enron

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</div><div>1985-Kenneth Lay merges Houston Natural Gas Co. With Nebraska-based InterNorth. The deal is financed by Michael Milken. Lay also hires Arthur Anderson to be in charge of Enron’s accounting.1986-Ken Lay is named chief executive officer of Enron.1988-Feb. - Dr. Wendy Gramm sworn in as chairwoman of the Commodity Futures Trading Commission.1989-July - Policy memo issued by Wendy Gramm states her belief that swaps may not be regulated in the same way as futures contracts.-Aug. -Judge Easterbrook of the 7th U.S. Circuit Court of Appeals in Chicago rules that the Commodity Futures Trading Commission (CFTC), not the Securities and Exchange Commission (SEC), has jurisdiction over futures contracts.-Nov. 29 - Sen. Phil Gramm (R-Texas) delivers speech for which he receives a $2,000 honorarium from Enron.1990-Thomas White leaves the U.S. Army to join Enron.1992-Oct. 24 - President Bush signs the Energy Policy Act of 1992, which, among other things, forces utilities to allow upstart power marketers like Enron access to the utilities' transmission grids. Enron lobbied heavily for this provision, which allowed it to gain a foothold in wholesale markets. The law paves the way for the Federal Energy Regulatory Commission's 1996 Order 888.Nov. 16 - Enron petitions the Commodity Futures Trading Commission to remove energy derivative contracts and interest rate swaps from government regulation.-During the 1992 election cycle, Enron contributes nearly $300,000 to members of Congress and ranks 18th in contributions from Energy/Natural Resources companies.1993-Jan. 14 - The five-member Commodity Futures Trading Commission votes, with two seats vacant, to remove oversight of energy commodity contracts and swaps.-Jan. 20 - Bill Clinton inaugurated as president, Wendy Gramm ends term at Commodity Futures Trading Commission.-Late Feb - Ken Lay appoints Wendy Gramm to serve on Enron's board of directors, a part-time position for which she is eventually paid as much as $50,000 annually, plus tens of thousands in stock options and other cash benefits.-A panel that had been convened to determine whether steps needed to be taken to strengthen the independence of auditors concludes that a "more congenial and less adversarial relationship between the SEC and the accounting profession" is needed, according to a CPA-industry history.-Dec. 28 - Enron petitions the Securities & Exchange Commission (SEC) to exempt Enron from a federal energy regulation enforced by the SEC, the Public Utility Holding Company Act of 1935 (PUHCA). PUHCA protects consumers by regulating multi-state electricity companies. PUHCA regulates "facilities used for the generation, transmission, or distribution of electric energy for sale." Enron writes that since the company would not be owning power plants but be trading electricity, its activities should be exempted from the PUHCA definition of "facilities."1994-Jan. 5 - SEC issues a "no action" letter, agreeing to exempt Enron from regulatory oversight. This blows a huge loophole in PUHCA, allowing power marketers like Enron to escape federal scrutiny and undermine U.S. energy consumer protections.-During the 1994 election cycle, Enron is the 6th highest political contributor in the Energy/Natural Resources sector, giving nearly $500,000 to federal candidates. In 1993-1994, Enron and its executives also give $146,500 to George W. Bush's first campaign for Texas governor. They give $19,500 to Gov. Ann Richards.1995-The accounting industry wins passage of the Private Securities Litigation Reform Act, over a Clinton veto, limiting its liability in shareholders’ suits and making it harder for plaintiffs to bring such suits successfully.1997-Apr. 14 - Bush writes an informal note to Ken Lay, celebrating Lay's 55th birthday.-Enron creates Energy Services, a major division, to take advantage of national energy deregulation. The division sold contracts to provide natural gas and electricity to companies for long periods.1998-Oct. - President Clinton helps set up the U.S.-chaired Forum on Harmful Tax Practices under the Organization for Economic Cooperation and Development (OECD). It is spurred by an OECD report that shows ways to deal with the "harmful preferential regimes" such as the Cayman Islands.-Nov. 11 - In a letter, Lay asks Bush to support legislation deregulating Texas' electric industry.-Dec. - Wendy Gramm notifies Enron that a congressional legislative agenda including federal electricity deregulation might prevent the Gramms from holding Enron stock. This is just days after she sells Enron stock worth $276,912. Enron then cancels her outstanding shares, worth $117,000 — including an additional service fee — to be paid out over four years.1999-June 18 - Bush signs Texas' energy deregulation bill that opens markets for Enron.-Nov. - The President’s Working Group on Financial Markets concludes that the trading of energy must not be deregulated. Members of the Working Group are Lawrence Summers, Secretary of the Treasury; Alan Greenspan, chairman of the Federal Reserve; Arthur Levitt, chairman of the Securities and Exchange Commission; and William Rainer, chairman of the Commodity Futures Trading Commission.- Dec. - Enron wins its first Army contract, signing a 10-year contract to manage all utility lines at Fort Hamilton in Brooklyn, NY.-Over the year, Enron’s in-house lobbying office spends nearly $1.7 million pressing for energy deregulation, in addition to $710,000 the company paid to lobbying firms. The President’s Working Group was among its targets.2000-Apr. 7 - Lay hosts George W. Bush and his father at the first Houston Astros game in Enron Field.-Apr. 26 - Lay co-chairs a record-setting $21 million Republican fundraiser in Washington, at which Bush is the keynote speaker.-May - Sen. Gramm takes the entire Senate Banking Committee to Chicago to discuss commodity trading deregulation and meet with Commodity Futures Trading Commission Chairman William Rainer, SEC Chairman Arthur Levitt and the heads of the Chicago mercantile exchanges.-June - Sen. Gramm introduces the Commodity Futures Modernization Act of 2000, which includes language to deregulate energy trading. The bill languishes in the Senate.-June - The OECD releases its "pariah" list of nations with banking systems that facilitate criminal behavior. Six nations, including the Cayman Islands, are not included due to an agreement with the Clinton administration to work with the U.S. to clean up their banking systems.-July - At the G-7 summit, plans are made to impose strict economic sanctions on nations identified as operating tax and banking havens unless they improve transparency by July 2001.-Oct. 19 - The U.S. House passes legislation to exclude companies like Enron from the Commodity Exchange Act and Commodity Futures Trading Commission jurisdiction.-Dec.15 - Sen. Gramm helps reintroduce his deregulation bill, under a new bill number, and is able to attach it to a must-pass appropriations bill.-Dec. 7 - California experiences its first "rolling blackout" since its energy crisis began in May of 2000.-Dec. 21 - Clinton signs the appropriations bill, along with Sen. Gramm’s measure that allows Enron to operate its own unregulated trading auction.2001-Feb. 5 - Several Arthur Andersen officials discuss dropping Enron as a client in a meeting and subsequent e-mails.-Feb. 12 - Jeffrey Skilling becomes CEO of Enron; Lay remains chairman.-Feb. 17 - Treasury Secretary Paul O’Neill tells G-7 representatives that he is putting President Clinton’s efforts at cracking down on offshore tax havens "under review."-Feb. 22 - Enron officials meet with Vice President Dick Cheney to discuss energy policy.-March 7 - Enron officials meet a second time with Cheney to discuss energy policy.-April 9 - Enron officials, along with about two dozen utility representatives, meet with staff members of Cheney’s energy task force.-April 17 - Enron CEO Ken Lay meets with Vice President Dick Cheney, urging him to oppose price relief in the California energy crisis. The next day, Cheney calls the Los Angeles Times and argues against price caps.-April 26 - President Bush and Lay attend a literacy fund-raiser in Houston hosted by Barbara Bush. The president says this is the last time he spoke to Lay.-May 17 - Vice President Cheney releases his energy plan.-May 31 - Former Enron Energy Services executive Thomas E. White is sworn in as secretary of the army. At his confirmation hearings, he tells senators, "I will personally commit to you to avoid any appearance of conflict in terms of any future relationships that Enron might choose to have with the department."-May - Enron Vice-Chair Clifford Baxter is one of three executives to complain of the "inappropriateness" of Enron’s partnership deals. He resigns and is found shot on Jan. 25, 2002, in an apparent suicide.-June - Secretary of the Army Thomas E. White, a former vice chairman of Enron Energy Services, vows to accelerate efforts to privatize energy utilities serving the military. Bush senior political adviser Karl Rove sells all of his Enron stock, valued at between $100,000 and $250,000.-June 19 - The Federal Energy Regulatory Commission imposes strict, round-the-clock price controls in California, bringing its energy crisis to an end. Over the six months since Enron was first able to operate an unregulated trading auction beginning on Dec. 21, 2000, there were 38 Stage 3 emergencies, necessitating rolling blackouts. Over this time, Enron’s revenues increased by nearly $70 billion over the same period in 2000.-June 24 - Vice President Cheney and Lay attend the same conference, which is their last contact.-Throughout August, Lay sells $16.1 million in Enron stock. Skilling sells $15.5 million worth.-Aug. 7 - Officials of an Enron subsidiary in Germany meet with the deputy executive director of the energy task force.-Aug. 9 - Army Secretary Thomas White asks the Senate to give him until Jan. 1 to sell all of his Enron investments, including stocks and partnerhip interests.-Aug. 14 - Skilling resigns as Enron CEO, Lay takes over. Enron’s Broadband division reports losses of $137 million and analysts lower Enron’s rating. "I can honestly say the company is in the strongest shape it’s ever been in," Lay says.-Aug. 15 - Lay receives brief anonymous letter from Enron Vice President Sherron Watkins, warning him that the departure of Skilling could "raise suspicions of accounting improprieties."-Aug. 20 - Watkins calls a former Andersen colleague with worries about Enron’s accounting practices. Four Andersen officials, including David Duncan, a lead partner, meet to discuss her concerns.-Aug. 21 - In an e-mail conversation, Lay tells employees that the company is in good shape. On Aug. 20 and 21, he sells 93,000 shares of Enron stock, netting $2 million.-Aug. 22 - Watkins identifies herself as the sender of the letter and is invited to meet with Lay. She gives him a more detailed letter with her concerns.-Aug. 27 - Enron CEO Ken Lay sends an e-mail to employees, saying "One of my highest priorities is to restore investor confidence in Enron. This should result in a significantly higher stock price."-Sept. 4 - Sen. Gramm announces he will not seek re-election to the Senate.-Sept 17 - Former Enron chief executive Jeffrey Skilling sells $15 million in Enron stock.-Sept. 18-19 - Ken Lay is denied a meeting with Energy Secretary Spencer Abraham.-Sept. 26 - Lay urges employees to buy Enron stock.-Oct. 10 - Enron officials meet with an aide to Vice President Cheney to discuss energy policy.-Oct. 11 - White House Budget Director Mitchell E. Daniels Jr. has short conversation with Lay about the economic stimulus package, which would refund $254 million in tax payments to Enron.-Oct. 12 - Nancy Temple, an internal lawyer at Arthur Andersen sends an e-mail reminding employees working on the Enron account of the auditor’s document retention policy, which calls for some records to be kept and others to be destroyed.-Mid-October - Top economic adviser and former Enron consultant Lawrence Lindsey leads White House study to examine the economic consequences of an Enron failure.-Oct. 15 - Enron commissions a report from law firm Vinson & Elkins, stemming from the Watkins letter. Report concludes that Enron did no wrong. Auditor David Duncan writes a memo expressing concerns over the way that Enron planned to disclose financial losses, saying that the disclosure was misleading and potentially illegal. Enron CEO Ken Lay talks to Commerce Secretary Donald Evans about an Enron energy project in India.-Oct. 16 - Enron discloses $1.2 billion decrease in company value and $618 million loss in the third quarter; most losses come from investment partnerships managed by CFO Andrew Fastow. Enron in-house lawyer Nancy Temple asks that Duncan delete language questioning Enron’s disclosure process.-Oct. 23 - Lay reassures investors of Enron’s stability in a conference call. Arthur Andersen steps up the disposal of Enron-related documents. SEC opens an informal probe into Enron.-Oct. 24 - The U.S. House of Representatives passes an economic stimulus plan that would refund$254 million that Enron had paid under the corporate alternative minimum tax.-Oct. 24 - Enron ousts Fastow as CFO.-Oct. 26 - Ken Lay calls Federal Reserve Chairman Alan Greenspan, Greenspan’s office says he does nothing in response.-Oct. 28 - Lay places a call to Treasury Secretary Paul O’Neill’s home on a Sunday and speaks with him about the financial problems at Enron.-Oct. 29 - Lay speaks with Commerce Secretary Evans, asking for Evans to use his influence in Moody’s Investor Service’s decision to downgrade Enron’s credit rating. Army Secretary Thomas White meets with John Carr, who worked with Enron Federal Solutions, seeking military contracts. Enron's shares drop 10 percent.-Oct. 30 - Thomas White's family partnership sells 86,700 shares of Enron stock, for a total of $1.1 million.-Oct. 31 - Enron announces that the SEC has begun an inquiry.-Nov. 2 - Energy Secretary Spencer Abraham calls Ken Lay to check on Enron’s status.-Nov. 8 - SEC issues subpoena to Enron. Enron admits inflating income almost $600 million since 1997. Lay speaks again to Treasury Secretary O’Neill about the company’s problems.-Nov. 9 - By e-mail, Duncan’s assistant tells other secretaries to "stop the shredding." Dynegy announces its intention to buy Enron.-Nov. 14 - Enron announces it is trying to raise $500 million to $1 billion in private equity to increase customer and market confidence.-Nov. 17 - Treasury Secretary O’Neill announces that the Cayman Islands government has agreed to begin cooperating with American investigations into its banking laws beginning in 2004, providing companies like Enron 25 months to move their assets to another tax haven and seal the records from scrutiny.-Nov. 19 - Enron restates third-quarter earnings and announces it is attempting to restructure $690 million in debt payment.-Nov. 28 - Dynegy backs out of deal to buy Enron after its credit rating is downgraded to junk bond status.-Dec. 2 - Enron files for bankruptcy. The next day the company lays off 4,000 workers. An employee later reveals that Enron had paid $55 million in retention bonuses to top managers and executives just before filing.2002-Jan. 3 - Vice President Cheney’s legal counsel David Addington writes in a letter to Rep. Henry Waxman in response to Waxman’s request for information on Cheney’s energy task force, acknowledging that administration officials met with Enron six times in 2001. "None of these meetings included a discussion of the financial position of the Enron Corporation," he writes.-Jan. 9 - Justice Department announces it has begun a criminal investigation of Enron.-Jan. 10 - Anderson admits to destroying documents. The Bush administration acknowledges that it had contact with Enron officials about the state of the corporation. Attorney General John Ashcroft recuses himself from the investigation along with David Ayers, his chief of staff. Bush tells reporters that Lay was "a supporter of Ann Richards in my run in 1994."-Jan. 11 - A top administration aide denies that Commerce Secretary Don Evans had told the White House about Enron’s shaky status.-Jan. 13 - Commerce Secretary Evans admits that he had told White House Chief of Staff Andrew Card about Enron’s troubles.-Jan. 15 - Andersen fires auditor David Duncan for shredding documents. The New York Stock Exchange removes Enron from the board. The stock closes at 67 cents per share, down from a high of $83 per share on Jan. 24, 2001.-Jan. 16 - Andersen auditor David Duncan tells congressional investigators he was aware in February 2001 that Enron’s account was a "significant risk."-Jan. 17 - White House confirms it conducted a review of Enron’s problems in October. Enron fires Andersen. A study by Citizens for Tax Justice shows that Enron has paid no income taxes in four of the past five years. Army Secretary Thomas White completes the sale of an undisclosed number of shares in 20 defense contractors. He writes to the Army general counsel and the Senate that he has forfeited 665,342 shares of Enron stock.-Jan. 18 - White House confirms that Vice President Dick Cheney met with a politician from India about a massive Enron energy project. Senators Carl Levin (D-Mich.) and John Warner (R-Va.) ask the Office of Government Ethics to look into Thomas White's option holdings at $688 monthly annuity payment from Enron.-Jan. 21 - A former Enron executive says that Enron employees had shredded documents as recently as mid-January.-Jan. 23 - Ken Lay resigns as CEO of Enron, claiming the myriad investigations were distracting him from the needs of the company.-Jan. 25 - The New York Times reveals that Bush adviser Karl Rove helped former Christian Coalition executive director Ralph Reed secure a position with Enron that has paid him $10,000 to $20,000 per month since 1997.-Feb. 1 - Enron board special investigative committee, headed by William C. Powers, dean of the University of Texas School of Law, releases report detailing Enron's myriad problems and suggesting criminal activity.-Feb. 2 - Ken Lay's attorney announces that Lay will not testify in Congressional hearings because "judgements have been reached and the tenor will be prosecutorial."-Feb. 7 - Former Enron executive Jeffrey Skilling testifies before the House Energy and Commerce subcommitte that he was not involved in approving individual LJM partnership deals.-Feb. 12 - Ken Lay appears under subpoena before the Senate Commerce Committee and, asserting his Fifth Amendment right, does not testify.-Feb. 14 - Former Enron vice president Sherron Watkins testifies before the House Energy and Commerce Committee. She testifies that Lay "did not understand the gravity of the condition the company was in," and that "Mr. Skilling and Mr. Fastow are highly intimidating, very smart individuals, and I think they intimidated a number of people into accepting some structures that were not truly acceptable." Enron dismisses two executives, Richard Causey and Richard Buy. William C. Powers announces he will resign from Enron's board.-Feb. 15 - Following a public records request filed by Public Citizen, documents showing personal and business interactions between then-Gov. Bush and Enron are released, along with documents of Enron's role in the Texas' global warming policy and Public Utility Commission.Feb. 26 - Jeffrey Skilling and Sherron Watkins testify before the Senate Commerce Committee in a five-hour hearing. At the hearing, Skilling testifies that he cannot recall whether he received $5.6 million in bonuses or sold $66 million in Enron stock in the past few years, and denies knowledge of Enron's accounting practices. Watkins says "I believe Mr. Andy Fastow would not have put his hands in the Enron candy jar without an explicit or implicit approval to do so by Mr. Skilling."March 1 - Senators Carl Levin (D-Mich.) and John Warner (R-Va.) send a letter to Army Secretary Thomas White, expressing their concern that he did not disclose his continued holding of Enron stock and that he accepted a retirement annuity from the company.Information for this chronology came from the following sources:Allen, Mike. "Cheney, Aides Met with Enron 6 Times in 2001." Washington Post, Jan. 9, 2002, A1.Behr, Peter. "Skilling to Face Senators, Accusers." Washington Post, Feb. 26, 2002, A1.Berenson, Alex. "Army Official Kept Options on Enron Stock Until January." New York Times, March 7, 2002, C1.Berger, Eric. "NYSE Blocks Further Trades of Enron Stock." Houston Chronicle, Jan. 17, 2002,Berke, Richard. "Associates of Bush Aide Say He Helped Strategist Win an Enron Contract." New York Times, Jan. 25, 2002, C1.Bumiller, Elisabeth. "Enron Contacted 2 Cabinet Officers Before Collapsing." New York Times, Jan. 11, 2002Cummings, Jeanne and Ip, Greg. "Details Emerge of Enron’s Pleas to Bush Aids for Help." Wall Street Journal, Jan. 14, 2002, A6.Day, Kathleen and Behr, Peter. "Andersen considered Severing Enron Ties." Washington Post, Jan. 17, 2002, A1.Duffy, Michael. "When Did they Know It?" Time, Jan. 28, 2002, 16-22Eichenwald, Kurt. "Talk of Crime Gets Big Push" New York Times, Feb. 4, 2002, A1.Emshwiller, John and Smith, Rebecca. "Behind Enron’s Fall, a Culture of Operating Outside Public’s View." Wall Street Journal, Dec. 5, 2001, A1.Fineman, Howard. "The Great Giveback." Newsweek. Jan. 28, 2002, 37.Glater, Jonathan and Brick, Michael. "Ex-Official Says Enron Employees Shredded Papers." New York Times, Jan. 22, 2002, A1.Hamburger, Tom. "Enron Met Six Times With Bush Energy Task Force." Wall Street Journal, Jan. 9, 2002.Herbert, Bob. "Silencing the Alarm." New York Times, Jan. 14, 2002Hilzenbrath, David. "Doing a Number on Reforms." Washington Post, Jan. 24, 2002, E1.Keen, Judy. "Bush, Lay kept emotional distance." USA Today, Feb. 26, 2002Keen, Judy. "Enron Proves a Touchy Topic for Both Parties." USA Today, Jan 14, 2002, 4A.Knox, Noelle. "Debt Downgrade, canceled deal stagger energy giant." USA Today, Nov. 29, 2001, B1.Johnston, David C. "Enron Avoided Income Taxes in 4 of 5 Years." New York Times, Jan. 17, 2002, A1.Labaton, Stephen and Oppel, Richard. "At 11th Hour, Lay Refuses to Testify as Congressional Criticism Grows More Pointed." New York Times, Feb. 4, 2002, A20.Marquis, Christopher. "Army Chief Being Challenged on Ties to Company." New York Times, Jan. 25, 2002, C6.Milbank, Dana and Behr, Peter. "Enron Asked for Help from Cabinet Officials." Washington Post, Jan. 11, 2002.Norris, Floyd. "Chief Used Stock to Repay Enron Loan, Lawyer Says." New York Times, Jan. 15., 2002, C1.Oppel Jr., Richard. "Andersen Says Lawyer Let its Staff Destroy Files." New York Times, Jan. 14, 2002Oppel Jr., Richard. "Enron Official Says Many Knew About Shaky Company Finances." New York Times, Feb. 15, 2002, A1.Oppel Jr. Richard. "Ex-Chief of Enron Will Not Testify Before Congress." New York Times, Feb. 11, 2002, A1.Oppel Jr., Richard A. "Wide Effort Seen in Shredding Data on Enron’s Audits." New York Times, Jan. 24, 2002, A1.Schmidt, Susan. "CEO Was 'Misserved' At Enron, Hill Told." Washington Post, Feb. 15, 2002, A1.Schmidt, Susan. "Senators Fill Lay's Silence." Washington Post, Feb. 13, 2002, A1.Slocum, Tyson. "Blind Faith." Dec. 21, 2001Stephens, Joe and Nakashima, Ellen. "Senators Say White Broke Ethics Vow." Washington Post, March 7, 2002, A1.Thomas, Evan and Murr, Andrew. "The Man Who Blew it All." Newsweek, Feb. 4, 2002, 19.Waxman, Henry. "All Enron Cards on the Table." Washington Post, Jan. 24, 2002, A21.</div><div>=</div><div>http://www.citizen.org/cmep/article_redirect.cfm?ID=7104</div><div>
</div><div>Blind Faith: How Deregulation and Enron's Influence Over Government Looted Billions from Americans  Sen. Gramm, White House Must Be Investigated for Role in Enron's Fraud of Consumers and Shareholders  December 2001  Public Citizen'sCritical Mass Energy & Environment Program<hr size="1" style="height: 1px; line-height: 14px; background-color: rgb(255, 255, 255);" /><div style="line-height: 18px; text-align: left;">Summary of Findings </div><div style="text-align: left; line-height: 18px;">
</div><ul style="margin: 0px; padding: 0px 0px 10px; line-height: 14px;"><li style="list-style: none; padding-left: 10px; line-height: 18px; background-image: url(" view.image="view.image" id="429" background-color="background-color" rgb="rgb" background-position="background-position" px="px" background-repeat="background-repeat" no-repeat="no-repeat">The combination of unregulated state wholesale electricity markets and federal deregulation of commodity exchanges has removed accountability and transparency from the energy sector, allowing corporations to manipulate price and supply of electricity and natural gas through the exercise of significant market power. California's recent energy crisis and Enron's bankruptcy would have been impossible under a regulated system.  </li><li style="list-style: none; padding-left: 10px; line-height: 18px; background-image: url(" view.image="view.image" id="429" background-color="background-color" rgb="rgb" background-position="background-position" px="px" background-repeat="background-repeat" no-repeat="no-repeat">Enron developed mutually beneficial relationships with federal regulators and lawmakers to support policies that significantly curtailed government oversight of their operations.  </li><li style="list-style: none; padding-left: 10px; line-height: 18px; background-image: url(" view.image="view.image" id="429" background-color="background-color" rgb="rgb" background-position="background-position" px="px" background-repeat="background-repeat" no-repeat="no-repeat">Enron's business model was built entirely on the premise that it could make more money speculating on electricity contracts than it could by actually producing electricity at a power plant. Central to Enron's strategy of turning electricity into a speculative commodity was removing government oversight of its trading practices and exploiting market deficiencies to allow it to manipulate prices and supply.  </li><li style="list-style: none; padding-left: 10px; line-height: 18px; background-image: url(" view.image="view.image" id="429" background-color="background-color" rgb="rgb" background-position="background-position" px="px" background-repeat="background-repeat" no-repeat="no-repeat">Dr. Wendy Gramm, in her capacity as chairwoman of the Commodity Futures Trading Commission (CFTC), exempted Enron's trading of futures contracts in response to a request for such an action by Enron in 1992. At the time, Enron was a significant source of campaign financing for Wendy Gramm's husband, U.S. Senator Phil Gramm.  </li><li style="list-style: none; padding-left: 10px; line-height: 18px; background-image: url(" view.image="view.image" id="429" background-color="background-color" rgb="rgb" background-position="background-position" px="px" background-repeat="background-repeat" no-repeat="no-repeat">Six days after she provided Enron the exemption it wanted, Wendy Gramm resigned her position at the CFTC. Five weeks after her resignation, Enron appointed her to its Board of Directors, where she served on the Board's Audit Committee. Her service on the Audit Committee made her responsible for verifying Enron's accounting procedures and other detailed financial information not available to outside analysts or shareholders.  </li><li style="list-style: none; padding-left: 10px; line-height: 18px; background-image: url(" view.image="view.image" id="429" background-color="background-color" rgb="rgb" background-position="background-position" px="px" background-repeat="background-repeat" no-repeat="no-repeat">Following Wendy Gramm's appointment to Enron's board, the company became a significant source of personal income for the Gramms. Enron paid her between $915,000 and $1.85 million in salary, attendance fees, stock option sales and dividends from 1993 to 2001. The value of Wendy Gramm's Enron stock options swelled from no more than $15,000 in 1995 to as much as $500,000 by 2000.  </li><li style="list-style: none; padding-left: 10px; line-height: 18px; background-image: url(" view.image="view.image" id="429" background-color="background-color" rgb="rgb" background-position="background-position" px="px" background-repeat="background-repeat" no-repeat="no-repeat">Phil Gramm is the second largest recipient in Congress of Enron campaign contributions, receiving $97,350 since 1989.  </li><li style="list-style: none; padding-left: 10px; line-height: 18px; background-image: url(" view.image="view.image" id="429" background-position="background-position" px="px" background-repeat="background-repeat" no-repeat="no-repeat">Days before her attorneys informed Enron in December 1998 that Wendy Gramm's control of Enron stock might pose a conflict of interest with her husband's work, she sold $276,912 worth of Enron stock. [accidentally insulated from losses?] </li><li style="list-style: none; padding-left: 10px; line-height: 18px; background-image: url(" view.image="view.image" id="429" background-position="background-position" px="px" background-repeat="background-repeat" no-repeat="no-repeat">Enron spent $3.45 million in lobbying expenses in 1999 and 2000 to deregulate the trading of energy futures, among other issues.  </li><li style="list-style: none; padding-left: 10px; line-height: 18px; background-image: url(" view.image="view.image" id="429" background-position="background-position" px="px" background-repeat="background-repeat" no-repeat="no-repeat">In December 2000, Phil Gramm helped muscle a bill through Congress without a committee hearing that deregulated energy commodity trading. This act allowed Enron to operate an unregulated power auction -- EnronOnline -- that quickly gained control over a significant share of California's electricity and natural gas market.  </li><li style="list-style: none; padding-left: 10px; line-height: 18px; background-image: url(" view.image="view.image" id="429" background-color="background-color" rgb="rgb" background-position="background-position" px="px" background-repeat="background-repeat" no-repeat="no-repeat">Phil Gramm's legislation was in conflict with the explicit recommendations of the President's Working Group on Financial Markets, which is composed of representatives from the Department of Treasury, the Board of Governors of the Federal Reserve, the Securities and Exchange Commission and the Commodity Futures Trading Commission. The Working group expressly recommendedagainst deregulating energy commodity trading because the traders would be in strong positions to manipulate prices and supply.  </li><li style="list-style: none; padding-left: 10px; line-height: 18px; background-image: url(" view.image="view.image" id="429" background-color="background-color" rgb="rgb" background-position="background-position" px="px" background-repeat="background-repeat" no-repeat="no-repeat">From June 2000 through December 2000 -- prior to the bill's passage -- California experienced significant price spikes but only one Stage 3 emergency (requiring "rolling blackouts"). After passage of Gramm's energy commodity deregulation bill in December 2000, Stage 3 emergencies increased from one to 38 until federal regulators helped end the crisis by imposing price controls in June 2001. Phil Gramm's legislation, for which Enron was the primary lobbyist, allowed Enron's unregulated energy trading subsidiary to manipulate supply in such a way as to threaten millions of California households and businesses with power outages for the sole purpose of increasing the company's profits.  </li><li style="list-style: none; padding-left: 10px; line-height: 18px; background-image: url(" view.image="view.image" id="429" background-color="background-color" rgb="rgb" background-position="background-position" px="px" background-repeat="background-repeat" no-repeat="no-repeat">Because of Enron's new, unregulated power auction, the company's "Wholesale Services" revenues quadrupled -- from $12 billion in the first quarter of 2000 to $48.4 billion in the first quarter of 2001. This remarkable revenue increase came on top of the record revenue gain that Enron posted from 1999 to 2000, when full-year "Wholesale Services" revenues increased from $35.5 billion to $93.3 billion -- a 163 percent increase.  </li><li style="list-style: none; padding-left: 10px; line-height: 18px; background-image: url(" view.image="view.image" id="429" background-color="background-color" rgb="rgb" background-position="background-position" px="px" background-repeat="background-repeat" no-repeat="no-repeat">Investigations by state and federal officials concluded that power generators and power marketers intentionally withheld electricity, creating artificial shortages in order to increase the cost of power.  </li><li style="list-style: none; padding-left: 10px; line-height: 18px; background-image: url(" view.image="view.image" id="429" background-color="background-color" rgb="rgb" background-position="background-position" px="px" background-repeat="background-repeat" no-repeat="no-repeat">Enron took advantage of lax oversight following deregulation and formed a complicated web of more than 2,800 subsidiaries -- more than 30 percent (874) of which were located in officially designated offshore tax and bank havens.  </li><li style="list-style: none; padding-left: 10px; line-height: 18px; background-image: url(" view.image="view.image" id="429" background-position="background-position" px="px" background-repeat="background-repeat" no-repeat="no-repeat">President Bush's presidential campaign received significant financial support from Enron ($1.14 million).  </li><li style="list-style: none; padding-left: 10px; line-height: 18px; background-image: url(" view.image="view.image" id="429" background-position="background-position" px="px" background-repeat="background-repeat" no-repeat="no-repeat">Upon assuming office in 2001, Bush promptly scrapped plans put into place by former President Bill Clinton to significantly limit the effectiveness of these countries as tax and bank regulation havens. This action came at the height of high West Coast energy prices, probably allowing Enron to siphon billions to its offshore accounts.  </li><li style="list-style: none; padding-left: 10px; line-height: 18px; background-image: url(" view.image="view.image" id="429" background-color="background-color" rgb="rgb" background-position="background-position" px="px" background-repeat="background-repeat" no-repeat="no-repeat">At the same time, the Bush administration and certain members of Congress waged a legislative and public relations campaign against the imposition of federal price controls in the Western electricity market. Such price controls remove the ability of companies exercising significant market share to price-gouge by effectively re-regulating the market. Bush's opposition to price controls unnecessarily extended the California energy crisis and cost the state billions of dollars.  </li><li style="list-style: none; padding-left: 10px; line-height: 18px; background-image: url(" view.image="view.image" id="429" background-color="background-color" rgb="rgb" background-position="background-position" px="px" background-repeat="background-repeat" no-repeat="no-repeat">When federal regulators finally imposed strict, round-the-clock price controls over the entire Western electricity market on June 19, 2001, companies operating power auctions (like Enron) no longer had the ability to charge excessive prices and no longer had incentive to manipulate supply.  </li><li style="list-style: none; padding-left: 10px; line-height: 18px; background-image: url(" view.image="view.image" id="429" background-position="background-position" px="px" background-repeat="background-repeat" no-repeat="no-repeat">While price controls clearly saved California, Enron suffered because it could no longer manipulate the market and price-gouge consumers. With no significant asset ownership to offset its losses, Enron's unregulated power auction quickly accumulated massive debts. At the same time, the curtailed revenue flow made it more difficult for executives and members of the Board to conceal the firm's accounting gimmicks. Amid the turmoil, CEO Jeff Skilling resigned in August. But shareholders and federal regulators did not learn of the severity of Enron's financial trouble until November 2001. At this time, Enron's top executives continued to receive significant bonuses.  </li><li style="list-style: none; padding-left: 10px; line-height: 18px; background-image: url(" view.image="view.image" id="429" background-color="background-color" rgb="rgb" background-position="background-position" px="px" background-repeat="background-repeat" no-repeat="no-repeat">Due to Wendy Gramm's position on Enron's Audit Committee, she had intimate knowledge of Enron's financial structure and had access to sensitive financial information not available to Wall Street analysts or average shareholders. It is therefore probable that she knew of Enron's possibly fraudulent practices for some time and that her husband would have known as well. Enron's 874 tax haven subsidiaries allowed Enron to funnel billions of dollars to offshore accounts.  </li><li style="list-style: none; padding-left: 10px; line-height: 18px; background-image: url(" view.image="view.image" id="429" background-position="background-position" px="px" background-repeat="background-repeat" no-repeat="no-repeat">The Gramms' close involvement with Enron's corporate and legislative activities, the Gramms' possible knowledge and/or connection to criminal misconduct relating to Enron's collapse, and the effects of Enron's layoffs and other economic impacts on Senator Gramm's constituents may have been the leading factor in Gramm's decision on September 4 not to seek re-election to the Senate in 2002.</li></ul><hr size="1" style="height: 1px; line-height: 14px; background-color: rgb(255, 255, 255);" /> Public Citizen Recommendations  </div><div></div>