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.