The Securities and Exchange Commission (SEC) is investigating Dynegy for "Project Alpha," a complex accounting vehicle related to a gas contract that boosted reported cash flow by $300 million and cut taxes with no other obvious purpose. As of August 22, 2002, Dynegy was one of 16 companies yet to comply with an SEC directive requiring executives at 691 companies to swear to the veracity of their financial statements. Dynegy cited its three-year re-audit as cause of the delay.67

67 Kristen Hays. "Dynegy Reports $328 Million Loss." Associated Press. July 30, 2002; Krissah Williams. "16 of 691 Firms Missed Deadline." Washington Post. August 22, 2002.

The California Public Utility Commission claims that El Paso Corp. and its affiliates intentionally held back capacity on four natural gas pipelines into California from November 2000 through March 2001, contributing to a sharp rise in electricity prices and costing Californians an extra $3.3 billion.68

68 "FERC judge aims to issue El Paso decision by end-Aug." Reuters Company News. August 6, 2002.

Analysts and investors have grown skeptical of El Paso Corp.'s complicated business structure and numerous off balance sheet affiliates, which have doubled in the last two years. Some have speculated that many of these off balance sheet partnerships serve the sole function of hiding debt and discounting future earnings to report current earnings.69

69 Melissa Davis, "El Paso's Utility Deal Raises Eyebrows." TheStreet.com. July 26, 2002. "El Paso Investors Question Booking of Power Contracts." Dow Jones Business News. July 23, 2002.

Beginning in late 1998, Halliburton allegedly began counting cost overruns on several large projects as revenue, even though its customers had not agreed to pay those costs.70

70 David Koenig. "Halliburton Posts $498M 2Q Loss." Associated Press. July 25, 2002.

The White House has railed against the practice of setting up subsidiaries in tax havens such as the Cayman Islands and Bermuda to sidestep disclosure rules and avoid paying U.S. taxes. However, the number of Halliburton subsidiaries incorporated in offshore tax havens rose from nine to 44 while Vice President Cheney served as chief executive between 1995 and 2000.71

71 Citizen Works analysis

On August 15, 2002, Mirant announced that an accounting review had turned up mistakes that may have inflated figures on its balance sheet by as much as $1.1 billion.[i] As of August 22, 2002, Mirant was one of 16 companies yet to comply with an SEC directive requiring executives at 691 companies to swear to the veracity of their financial statements. Mirant cited an internal review of its accounting policies as cause of the delay.72

72 "Mirant Finds at Least $1.1 Billion in Errors." New York Times. August 15, 2002.; Krissah Williams. "16 of 691 Firms Missed Deadline." Washington Post. August 22, 2002.

In the spring of 2002, California officials sued Mirant and three other energy suppliers, accusing them of market misconduct after a year-long investigation into California's failed wholesale electricity market. Investigators found that traders at Xcel Energy and Mirant allegedly discussed "games" to profit from California's electricity crisis in 2000, including schemes to schedule nonexistent power use and to take advantage of "congestion" payments on California's overburdened electric grid.73

73 Albert B. Crenshaw, "Mirant Made Accounting Errors." Washington Post. July 31, 2002.

Reliant Energy and its subsidiary Reliant Resources filed amended annual reports with the Securities and Exchange Commission to reflect so-called round-trip trades—the simultaneous buying and selling of power with the same counterparty for the purpose of inflating volumes or revenue. The swap transactions inflated the companies' revenue for fiscal years 1999, 2000 and 2001.74

74 Leticia Williams. "Reliant Energy amends annual report." CBS.MarketWatch.com. July 5, 2002.

The Wall Street Journal revealed in an article printed on August 5, 2002 that several prominent oil and gas companies manage large numbers of subsidiaries in offshore tax havens to cut their U.S. taxes. According to its latest annual report, Halliburton has subsidiaries in St. Lucia, Liechtenstein, Barbados, the Cayman Islands, Cyprus, the Netherlands Antilles, and the British Virgin Islands—all well-known tax havens. Halliburton has 30 subsidiaries in the Cayman Islands and 26 in the Netherlands Antilles.

The Wall Street Journal revealed in an article printed on August 5, 2002 that several prominent oil and gas companies manage large numbers of subsidiaries in offshore tax havens to cut their U.S. taxes. Schlumberger Ltd. has been incorporated in the Netherlands Antilles for decades. In fact, the company pays an average tax rate of 25%, well-below the statutory corporate tax rate of 35%.75

75 Glenn R. Simpson and Alexei Barrionuevo. "Many Energy Companies Create Offshore Havens to Cut Tax Bills." Wall Street Journal. August 5, 2002.

The Wall Street Journal revealed in an article printed on August 5, 2002 that several prominent oil and gas companies manage large numbers of subsidiaries in offshore tax havens to cut their U.S. taxes. Transocean Sedco Forex and GlobalSantaFe Corp., the world's largest offshore drilling firms, have moved their headquarters to the Cayman Islands.76

76 Glenn R. Simpson and Alexei Barrionuevo. "Many Energy Companies Create Offshore Havens to Cut Tax Bills." Wall Street Journal. August 5, 2002.

The Wall Street Journal revealed in an article printed on August 5, 2002 that several prominent oil and gas companies manage large numbers of subsidiaries in offshore tax havens to cut their U.S. taxes. Noble Corp., an offshore drilling firm, reincorporated in the Cayman Islands in May 2002. CEO James Day admits to being "philosophically opposed" to moving the company's headquarters offshore, saying that it is "not appropriate." Day contends that he was forced to move his company after Transocean and GlobalSantaFe did.77

77 Glenn R. Simpson and Alexei Barrionuevo. "Many Energy Companies Create Offshore Havens to Cut Tax Bills." Wall Street Journal. August 5, 2002.

Former Williams Chairman and CEO Keith Bailey borrowed more than $24 million under the company's stock option loan program. Bailey owns 1.9 million shares of Williams stock and still owes the company more than $23 million. Bailey is one of five executives participating in the company's loan program, which has doled out low-interest loans totaling more than $34 million.* The Sarbanes-Oxley corporate reform law signed by the President in July would bar companies from making personal loans to its top officers.78

78 Russell Ray. "Williams loaned execs millions." Tulsa World. July 26, 2002.

The total amount of sweetheart insider loans doled out to John Rigas (Adelphia), Bernie Ebbers (WorldCom), Stephen Hilbert (Conseco), Dennis Kozlowski (Tyco) and Ken Lay (Enron) was $3.9 billion. With $3.9 billion, you could fund Habitat for Humanity to build 83,691 homes at a cost of 46,600 each for America's homeless.79

79 "Scandal Fatigue: Putting The Corporate Crime Wave Into Perspective" by Arianna Huffington

The total loss in market value of WorldCom, Tyco, Qwest, Enron and Global Crossing was $427 billion. With $427 billion, you could fund the United Nations for the next 263 years and still have $164 billion left over for unforeseen famine relief and peacekeeping missions.80

80 "Scandal Fatigue: Putting The Corporate Crime Wave Into Perspective" by Arianna Huffington

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