Greg Palast: Lay Convicted, Bush Walks


Richard Moore

Date: Thu, 25 May 2006 17:21:35 -0400 (EDT)
From: Greg Palast <•••@••.•••>
Subject: Lay Convicted, Bush Walks (and Ahnold Gets Lay'd)

Lay Convicted, Bush Walks (and Ahnold Gets Lay'd)
Special For Truthout
Wednesday, May 24, 2006
by Greg Palast

Don't kid yourself. If you think the conviction of Ken Lay means that George 
Bush is serious about going after corporate bad guys, think again.

First, Lay got away with murder -- or at least grand larceny. Like Al Capone 
convicted of failing to file his taxes, Ken Lay, though found guilty of stock 
fraud, is totally off the hook for his BIG crime: taking down California and 
Texas consumers for billions through fraud on the power markets.

Lay, co-convict Jeff Skilling and Enron did not act alone. They connived with 
half a dozen other power companies and a dozen investment banks to manipulate 
both the stock market and the electricity market. And though their 
co-conspirators have now paid $3 billion to settle civil claims, the executives 
of these other corporations and banks get a walk on criminal charges.

Furthermore, to protect our President's boardroom buddies from any further 
discomforts, the Bush Justice Department, just days ago, indicted Milberg, 
Weiss, the law firm that nailed Enron's finance industry partners-in-crime. The 
timing of the bust of this, the top corporation-battling law firm, smacks of 
political prosecution -- and a signal to Big Business that it's business as 

Lay and Skilling have to pay up their ill-gotten gains to Enron's stockholders, 
but what about the $9-plus billion owe electricity consumers? The Federal Energy
Regulatory Commission, Bush's electricity cops, have slapped Enron and its gang 
of power pirates on the wrist. Could that have something to do with the fact 
that Ken Lay, in secret chats with Dick Cheney, selected the Commission's 

Team Bush had to throw the public a bone -- so they threw us Lay and Skilling --
for the crime, note, not of ripping off the public, but ripping off 
stockholders, the owner class.

This limited conviction, and the announcement of only one more indictment -- of 
the crime-busters at Milberg-Weiss -- is Team Bush's "all clear!" signal for the
sharks to jump back into the power pool.

That leaves one question: if Bush's Justice Department let Ken and company keep 
the California loot, what about that state's own government? If you want to know
how Californian's $9 billion went bye-bye, read on ...


[From Armed Madhouse , Greg Palast's new book out 06-06-06.  Order it now at]

Peninsula Hotel, Beverly Hills. May 17, 2001. The Financial Criminal of the 
twentieth century, not long out of prison, meets with the Financial Criminal of 
the twenty-first century who feared he may also have to do hard time. These two,
bond-market manipulator Mike Millikin and Ken Lay, not-yet-indicted Chairman of 
Enron Corporation, were joined by a selected group of movers and shakers -- and 
one movie star.

Arnold Schwarzenegger had been to such private parties before. As a young 
immigrant without a nickel to his name, he put on private displays of his 
musculature for guests of his promoter. As with those early closed gatherings, I
don't know all that went on at the Peninsula Hotel meet, though I understand 
Ahnold,_ this time, did not have to strip down to his Speedos. Nevertheless, the
moral undressing was just as lascivious, if you read through the 34 page fax 
that arrived at our office.

Lay, who convened the hugger-mugger, was in a bit of trouble. Enron and the 
small oligopoly of other companies that ruled California's electricity system 
had been caught jacking up the price of power and gas by fraud, conspiracy and 
manipulation. A billion here, a billion there, and pretty soon it was real money
- $6.3 billion in suspect windfalls in just six months, May through December 
2000, for a half-dozen electricity buccaneers, at least $9 billion for the year.
Their skim would have been higher but the tricksters thought they were limited 
by the number of digits the state's power-buying computers could read.

When Ken met Arnold in the hotel room, the games were far from over. For example
, in June 2003, Reliant Corporation of Houston simply turned off several power 
plants, and when California cities faced going dark, the company sold them a 
pittance of kilowatts for more than gold, making several million in minutes.

Power-market shenanigans were nothing new in 2000. What was new was the response
of Governor Gray Davis. A normally quiet, if not dull, man, this Governor had 
the temerity to call the energy sellers "pirates_" -- in public! -- and, even 
more radically, he asked them to give back all the ill-gotten loot, the entire 
$9 billion. The state filed a regulatory complaint with the federal government.

The Peninsula Hotel get-together was all about how to "settle"_ the legal 
actions in such a way that Enron and friends could get the state to accept dog 
food instead of dollars. Davis seemed unlikely to see things Ken's way. Life 
would be so much better if California had a governor like the muscle guy in the 

And so it came to pass that, in 2003, quiet Gray Davis, who had the cojones to 
stand up to the electricity barons, was thrown out of office by the voters and 
replaced by the tinker-toy tough guy. The Governator_ performed as desired. Soon
after Schwarzenegger took over from Davis, he signed off on a series of deals 
with Reliant, Williams Company, Dynegy, Entergy and the other power pirates for 
ten to twenty cents on the dollar, less than you'd tip the waitress. Enron paid 
just about nothing.


On June 6, Penguin Dutton will publish Greg Palast's new book, Armed Madhouse: 
Dispatches From the Front Lines of the Class War, from which this excerpt is 
taken.  You can pre-order the book now and see the BBC report on Enron at

Palast, an internationally recognized expert on Enron and electricity market 
manipulation, is co-author of "Democracy and Regulation," the United Nation's 
guide to control of the utility industry.

Special thanks to the Foundation for Taxpayer and Consumer Rights, Los Angeles,, who first uncovered the confidential Peninsula Hotel 

View Palast's investigative reports for Harper's Magazine and BBC Television's 
Newsnight at

Escaping the Matrix website
cyberjournal website  
subscribe cyberjournal list     mailto:•••@••.•••
Posting archives      
  cyberjournal forum  
  Achieving real democracy
  for readers of ETM  
  Community Empowerment
  Blogger made easy