The Congressional Record is a unique source of public documentation. It started in 1873, documenting nearly all the major and minor policies being discussed and debated.
“ENERGY CRISIS” mentioning the U.S. Dept. of Justice was published in the Senate section on pages S8223-S8224 on July 15, 2004.
The publication is reproduced in full below:
ENERGY CRISIS
Mrs. FEINSTEIN. Mr. President, I rise today to set the record straight regarding the Western energy crisis. Ken Lay, the former CEO of Enron, appeared on CNN's Larry King Live on Monday, July 12. Larry King asked him:
Did Enron's problems or fortunes or misfortunes have anything to do with hurting California and its energy problem? Because a lot of politicians in California blamed Enron.
Lay responded:
Well, they do, and I still think to this day falsely, Larry. I mean, California, for the most part--I mean, California, California regulators, politicians, et cetera, caused the problem in California.
Let me set the record straight. During consideration of California's legislation that deregulated the energy market, Enron was at the center of the lobbying effort that crafted the bill.
Once the legislation was passed, Enron took full advantage of the loopholes it helped to create to manipulate and game the Western energy market. I would not argue that the system was perfect, but I would assert that Enron had a huge hand in creating such a flawed system, which it used to its benefit.
Enron, and other energy companies, created a business environment in which the bottom line mattered more than the public good.
As I have stated on this floor before, energy traders were completely unconcerned with customers having electricity as long as it meant that they got an extra bonus that day.
And the fault does not lie solely with Enron. Other companies were also involved with gaming the Western energy markets, including, but not limited to: Dynegy, Reliant, Williams, El Paso, Duke, BP Energy, Portland General, AES, Mirant, CMS Energy, American Electric Power Company, and Sempra Energy Trading.
The recently-released Enron tapes demonstrate the callousness of these companies:
One trader complained: ``They're [expletive] taking all the money back from you guys? All the money you guys stole from those poor grandmothers in California?''
A second responded: ``Yeah, grandma Millie, man.''
The first responded: ``Yeah, now she wants her [expletive] money back for all the power you've charged right up, [expletive phrase], for
[expletive] $250 a megawatt hour.''
The good news is that the figures responsible for running Enron are beginning to be brought to justice. For instance, Ken Lay, along with former Enron CEO Jeffrey K. Skilling and former Enron Chief Accounting Officer Richard Causey, were indicted by the U.S. Department of Justice on charges of conspiracy, securities fraud, wire fraud, bank fraud and making false statements.
The indictment alleges that at various times between at least 1999 and 2001, Lay, Skilling, Causey and other Enron executives engaged in a wide-ranging scheme to deceive the investing public, the U.S. Securities and Exchange Commission and others about the true performance of Enron's businesses.
The alleged scheme was designed to make it appear that: Enron was growing at a healthy and predictable rate, consistent with analysts' published expectations; Enron did not have significant write-offs or debt and was worthy of investment-grade credit rating; and, Enron was comprised of a number of successful business units, and that the company had an appropriate cash flow.
These actions had the effect of inflating artificially Enron's stock price, which increased from approximately $30 per share in early 1998 to over $80 per share in January 2001, and artificially stemming the decline of the stock during the first three quarters of 2001.
The indictment also alleges that Lay had a significant profit motive for participating in the scheme.
As stated in the indictment, Lay received approximately $300 million from the sale of Enron stock options and restricted stock between 1998 and 2001, netting over $217 million in profit, and was paid more than
$19 million in salary and bonuses.
Lay received a salary of over $1 million, a bonus of $7 million and
$3.6 million in long term incentive payments during 2001 alone.
Additionally, Lay sold 918,104 shares of Enron stock during the period of August 21 through Oct. 26, 2001, to repay advances totaling
$26,025,000 he had received from a line of credit extended to Lay by Enron.
At that same time, California was overcharged by at least $9 billion. Now we at least know where some of that money went.
Yet even if Enron is forced to pay back the almost $2 billion it overcharged California, bankruptcy will protect the company from paying back much more than 20 cents on the dollar.
It is my hope that as the evidence mounts against Ken Lay that the truth about his, and Enron's, role in the Western energy crisis will leave no doubt in anyone's mind that the crisis was manufactured by unethical, greedy corporations.
California has suffered enough as a result of the crisis--it does not need to suffer further from Ken Lay's mistruths.
Mr. President, thank you for letting me set the record straight.
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