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Thursday, July 06, 2006

The Devil Takes Care of His Own

It is said, the devil takes care of his own. Much more should a good spirit—the spirit of the Constitution and the Union—take care of its own. I think it can not do less, and live.
Abraham Lincoln, 1862

Honest Abe was no dewy eyed babe; he called them as he saw them, and in this case, Porcupine is certain that a Good Spirit feels thwarted by the narrow escape has had from an orange jumpsuit parade. Lay died of a massive coronary on Tuesday, evading his October sentencing for his conviction in the fraud case.

was convicted last May 25 of defrauding investors and employees by repeatedly lying about Enron's financial strength in the months before the company plummeted into bankruptcy protection in December 2001. Lay was also convicted in a separate non-jury trial of bank fraud and making false statements to banks about his personal finances. Now, the prosecutors will have a difficult time recouping any of the $43.5 million judgment against Lay.

Lay had built Enron into a high-profile, widely admired company, the seventh-largest publicly traded in the country. But Enron collapsed after it was revealed the company's finances were based on a Ponzi-like web of fraudulent partnerships and schemes, not the profits that it reported to investors and the public.

When on trial, Lay was characterized as irritable and combative. He arrogantly defended his extravagant lifestyle, including a $200,000 yacht for wife Linda's birthday party, $4,700 for a trip to the French Rivera, while he was sunk into $100 million in personal debt and saying " We could have reduced some living costs, but as I said earlier, we had realized the American dream. We were living a very expensive lifestyle. It was difficult to turn off that lifestyle like a spigot." He also paid for a $12,000 birthday party. A note here from Porcupine for all aspiring Titans of Capital – never allow your toga-style birthday orgy to be videotaped. Later, when it becomes part of a major motion picture, you will look fat, disassociated and unspeakably greedy.

And what a motion picture it proved to be. Enron – the Smartest Guys in the Room was nominated for Best Documentary in the 2006 Academy Awards, and would likely have won if not for some penguin movie that so many people saw.

Using tape recordings of Enron traders on the phone with California power plants, the film chillingly overheard them asking plant managers to "get a little creative" in shutting down plants for "repairs." Between 30 percent and 50 percent of California's energy industry was shut down by Enron a great deal of the time, and up to 76 percent at one point, as the company drove the price of electricity higher by nine times. The Enron traders joked about "Grandma Millie," a hypothetical victim of the rolling blackouts, and boasting about the millions they made for Enron. Or, since the company went belly up, for Ken Lay.

Yes, the film lost to the blockbuster March of the Penguins. Yet we are driven along a similar trail, waddling desperately to reach our safe haven. Utility deregulation has not been a success, especially in rural areas like Cape Cod. There is a place for deregulation – phones, airlines, and other industries where there are alternative to that service. But electricity is needed by all, and electricity deregulation has been a disaster.

Ken Lay was to the business world what Duke Cunningham is to the political one – a Rapscallion Extraordinaire, an embarrassment and an example of how bad men in a system can pervert it. In the meantime, Satan has spared one of his Titans the embarrassment of incarceration. It is to be hoped that he has an even warmer welcome planned.


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