Enron was an energy company based in Houston, Texas, although it was founded in Omaha, Nebraska. It was one of the largest energy providers in the United States, and employed over 21,000 people. It was named Fortune Magazine's "America's Most Innovative Company" for six consecutive years. The company filed for bankruptcy in 2001 after years of accounting fraud and lack of regulatory oversight in the 1990s.
Kyoto protocols and carbon emissions
An internal Enron memo says the treaty will, "do more to promote Enron's business than will almost any other regulatory initiative outside of restructuring the energy and natural gas industries in Europe and the United States." Lay told Enron employees Bill Clinton solicited Lay's views "in advance of a climate treaty to be negotiated at an international conference" And Lay said Clinton agreed to support Lay's proposal of a carbon emissions trading exchange from which Enron planned to profit hugely while American consumers paid steep price increases for electricity and natural gas.
The Republican Senate rejected the Kyoto treaty by a 95-to-0 vote on August 15, 1997.
Cap and trade
- Main article: Cap and trade
Even after the U.S. withdrew from the Kyoto protocols, Enron continued to push for a domestic regulatory scheme known as cap-and-trade, whereby the government would set a cap on the total amount of carbon dioxide emissions allowed in the U.S. It would distribute permits or allowances to companies affected by the cap giving them the right to emit a certain amount of carbon dioxide. Those allowances could then be traded on a carbon emissions trading exchange.
Enron executives believed that a cap-and-trade program would put them in a position to dominate the U.S. energy market. Electric utilities, required to reduce emissions of carbon dioxide, would be forced to switch from coal to natural gas as the only practical alternative to electricity production. As a leading trader of natural gas, Enron would be the recipient of a huge financial windfall.
While Barack Obama served as a board member for the Chicago-based Joyce Foundation, it gave nearly $1.1 million to start the Chicago Climate Exchange, calling itself "North America's only cap and trade system for all six greenhouse gases, with global affiliates and projects worldwide." In 2010, the Chicago Climate Exchange collapsed. As many investors were wiped out, its founder sold out before hand for $90 million and Al Gore, who was also associated by name with the company, pocketed $18 million.
Corruption and Demise
The Enron scandal occurred when Enron, a Blue Chip stock, was revealed to have far more debt than realized. Top officers misled shareholders and some transactions did not appear on the company's financial records using "future value accounting," whereby they were reporting profits based on projected future earnings rather than actual earnings. The stock dropped from $90 a share to mere pennies. It is considered to be one of the largest bankruptcies in history.
The "Enron 3", Ken Lay, Jeffery Skilling, and Andrew Fastow, the top officers of Enron were all convicted for their role in the collapse of Enron. Enron's accounting firm Arthur Andersen was convicted of obstruction of justice for its dealings in the event, and went from being one of the top five accounting firms in the world, to a mere shadow of its original stature. This is because the numerous civil suits against it, lack of credibility, and loss of clients in the Enron collapse.
The name of the Houston Astros' baseball stadium, Enron Stadium, was changed to Minute Maid Field after the incident. Many documentaries, movies and books about the Enron Scandal have been created, one of the most notable is the movie, Fun with Dick and Jane, with a storyline loosely based around the scandal, even mentioning Enron in the credits.
In 2011, First Lady Michelle Obama scheduled a fundraising event in the mansion of a former Enron executive and billionaire for President Obama's 2012 re-election asking for $10,000 per ticket to the event, or the “co-host level” contribution being $35,800.
In May 2013, Skilling negotiated a deal for his earlier release from prison in exchange for dropping his appeals that have held up the distribution of $40 million to victims of the Enron collapse. If the judge approves the deal, Skilling may be released in 2017.
- Obama Years Ago Helped Fund Carbon Program He Is Now Pushing Through Congress, By Ed Barnes, March 25, 2009. FoxNews.com
- Collapse of Chicago Climate Exchange Means a Strategy Shift on Global Warming Curbs, By Ed Barnes, November 09, 2010, FoxNews.com
- Obama Rakes In Cash From Lobbyists, Enron Executives, John Hayward, Human Events, 10/28/2011.
- De la Merced, Michael. "Enron’s Skilling Strikes Deal for Shorter Sentence", New York Times, May 8, 2013. Retrieved on May 14, 2013.