Friday, 18 April 2003, 9:55 am
Column: Catherine Austin Fitts
Mapping the Real Deal…
The Real Deal About Enron
… an interview with Scoop Real Deal Columnist Catherine Austin Fitts
Part Seven 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.]
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
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(Click Here for Part One)
(Click Here for Part Two)
(Click Here for Part Three)
(Click Here for Part Four)
(Click Here for Part Five)
(Click Here for Part Six)
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 , Part Three , Part Four , Part Five and Part Six )
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CONTINUATION LINE:
CAF: So what do we do? Essentially, we have to reengineer our economy from a negative return on investment to a positive return on investment. At the heart of that is reengineering government investment, credit and regulation by place.
If every neighborhood in America took a look at the sources and uses of all federal, state and local government resources and started to reengineer those resources place by place, we could leverage our current capital base by many multiples. During the 1990’s, I prototyped approximately $12 billion of transactions that gave me the detailed pricing information needed to build a conceptual framework of how to do this by financing communities with equity in a way that makes money for all the parties involved including business, investors, and community. This was what Hamilton Securities prototyped at Edgewood Terrace with our software Community Wizard.
This is my solari model, a winwin alignment between people, environment and money. Such an alignment can unleash astonishing amounts of new wealth. So now that a few have used new technology to steal all of America’s retirement savings while the rest of us let it happen, it is time for the natural leaders among us to use new technology to reengineer our concrete economy and create new wealth to reduce our addiction for more borrowing and debt and to fulfill our financial obligations to each other.
Two months ago, I published a two part series with Sanders Research Associates in London that describe what I learned from the prototyping effort about where the opportunities lie—”The Myth of the Rule of Law or How the Money Works: The Destruction of Hamilton Securities Group”—and my vision of how we are going to capture that value as investors and entrepreneurs “Solari & the Rise of the Rule of Law.”
For those who are interested in profitable transformation that can make our neighborhoods safe again, create new jobs or replace our retirement and pension losses, you can link to both articles from my website at http://www.solari.com.
After many years and many billions of transactions and investments, my childhood intuition has been affirmed. The honest folks can make more money healing a community than the powers that be made destroying it. As this was true for West Philadelphia where I grew up, it’s true for all of America today.
EPILOGUE [By Daniel Armstrong]: It is important for all of us to understand the Enron bankruptcy as well as we can. It affected a huge portion of the nation. Thousands of jobs were lost. Enron employee 401K plans were stripped. Many large investment portfolios, nearly every state pension plan and all variety of special retirement packages public and private were laced with the failing Enron stock. Investment brokerages continued to tout Enron even as they knew the tides had turned—and a sudden insider sell off would drop a $90 stock to mere pennies.
Literally hundreds of thousands of Americans suffered grave hits on nest eggs they’d put a life’s work into, sending, in some cases, retired folk back to the streets looking for jobs. One of the world’s largest accounting services Arthur Andersen came tumbling down for its part in the disaster. The entire California energy grid was manipulated for vicious levels of profit.
Lies were told to the public and the government about the whys and wherefores of rolling brownouts. It wasn’t just greedy Enron managers stealing money. It wasn’t just stock market fraud. It was the abuse of immense public trust and responsibility. And for what we have seen in news reports, it resulted from the collusion of Enron executives and board members, lawyers, sever al influential banks, regulatory officers, and an unknown quantity of political compliance. For all of us, it demands an explanation.
I spoke to Catherine Austin Fitts for the expressed purpose of trying to find this explanation. In the end, she told me more than I was really prepared to accept. More than Enron, more than Arthur Anderson, the entire US government was riddled with fraud, incomplete balance sheets, and syndicated operations. It was too much to comprehend. In the days after the interview, however, I tried to sort it out. That is, put the entire Enron fiasco in a perspective that fit with my worldview. The following was my assessment:
Superficially, the Enron bankruptcy looks pretty much like a passing pumpanddump scheme, orchestrated by a handful of inside managers. A closer look, and we see the part played by outside investors, stock brokerage hypes, accounting firms, and a fair measure of bank compliance. Indeed, it’s not such a far stretch to say this little energy market con game was manipulated from the outside through a handful of pasty insiders, with Ken Lay at the top.
While those Enron managers and accountants take the rap, and perhaps lose their illegal profits, the real money will be going to a tight clique of enlightened investors, benefactors watching from three or four shells deeper within the game, selling really big numbers of stock at precisely the right time.
But it’s not until you put this scandal in the context of other major scandals since the Reagan Presidency— I hesitate to venture any further back than that—do you see something even larger maneuvering in the back ground, influencing politicians, pulling legislative strings, like the deregulation of the energy market, and producing glowing business reports from Ivy League Colleges. As hard as it is to believe, or maybe as much as we don’t want to believe it, the same corporate relationships appear over and over again in various combinations through the S&L crisis, the HUD robberies, the BCCI scandal, the Iran/Contra arms for drugs heist, and this bankruptcy in Houston—and always with the acquiescence of America’s biggest banks.
So, it’s military contractors. It’s oil men/energy traders, and it’s the information technology industry, all roiled together with a few staunch and formal pinstriped suits from Wall Street and the banking industry. The United States Treasury sits in the background like the Sphinx—a giant obscuring financial slush fund—with a federal accounting system that makes Enron/Andersen’s books look as clear as crystal. Three trillion missing government dollars at last count. How could anyone think a system this loose could be honest?
Now let’s take a step back from here. Let’s take yet another look at this thing, this network of bankers, defense contractors, energytrading oilmen, and greased politicians that Ms. Fitts describes. Dwight Eisenhower had a name for it: the MilitaryIndustrial Complex. It almost sounds like a joke it’s so overused. But unfortunately, it’s not a joke. Ms. Fitts has drawn a picture of it for us, or at least in broad strokes, one tentacle of the ever-changing creature.
A loose affiliation of millionaires and billionaires all interlocked and sustaining the military weapons industry and dictating foreign policy both overt through Congress – and covert through operational fraud profits. I know, I fight the cliché, but the truth is there is a network of goodoldboy weapons makers and communications experts whose contracts are the richest in the world. LockheedMartin, DynCorp. RaytheonHughes, McDonnell DouglasBoeing. They go through the biggest banks. Citigroup, MorganChase, the Bank of New York.
Their books are cooked by the biggest accountants. Arthur Andersen, PriceWaterhouse. They are assisted by the intelligence community. They own big pieces of the media, and they build the world’s most powerful military. They represent the muscle end of the equation of control of the planet, and especially since 9/11, they exercise huge sway over the U.S. government. Like the 800pound gorilla, they do pretty much whatever they please. The MilitaryIndustrial Complex or the Iron Triangle, as it is also called, is real and it’s powerful; and as evidenced by the actions of this one tentacle—the Enron bankruptcy—it is full of corruption and fraud. It might more accurately be called a criminal syndicate than a complex of common business interests. This is my opinion.
Of course, there are some that would say this industrial syndicate is what makes America strong. And it surely does that. Some would say that is it simply good business, businessmen networking for success. And there are some that would say this syndicate protects the manifold freedoms of the United States. And perhaps, in a strained way, it does. But there are others who would say that this syndicate acts as a shadow government, sucks up our taxes, sustains itself by making war anywhere on the globe, and prevents the possibility of worldwide peace and equality.
We all must come to our own conclusion whether the Military Industrial Complex is friend or foe. In any case, Catherine Austin Fitts’ commentary reveals that, at the very least, the people behind it are dangerous and criminally ambitious. The Enron scandal suggests that the creature has also heavily infiltrated the present presidential administration and that the very highest powers in the United States are orchestrating a cover-up because of that.
Forty-five years after Ike’s first warning, it is clear the checks are out of balance. If we really live in a democracy that’s free and run by the people for the people, it’s time we hold our leaders and ourselves accountable. It won’t be easy. Catherine Austin Fitts’ story demonstrates what happens to people who do. Though Catherine Austin Fitts has made it through the gauntlet with her credibility stronger than ever and a shot a recovering her fortune, most do not. Perhaps the time has come to support the people who do and try restructuring our world from the inside out.
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Catherine Austin Fitts is the President of Solari, Inc. 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.
©opyright Daniel Armstrong, March 2003