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The Real Deal About Enron (Part 4) – Interview
Mapping the Real Deal…
The Real Deal
About Enron
... an interview with Scoop Real Deal Columnist Catherine Austin Fitts
Part Four Of Seven Parts
By Daniel Armstrong*
Originally Published By Sanders Research Associates
[*Daniel Armstrong is a writer and novelist based
in Eugene, Oregon. Mr. Armstrong is a graduate of Princeton
University and attended the University of Oregon School of
Journalism.] (
Click Here for Part One
In Part One, we introduced Catherine Austin Fitts and
described some of her experiences in taking on the criminal
powers who lie behind the modern U.S. Governmental
apparatus. The Interview transcript follows in
Part Two and
Part
Three (Continuation line...)
CAF: I have been told that the congressional audit teams
have preserved some settlement system records. However, I am
skeptical. The proof is in the pudding. A year has passed.
Where is the money? The failure to assert control of the
records and money for this length of time can only be a
cover up. DA: By cover up, you mean a way to steal
and launder money all at the same time? CAF: You might
say it that way. But a cover up is also a method to protect
people and institutions---that is, to keep the pieces of the
syndicate in place. For instance, it is my understanding,
that PROMIS is managed for the Department of Justice by the
military contractor DynCorp. Again the technology is
important. The sophistication of surveillance and
communication technology today is even beyond what Hollywood
can imagine. And curiously enough, Herbert "Pug'' Winokur,
who was DynCorp's Chairman and lead investor from 1989 to
1997, and who is still Chairman of DynCorp's compensation
committee, was the Chairman of Enron's Finance Committee
through all of Enron's worst days---that is, until June 6th
of 2002 when he resigned. DA: Thus the exChairman of
Enron's Finance Committee has intimate connection to the
DOJ's most powerful tool for watching bank deposits and
money flows. CAF: It's more than that. DynCorp is also
the lead contractor for the DOJ Asset Forfeiture Fund. So if
DOJ wanted to do a seizure of any assets in connection with
Enron, presumably they would have to turn to Pug's company
to seize Pug's assets as a fiduciary, an investor and an
individual. Not surprisingly, we have one indication that
seizures are not even on their radar screen. Very shortly
after they neatly got Enron Online tucked away inside the
Swiss mountain range---some very important news slips out of
the Cayman Islands. It is a press release from the Cayman
Islands. Enron SEC filings indicate that there are
approximately 700 Enron subsidiaries in the Cayman Islands.
This is a huge number of subsidiaries for a company to
have---in one of the great offshore money havens of the
world. The government of the Cayman Islands says, in this
press release, that it would be delighted to cooperate with
U.S. investigators and prosecutors on an investigation of
Enron, but as of this date they have not yet received a
request for assistance From everything I can see, there has
been no effort to assert control of the data about the money
because there was no effort to identify and recapture stolen
or fraudulently made company money. Never believe someone
who says we need to take action to make sure that this does
not happen again. The only way it will not happen again is
if you get the money back this time. Remember, it's all
about the cash. Crime that pays is crime that continues.
Graphic: J.
Ward DA: While in the instance of
Hamilton Securities, here is a company doing something good
for people, saving taxpayers money, whose work results in
the agency effort winning Vice-President Gore's Hammer Award
for reengineering government, and the rug got pulled out
from under you. What do they say, "No good deed goes
unpunished.'' For white-collar crime, it seems more like no
bad deed goes without its reward. CAF: Ouch! The sixth
step in a competent investigation is you assert control of
all the insider trading and personal cash where probable
fraud exists, both onshore and offshore. Enforcement
officials can also assert control of all the capital gains
that were made on insider trading or probable insider
trading. You do not need to have proof of fraud or an
indictment or conviction to assert control over those stock
market profits made by the Enron board and management and
their affiliates or partners participating in insider
trading fraud with them. You can freeze or seize the
personal assets of current and former Enron employees and
auditors and any other parties implicated in potential
fraud. The DOJ communicated openly that they had the right
to seize personal assets of Hamilton management, board
members, and agents as a result of possible company fraud.
Based on Enron confessions, it is hard to understand why
there have been no seizures of the insider trading profits
and personal assets of a number of key Enron management and
board members as well as, potentially, its auditors and
private attorneys. The idea that Ken Lay was paid $50
million a year to be oblivious to what was going on and that
he sold over $100 million in stocks just at the right time
and should be allowed to keep all this money because he is a
good guy is financial, ethical and legal insanity. It is,
however, a perfectly rational decision if the goal is to
protect the syndicate's winnings, key government officials,
and operations that facilitated the fraud. DA: The
government has frozen $23 million from the personal assets
of Michael Kopper and Andrew Fastow. [10] This is something.
Or would you contend these are just the little guys taking
the rap? CAF: The management are all little guys. I'll
say it again, the big guys are the guys who have the cash
that was laundered through Enron, stolen/liquidated out of
Enron, or made in pumping and dumping Enron's stock. The big
guys are the "street,'' the syndicate players. Harvard
Endowment appears to be a candidate for investigation in
this respect. Which leads us back to Mr. Winokur. He was a
member of the Harvard Corporation which runs both the
university and Harvard's $18 billion endowment---one of the
largest investors in the U.S. Winokur resigned from Harvard
Corporation on April 5th, due to pressure from the stu dent
group "Harvard Watch'' for his connection to the Enron
dealings. [11] Coincidently, two days later, Robert Rubin,
Clinton's Treasury Secretary and now on the board of
Citigroup, was selected to fill the gap on Harvard
Corporation's board. [12] And recall that is was Rubin who
placed a call to the Treasury to make a modest inquiry if
anything could be done to save Enron. Just another courtesy
among "friends,'' you might say. DA: According to
"Harvard Watch,'' Highfields Capital, the investment firm
that manages part of Harvard's endowment, sold 3.5 million
Enron put options for an estimated $120 million profit. [13]
And that was after the Harvard Business School wrote five
studies praising Enron's business model in the two years
prior to the collapse. [14] More courtesy within the
network? CAF: Pump then dump. That is the way it works.
During the S&L crisis, an investor would make money selling
assets to a developer at 2 to100 times market value financed
by an S&L. Then they would buy the assets back at 10 cents
on the dollar after the crash. So they made money on the
"pump'' and then money on the "dump''. Meantime, if the feds
needed a fall guy, they would have DOJ and the SEC go after
the developer or the S&L CEO. The reality was that the bank
regulators would never had allowed such things to go on if
the investor and their investment syndicate had not been
rigging the right laws and regulations and pushing regulator
"indifference'' or "incompetence'' throughout. The
developers and S&L CEO's and management were the small time
fraudsters or patsies. It was the quiet guys who made the
big money behind the scenes who were the real bad guys. They
got away scot
free. Harvard College Fund Assembly Boston, Mass.
October 12, 2002 "Because, let me tell you, if war
is too important to leave just to generals, science and
technology are too important to leave just to scientists and
technologists. And, though it gives me great pain to say, I
will also concede that the economy is too important to leave
just to
economists." As
far as I'm concerned that is why Enron happened. The folks
who made money on IranContra were able to rise to and
consolidate control of the investment community, media, and
government. Unfortunately, part of the reason this happens
is that honest government enforcement career staff is put in
the position of landing on Normandy Beach with water
pistols. As an example, the SEC during the last
administration, fought vigorously against the "street'' on
any number of accounting issues, and any number of "new
financial structures'' that obfuscated financial
transactions. The underfunding of these efforts and the
lack of serious political support play a significant part in
allowing these kinds of fraud to happen. DA: You link the
S&L crisis with IranContra. Are you saying it's the same
network of people---or using that word again, the same
syndicate that perpetrated IranContra also perpetrated the
S&L meltdown? CAF: Go back to the books and articles I
mentioned earlier. The S&L Crisis was simply part of
IranContra--- an intentional systemic fraud. Our banking
governance and regulatory structure did not work for a
reason. The people in charge did not want them to---everyone
involved made a lot of money, both in ripping off the S&L's
or HUD or the banks. Then they made money buying up the
assets cheap after the crash. It was a pump and dump of the
real estate market, with the S&L's as the primary financial
patsy that had to be refinanced out by the taxpayers. Very
few got held responsible. The message was "crime pays.''
Both the Clinton and Bush groups were IranContra winners.
DA: Clinton too? Is that why Clinton never brought up
IranContra during the 1992 election? CAF: Can you spell
Mena, Arkansas? DA: I'm sorry, Catherine, I just don't
want to believe this. CAF: No one does. That's how they
got away with it. The seventh step in a legitimate
investigation is you cancel federal government contracts,
particularly sensitive ones, and seize payables and any
other assets available where criminal behavior at the top of
the organization indicates that the organization is a
criminal enterprise. So I would ask: If Enron and Arthur
Andersen by their own admission are guilty of criminal
violations of destroying evidence, of cooking the books, and
you have Enron board members saying that Arthur Andersen and
the management lied, then on what basis should they not be
immediately disbarred from doing business with the federal
government? DA: On March 15th of this year, the General
Services Administration did prohibit new contracts with
Enron for twelve months and with Arthur Andersen for the
duration of the present indictment. [15] CAF: Almost four
months after Enron declared bankruptcy. Those contracts
could have been cancelled with in the space of 24
hours---as soon as there was any evidence of wrongdoing. And
cash that was owed under those contracts could also have
been seized as an offset for a variety of things, whenever
probable fraud is evident. Why should Enron be rewarded with
government contracts after causing the fraudulent energy
billing of Americans in the billions. Would you continue to
hire and use a person or company who has just stolen your
money? Of course not. It is interesting to note that Arthur
Andersen spin-off Accenture has been hired by the Pentagon
through IBM to sort out the defense department's missing
trillions. ENDNOTES: In Part Five we learn more about the
inimitable Pug Winokur and see his starring role in a
Cartoon Strip. ©opyright Daniel
Armstrong, March
2003 If my years working
on the clean up of BCCI and the S&L crisis taught me one
thing that I would communicate today to the shareholders,
retirees and employees who have been harmed, it is this:
people like those on the board of Enron absolutely make
money from insider trading, bid rigging and fraud, and they
do so with help from the highest levels.
-- Catherine Austin Fitts. 
IMAGE: Enron
- Click Through To Original
Article
http://www.scoop.co.nz/mason/stories/HL0304/S00031.htm
Click Here for Part Two
http://www.scoop.co.nz/mason/stories/HL0304/S00035.htm
Click Here for Part Three
http://www.scoop.co.nz/mason/stories/HL0304/S00063.htm)
IMAGE: Smug
Pug The Cancer Man
another happy investor... ..''crime
that pays is crime that
stays!''
IMAGE: Pug
Winokur A Man Of His Times – Click To Enlarge
9 http://www.enronfraud.com/
10 http://www.msnbc.com/news/796841.asp?cp1=1
11 http://www.harvardwatch.org/
12 http://www.people.fas.harvard.edu/~skomarov/harvardwatch/04_07_ap.html
13 http://www.people.fas.harvard.edu/~skomarov/harvardwatch/02_01_bg.html
14 http://www.people.fas.harvard.edu/~skomarov/harvardwatch/deregulation_deception_short.pdf
15
http://w3.gsa.gov/web/x/publicaffairs.nsf/dea168abbe828fe9852565c600519794/
576435646c09ff9185256b7d004800b8?OpenDocument
Catherine Austin Fitts is the President of Solari, Inc. ( http://solari.com) and a former
Assistant Secretary of Housing – Federal Housing
Commissioner in Bush I. She is currently litigating with
Ervin and Associates (acting on behalf of the government )
and the Department of Housing and Urban Development. If you
would like to support her litigation efforts, you can
through Affero/ Venture Collective:
http://www.solari.com/vote.php
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