Socialist Action /February 2002
Enron-Type Swindles are the Norm in
Capitalist America
By JEFF MACKLER
Enron, the nation's seventh largest corporation, with assets of $200
billion, had all the appearances of falling on hard times this past half
decade-if its reported taxes are used as a measure of its lack of success.
The world's leading energy broker paid no corporate taxes in four of the
five past years.
But zero sums contributed to the public treasury by leading U.S. corporations
are not unusual in capitalist America. Hundreds of billions of dollars are
made in profits for the wealthy few that are hidden from public scrutiny
and taxation.
Like Enron-a behemoth energy trader, stock market speculator, merger
and acquisitions specialist and corporate entity that manufactures little
of value-avoiding taxes is the rule, not the exception, in the U.S. business
community. More than half the top dogs on the list of Fortune 500 corporations,
like Enron, employ "offshore" tax shelters and other schemes to
hide profits that would otherwise be subject to government taxation.
In Enron's case, its creative accounting firm, Arthur Anderson Company,
one of the top five in the country that serves the ruling rich, created
900 subsidiaries in tax-haven countries to reduce its tax payments to Uncle
Sam to zero.
Democrats who are trying to use the Enron scandal to score a few points
against George Bush and his top level cabinet appointees who also benefited
from Enron's largess must think twice when confronted with reports that
Anderson's accounting and regulatory practices took place under both the
Clinton and Bush administrations.
It's an open secret that the U.S. Congress itself is complicit in Enron's
machinations. The last energy bill approved by the House and Senate contained
more than 200 provisions that directly benefited Enron. The "generous"
giant greased the way with large campaign contributions to 71 U.S. senators
and to a majority of the members of the U.S. Congress.
While President George W. Bush stands out as Enron's chief beneficiary,
at more than $600,000, Bush's friends on the other side of the aisle have
received similar amounts. Hillary Clinton joined a parade of others who
have suddenly decided to turn over Enron money to private charities.
As soon as Enron got wind of a Securities and Exchange Commission (S.E.C.)
investigation of its books, they sent out the word to shred the evidence.
Anderson's chief partner in charge of the Enron account, David B. Duncan,
complied and the word went out to 80 employees to destroy evidence that
could prove wrongdoing. While Duncan was scapegoated and fired for his misdeeds,
no one seriously believes that Anderson's top executives, not to mention
Enron's, were unaware of his actions.
A flurry of congressional hearings are now underway, with complicit congressman
and senators investigating themselves to the hilt. The Senate Governmental
Affairs Committee, one of a host of federal agencies put into motion to
"set it straight," will call as its first witness former S.E.C.
chair Arthur Levitt, whose modest efforts at tightening auditing standards
two years ago were crushed by Enron's friends in Congress.
The last thing in the world that the congressional defenders of corporate
rule desire is legislation aimed at forcing corporations, legally public
entities, to tell the truth about their financial affairs.
Corporations exaggerate profits
The S.E.C. and Enron are driven by the same logic, but for different
reasons. The S.E.C. desires some modicum of truth for big time stock market
investors who read corporate quarterly financial reports and expect the
bottom line to be real.
Corporations, on the other hand, tend to hype their financial reports,
hide the problems and exaggerate profits and prospects. They do this, in
part, to maintain and advance the price of their company's publicly sold
stock on the various exchanges. The Enron bankruptcy, the largest in U.S.
history, has frightened many a big-time investor because it highlighted
Enron's practice of reporting profits that did not exist, a common practice,
if not the norm, in the corporate trade.
What Arthur Anderson's creative accounting did for Enron, it likely does
for the rest of its corporate customers. But the financial world's manipulators,
speculators, and corporate chiefs are aware that there is a limit to creative
accounting. Eventually a failed or failing corporation must 'fess up with
the truth.
This truth, a steady and profound decline in the average rate of profit,
is what really shook corporate America and the U.S. stock market over the
past two years. Hype aside, in the face of ferocious worldwide capitalist
competition, profits and profit rates in virtually every major sector of
the U.S. and world economy took a dramatic dive-and the real figures, as
the Enron scandal revealed, are probably worse.
All the signs were there long ago but the official statisticians, until
December of last year at best, refused to declare the obvious, that the
United States has been in a major recession for quite some time. The infamous
"r" word was absent from corporate vocabularies as financial soothsayers
prayed for a recovery before they were compelled to admissions they feared
would precipitate an even deeper lurch downward.
Top Enron execs bail out
Enron's bursting bubble led to disaster for its 7000 employees who found
themselves robbed of their retirement savings as well as their jobs. Similar
looting of workers' pension funds takes place daily in corporate America.
Enron's executives, tied to the Bush administration and to the general
framework of corrupt capitalist politics, simply bailed out with their own
billions relatively intact before they informed their employees of the truth.
With full knowledge of the impending disaster, Enron's CEO Kenneth L. Lay
and his close associates disposed of their stock to save their own fortunes
while they simultaneously banned the sale of Enron stock by their employees.
Enron, a "new age" entity mired in speculative ventures, owns
little in real value. Its capital is fluid, as are its bargains when it
brokers trades in energy from producer to consumer. But hundreds of billions
of dollars pass through its hands. Laundered in foreign accounts that will
likely never be found and hidden by accounting deceptions, the wealth of
Enron's elite few can be expected to be well protected.
The Enron experience has shaken the political establishment, as one politician
after another scrambles to hide their association with the money-making
giant. But behind the scenes, the real power brokers of the ruling class
are preparing yet another cover-up.
The temporary wave of public indignation brought on by the public airing
of Enron's crimes can be expected to recede, as the momentarily stunned
participants in what Sen. John Conyers of Michigan called "one of the
largest corporate frauds in the nation's history" prepare to cleanse
themselves of guilt and find the proper scapegoats.
Working people are the victims
The lessons for working people are clear. Enron is the rule, not the
exception in corporate functioning. The scandal demonstrates once again
that the business of money-making in corporate America knows no limits.
The interpenetration of government and corporations that Enron demonstrated
is repeated daily, as the capitalist government, its political representatives,
and its investigative entities confirm that their true function is to dispense
corporate welfare and act as guarantors of the corporate good.
Working people have been the central victims of Enron's greed. The 7000
who lost their jobs and pensions are matched by tens of millions of others
who have been fired, as the world's mega-corporations intensify their drive
for profit at the expense of those who labor. The corporate vultures will
now circle Enron's carcass to make sure that whatever can be found is distributed
to its elite creditors as opposed to its former employees.
Working people have no voice in this process. They stand to gain only
by breaking with the twin parties that brought Enron and its sister looters
into being.
A party of the working class, a fighting labor party allied with all
the nation's oppressed and based on an expanded an reinvigorated trade-union
movement, can be expected to be the future political vehicle to fight for
the interests of the vast majority as opposed to the corporate few. Such
a party will emerge from the inevitable struggles of workers as they confront
the boss class at the point of production and in the social arena more generally.
A democratic and fighting trade-union movement would demand that the
real books of Enron and all other such corporations that endanger the jobs
and pensions of workers be opened to public and union scrutiny.
The immediate nationalization of the Enrons of America, along with the
entire energy industry, will stand among labor's top demands. Control of
the corporate looters must be placed in the hands of working people and
their mass organizations, who have nothing to gain from corporate plunder.
Socialist Action /February 2002 |