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According to a past issue of Adbusters Magazine (July/August 2001), “in order to be a fully informed citizen we need to know the entire story.” Looking below the surface is not often easy, but with the existence of independent media we can assist each other to discover more of the truth.
Case in point: In recent days the tobacco industry, and specifically Philip Morris, has come up with a new plan to keep citizens tied to it in subtle and creative ways. Adbusters goes on to explain that this company has initiated a campaign to position the company name in advertisements, sandwiched between bedrock-solid food brands that most households feel an allegiance toward and love.
With the acquisition of Post Raisin Bran, Kraft Miracle Whip, Jell-O, Maxwell House, Kraft Dinners, Kool-Aid, Miller Beer, and Nabisco by Philip Morris, we can now purchase a lot of our food from a tobacco company (list of products from Adbusters March/April 2001). To further hide the tobacco industry connection, Philip Morris has plans to change its food subsidiary name to “Altria”. New name but same deadly game!
Why should we care? Maybe because 4,000,000 people worldwide die each year from tobacco-related illnesses. Do we really want to buy our food from a tobacco company?

Has anyone in America not heard of the Enron scandal? For some reason it seems to have already received more media coverage than the savings and loan debacle of the 1980s, and the end is seemingly not yet in sight.
During the stock market boom of the last decade, Enron made its fortune by lying about its income, artificially inflating the value of its stocks, and using questionable accounting practices to cover its tracks. It was the classic “pump and dump” scheme, and 29 Enron executives made out like bandits, selling over $1 billion of their own artificially inflated stock just before the news of Enron’s true financial situation became public, according to a lawsuit filed by Amalgamated Bank of New York.
The corporation had over 800 offshore tax haven subsidiaries or holding companies, some with outlandish names like Chewco and Jedi, named after Star Wars characters. These shell companies allowed Enron to keep hundreds of millions of dollars of debt off of its books. This also had the effect of inflating the worth of the stock, which enriched the largest shareholders.
Enron’s bookkeeping tactics were so successful that, in four out of the last five years, the corporation paid no taxes at all. It did however, receive over $250 million in tax breaks in President Bush’s “economic stimulus package” last November, well after key administration officials knew that Enron was going under.
Like most good scandals, this one had sex, too. According to Frank Rich of the New York Times, Enron approached both Penthouse and Playboy magazines about entering the pornography business. Furthermore, Fortune magazine reports that rumors of sexual escapades at Enron were “rampant”. Nonetheless, or perhaps because of all this, Enron was the darling of Wall Street for years. During the California power crisis this past year (from which Enron reaped huge profits), CEO Jeff Skilling was quoted as saying “We are the good guys. We are on the side of the angels.”
But the real storymay be that technically no crime was committed at all. A fundamental question about the sprawling Enron affair is whether this is a case of sound regulations violated by villainous businessmen, or a case of weak laws so diluted that no one had to break them in order to ruin people’s lives. Indeed, the real crime here may be the dearth of legal accountability and genuine control over rogue executives that truly exists in America.
Enron twisted laws designed to keep insiders from profiting from secret knowledge, and used them to prevent regular workers and investors from seeing the clouds on the horizon. Its employees worked hard and played by the rules, but eventually watched helplessly as their savings and their jobs disappeared before their eyes. In fact, Salon.com reports that while denying severance packages to employees (on the same day they filed for bankruptcy), Enron executives were busy passing out “retention bonuses” totaling $55 million to top company officials.
Haveagoodlaugh.com offers this explanation of “Enron Venture Capitalism”, supposedly first posited by a Colorado professor: “You have two cows. You sell three of them to your publicly listed company, using letters of credit opened by your brother-in-law at the bank, then execute a debt-equity swap with an associated general offer so that you get all four cows back, with a tax exemption for five cows. The milk rights of the six cows are transferred via an intermediary to a Cayman Island company secretly owned by the majority shareholder, who sells the rights to all seven cows back to your listed company. The annual report says the company owns eight cows, with an option on one more. Now do you see why a company with $62 billion in assets is declaring bankruptcy?”
The key to understanding this scandal is appreciating the conflicts of interest inherent in the day-to-day operations at Enron. Government agencies and key regulators, responsible for maintaining a watchful eye on the wayward giant, time and time again demonstrated that they were mostly interested in helping themselves to the cash bonanza.
According to journalist Michelle Chihara, former Securities and Exchange Commission (SEC) head Arthur Levitt tried two years ago to reform certain obvious conflicts of interest that played a role in this scandal. In response to his attempts to rein in certain bookkeeping abuses, the accounting industry mounted a serious assault, ultimately resulting in Congressional pressure for Levitt to back down.
Now Congress is reconsidering the ways in which “pro forma” accounting operates to damage the system. Here’s how it works in a nutshell: In order to hide its debt, Enron created partnerships with other companies. Those companies were in fact headed by Enron executives, and financed by Enron stock. But Enron did not count the debt of these so-called “partners” as its own. This is called “off-balance-sheet” accounting. Enron also utilized questionable methods of counting bank loans as “profit.”
But meaningful change is still on the distant horizon, and there is currently nothing to prevent any other company from doing the same thing Enron did. In fact, Global Crossing, a corporation accused of Enron-like activity, has since gone bankrupt. And executives of Tyco, a California-based conglomerate, have sold $100 million of stock amid allegations of aggressive accounting, all the while proclaiming their faith in the company. Just like Enron.
If we examine corporate behavior over the past thirty years, some striking examples of malfeasance and negligence demonstrate a consistent pattern of corporate willingness to place profits above people.

• In 1984, a gas leak at a Union Carbide plant in Bhopal India resulted in explosions and a fire that killed 20,000 people, maiming hundreds of thousands more. While the Indian government has issued an arrest warrant for CEO Warren Anderson for his role inthis catastrophe, the US has resisted all its efforts to bring Anderson to justice.
• Amitai Etzioni of George Washington University found that between 1975 and 1984, 62 percent of Fortune 500 companies were involved in one or more incidents of corrupt behavior, including price fixing, bribery, violation of environmental regulations, and tax fraud.
• A 1979 study by Marshall Clinard concluded that 45 percent of the 582 largest corporations in the United States had been charged with at least one moderate or serious violation of federal law in 1975 and 1976.
• Each year, 6000 workers perish on the job from accidents, and another 50,000-70,000 die from “occupationally acquired diseases”.
• The National Center for White Collar Crime reports that 36% of all American households are at one time or another victims of white-collar crime.

If all of this is true, what is being done to stop it? Is the news media replete with stories detailing the myriad ways in which corporations violate basic laws dealing with human rights, both domestically and abroad? The answer is no. Here the Enron saga has another twist: the energy giant actually paid journalists to sit on a committee that most concede had no real purpose. According to conservative journalist Andrew Sullivan (himself on the dole of major pharmaceutical corporations that advertise on his web site), prominent journalists Paul Krugman, Irwin Seltzer, Peggy Noonan, William Kristol, and Lawrence Ludlow all received sums from Enron ranging from $50,000 to $100,000. So far, only Krugman of the New York Times has come forward, although he has tried to avoid mentioning the exact sum he received.
Enron’s total damages are only part of the phenomenon of corporate crime. Underneath the glitzy public relations campaigns espousing the rhetoric of free market gains for all, damages from corporate crime range as high as $200 billion per year, according to Essential Information, a citizen activist group founded by Ralph Nader. By comparison, losses from street and violent crime total only $3 to $4 billion per year.
While street crimes like robbery, murder, rape, and burglary all receive vigorous coverage by the corporate media, something much larger and more dangerous is occurring beneath their radar, either because they’re mysteriously blind to its effects or because they directly benefit from it.
For example, General Electric is the owner of NBC, MSNBC, and other media. GE also possesses a long track record of environmental degradation, including a 1999 order from the Department of Justice to clean up the Housatonic River of PCB’s. Can any citizen honestly expect to get the straight story on any of NBC’s news outlets about GE’s wrongdoings? As journalist William Greider has put it, “Citizen GE practices its everyday politics unhindered by its status as a convicted felon.” (For more information, see http://www.cleanupge.com.)
To take another example, Fox News owner Rupert Murdoch has long-standing business interests in China, and has refused to publish materials critical of the Chinese government (Columbia Journalism Review, May 98). Murdoch is also know to have given Deng Xiaoping’s daughter a $1 million book deal to write a propagandistic version of her father’s life. Armed with this knowledge, how can any of Fox News Channel’s viewers take seriously its claim to be “Fair and Balanced”?
Let’s compare America’s obliviousness to corporate predations with another trend in law enforcement. No area of government expenditures over the past two decades has increased the way jail and prison construction has. Justice Department data from 1999 indicate that the number of prison inmates in America has swelled to almost 2 million, more prisoners than evenauthoritarian China boasts. What is most troubling about the prison boom is that the vast majority of the people being sent to prison are not the Ted Bundys, Charlie Mansons, or Timothy McVeighs of the world, and they’re certainly not the Kenneth Lays and Jack Welches (CEO of GE) either. They are not even the thieves, rapists, and murderers the public imagines them to be. Most are simply defendants who have been found guilty of nonviolent and not particularly serious drug crimes. Too often, they are the victims of harsh mandatory minimum sentencing laws. In fact, 77 percent of the growth of prison populations between 1978 and 1996 is accounted for by non-violent drug offenders.
So what will happen to the arguably criminal conspirators of Enron? The answer is likely to be precious little. The reason has to do with Enron’s influence over key government officials. With over three quarters of all Congressional representatives (on both sides of the aisle) taking money from Enron, with President Bush being the recipient of the corporation’s largesse throughout his career (witness the recently released examples of personal correspondence between Bush and Enron CEO “Kenny Boy” Lay), and with key regulatory positions held by Enron-recommended appointees, it’s hard to imagine that the government will be able to bring itself to hand down a serious sentence of any kind. With both parties on the Enron dole, what would either have to gain by a serious pursuit of justice in this matter?
President Bush was actually flown around on Kenneth Lay’s corporate jet during his presidential campaign. Lay, in turn, enjoyed the enviable and highly questionable privilege of interviewing candidates for key Energy Department positions. He also helped choose the chairman of the SEC, Harvey Pitt, who was previously an attorney for Arthur Andersen, Enron’s accounting firm. As SEC chairman, Pitt worked to ensure that accounting firms would be exempted from numerous regulations.
Vice President Dick Cheney and Ken Lay also go way back, as bothgot lucrative contracts for their respective firms Enron and Halliburton to work in Kuwait after the Gulf War. Cheney is being pressured right now by the General Accounting Office to turn over records of the meetings at which he and Lay are reputed to have outlined national energy policy, but he is refusing to do so as “a matter of principle.”
And the Enron connections don’t end there. Lawrence Lindsey, Bush’s chief economic advisor, is a former Enron employee. Treasury Secretary Paul O’Neill has ties, asthe former CEO of Alcoa, to the law firm Vinson and Elkins that represents Enron. Thomas White, the Secretary of the Army, is a former vice-chairman of Enron. Bob Zoellick, the man who suggested that the best way for Americans to deal with terrorism wasto support Bush’s push for the Free Trade Area of the Americas, is also a former Enron advisor. Even chief Bush advisor Karl Rove owned a quarter-million dollars worth of Enron shares (cashed out before it all hit the fan).
Nor was Enron’s influence withpoliticians confined to the GOP, no matter how much the Democrats would like to the public to believe otherwise. President Bill Clinton helped Enron muscle its way into the power market of India, with disastrous results. Bribery, outright theft of land, and police repression were all fingerprints of Enron’s involvement in building a $3 billion power plant in Dabhol, India. In the end, the power plant deal fell through, and the US government ended up guaranteeing the losses to the tune of $200 million.
The bottom line is that all of these facts point to a troubling trend in American society, a weakening in the fabric of democracy. Corporations like Enron (the seventh largest corporation in the nation prior to its bankruptcy) wield an increasingly disproportionate influence in the body politic. Corporate officials, utilizing incestuous relationships with cronies ensconced in the highest levels of government, create and manipulate policies to benefit themselves at the expense of the American people. This sadscenario underlies all that was and is Enron. While what happened at Enron is acutely tragic, given the number of people affected, it is unfortunately not a unique problem in our society.