Bush Gave Enron Breathing Room


While the Bush administration is seemingly open to finding out what
happened with Enron, its disclosures are selective, omitting Cheney’s
energy task force and the role Enron played in framing White House
energy policies, which depended largely on the increased production of
natural gas at home and abroad. Natural gas is an underlying economic
factor in Central Asia, for starters, and U.S. pipelines for the fuel
were one of Enron’s biggest hard assets.

One unexplored approach to unraveling the Enron scandal may lie in
the company’s use of offshore tax havens, which have scant
banking-disclosure laws. The company had over 2800 subsidiaries, some
800 of which were headquartered in nations officially designated as tax
havens, including the Cayman Islands. In its lengthy study of Enron, the
watchdog Public Citizen argues that by stashing money in this myriad of
subsidiaries, Enron could conceivably hide from a growing list of
creditors as well as U.S. tax investigators. Indeed, Enron appears not
only to have paid no taxes for four of the past five years, but also may
have been eligible for hundreds of millions in refunds.

It’s an intriguing story. Under Clinton, the feds made an effort to
gain more information about how these tax havens operate by joining with
other countries in the Organization for Economic Cooperation and
Development (OECD), which wanted to clamp down on lax banking laws. At
first, the Clinton Treasury Department just named the offending
countries, hoping to embarasss them into changing. After Osama bin
Laden’s 1998 attack on U.S. embassies in Kenya and Tanzania, there was a
new urgency to tracking Al Qaeda’s money. Two years later, the U.S. was
able to negotiate deals with the Cayman Islands and others to work on
tightening their rules. And Clinton threatened economic sanctions if
they didn’t move.

With Bush, everything changed. Less than a month after his
inauguration last year, his Treasury announced the Clinton deals had
been placed under review. Last spring the administration told OECD that
it wouldn’t be going along with the Clinton agreements. Instead, on
November 27 of last year, in the midst of the gathering Enron scandal
and a few days before the company formally filed for bankruptcy,
Treasury Secretary Paul O’Neill said the Cayman Islands had agreed to
start cooperating with U.S. investigators in 2004. That might sound
tough, but it actually gives Enron and other companies a 25-month
breather to clear the decks and find somewhere else to stash their
money. Even then, as Manhattan District Attorney Robert M. Morgenthau
charged, the Cayman Islands could back out of an agreement with three
months’ notice and suffer no repercussions.

The question, of course, is whether Bush undertook this change in
offshore banking policy with Enron in mind. That could be answered by a
congressional investigation, but with Enron at the center of a partisan
battle, such a prospect is problematic at best. The situation is clouded
futher by Attorney General John Ashcroft having recusing himself,
Congress resting in Enron’s pocket, and members of the administration
suffering stock losses from plummeting Enron stocks. It may take an
investigation by a special independent counsel—Whitewater, anyone?
Turning the matter over to an outside investigator may be our only hope,
but it will cost millions of dollars and, as the Clinton inquiries
demonstrated, take forever and ever.

The biggest problem in the Enron scandal is making sense out of a
blizzard of statistics used by different sides to back up their
arguments. For example, last week, Public Citizen reported that Senator
Phil Gramm got more than $260,000 in campaign financing from
Enron—information picked up by media, including this column (see “Phil
Gramm’s Enron Favor,”). When questioned by reporters, the
watchdog did a recount and came up with a figure of $98,000. It’s
important to note that without the work of groups like Public Citizen,
few would ever draw the direct, subtle connections between contributions
given to politicians and the legislative favors they return. Even as the
nation strains to understand this scandal, the top echelon is counting
the millions they’ve made.

Afghan Casualties Outnumber WTC Dead

Beyond an Eye for an Eye

“The United States of America is a friend to the Afghan people,”
President Bush said in October as the bombing began. “Anytime there’s a
civilian casualty, one can’t help but just regret it terribly,” added
Secretary of Defense Donald Rumsfeld this month. And there was a plus
side to the equation, Rumsfeld pointed out: “A repressive government
has been taken out, and it has been done with the fewest civilian
casualties of any time in recent decades.”

In war, the idea has always been to dehumanize the enemy, but in
this campaign we have dehumanized our allies and the innocent neutral as
well. We like to see American lives as simply worth more, which starts
to explain the initial reluctance of U.S. commanders to have Yankee
troops scour the abandoned caves of Tora Bora when they could wrangle
Afghans into assuming the risks. American generals always find it easier
to make that kind of case when the people involved have dark skin. In
stark terms, the deaths of stockbrokers and firefighters in the World
Trade Center count far more than the agony of some Afghan kid who gets
his leg blown off in a U.S. air raid.

Even now, as mounting evidence suggests we have caused more civilian
casualties than Al Qaeda did at the World Trade Center, the issue is
still not a primary concern for U.S. leaders. Members of Congress have
recovered their nerve enough to question the president’s propriety in
the Enron scandal, but when it comes to war they sound like precocious
children tugging on a parent’s sleeve. Tammy Baldwin, the Democratic
congresswoman from Madison, Wisconsin, sent Bush a letter signed by
seven other members in early December that stated, “We believe it is
absolutely imperative that the United States make every effort to
minimize civilian casualties.”

With conflicting or scant reporting by mainstream media, the job of
chronicling civilian casualties fell to Marc Herold, a professor at the
University of New Hampshire. By the middle of last week, Herold,
recovering from an eye operation, his voice-mail boxcrammed to
overflowing, was still running a “one man” volunteer show,
cross-referencing news accounts and rounding up graduate students to
help post the latest horrors on his Web site at He
estimates a total of 4000 civilian casualties so far, and expects
another thousand will die. He says none of the big humanitarian
organizations have shown interest in his work or even called him. “I
have stayed away from taking shots,” he says, “but if they challenge
me, I’m ready to go.”

When a reporter told Rumsfeld about Herold’s figures, he replied,
“First of all, I don’t know this individual, Herold. And I have asked
somebody to try to provide some facts as to how in the world he could
have conceivably come up with such a breathtaking statement. I think
that if he or others investigate carefully, and analyze it, and talk to
people on the ground, we will find that there probably has never in the
history of the world been a conflict that has been done as carefully,
and with such measure, and care, and with such minimal collateral damage
to buildings and infrastructure, and with such small numbers of
unintended civilian casualties.”

Feds Lowball Terror Dragnet

Jailhouse Crock

It turns out that most of the men picked up in the 9-11 dragnet are
being held in New Jersey jails. An article in the current New Jersey Law
Journal reports that while Attorney General John Ashcroft says the
numbers of Muslim men held on minor immigration charges since September
11 has declined to 450, the real number actually may be higher.

Most of these men are Arabs or South Asians, and are being held in
New Jersey and Florida on minor immigration charges for such infractions
as overstaying student or work visas. The law journal counts 346 in
Jersey’s Passaic County jail and 200 in the Hudson County one, with
another 52 in Miami’s Krome Detention Center.

Representative Calls for Conscription

Rough Draft

With Bush ramping up the war against terror around the world, Nick
Smith, a conservative Republican congressman who represents Michigan’s
southern tier, has introduced a bill to restore the draft for men
between the ages of 18 and 22. The Universal Military Training and
Service Act would “require the induction into the Armed Forces of young
men registered under the Military Selective Service Act, and to
authorize young women to volunteer, to receive basic military training
and education for a period of up to one year.”

Additional reporting: Michael Ridley