Enron to the Warburgs

7-14-25

Excerpted, in part, from my book, Big Oil & Their Bankers in the Persian Gulf, Chapter 9: The Texas Oil Mafia.

In 1985 Drexel Lambert S&L crook Michael Milken helped Houston Natural Gas merged with Internorth to create Enron. Kenneth Lay headed Houston Natural Gas and became chairman and CEO of the new company. Enron was the biggest corporate contributor to George W. Bush’s campaign to become Texas Governor. [1]

Bush won and Texas led the way in a nationwide deregulation of energy markets which Lay advocated. Deregulation allowed Lay to pioneer energy trading. By 1999 Enron monopolized online energy trading via Enron Online. Throughout the political career of George W. Bush, Lay was his largest financial supporter, personally giving Bush $650,000.

In 1993 Wendy Gramm, wife of Senate Banking Committee Chairman Phil Gramm (R-TX), joined the board of Enron where she was chair of Enron’s Audit Committee. Wendy Gramm came to Enron straight from her job as 12-year chair of the Commodity Futures Trading Commission (CFTC), where she ostensibly aided in the cover-up of BCCI, Capcom, Mena drug trade and S&L scandals. At CFTC Gramm’s main task was to oversee the complex derivatives market, a favorite haven for drug money laundering due to its opaque nature.

While Wendy was covering tracks at CFTC, husband Phil was busy blocking key money laundering legislation and pushing for bank deregulation. He pushed passage of the Commodity Futures Modernization Act of 2000, which severely reduced government oversight of the derivative and futures markets.

Enron, where Wendy Gramm now collected a $200,000 per year stipend, received exclusive regulatory exemptions through the legislation. Section 101 of the Act granted regulatory exemption to on-line energy traders. There was only one such entity – Enron OnLine. One CFTC official stated of Section 101, “everyone called it the Enron exemption”. [2]

Ken Raisler was a key lobbyist for Enron. Raisler served as general counsel to the CFTC before joining Enron. Currently he is a partner at Sullivan & Cromwell - the spook law firm behind the overthrow of Mossadegh in Iran and Arbenz in Guatemala.

Enron hired former Clinton Treasury official Linda Robertson to head its Washington offices. Former Montana Governor Marc Racicot joined Enron as a lobbyist. Racicot, whom the Montana Militia has fingered for providing cover for a cocaine ring operating along the Montana/Canadian border while serving as Montana Attorney General, was appointed chair of the Republican National Committee just days before Enron went bust. Goldman Sachs and Morgan Stanley were huge Enron lobbyists. [3]

James Baker, Robert Mosbacher and Bush economic adviser Lawrence Lindsey all lobbied for Enron. James Baker had been hired straight from office as Bush Sr. Secretary of State to lobby the Kuwaiti government on behalf of Enron. Enron received a $600 million contract from Kuwait to build an electrical power plant as a result of his efforts. President Bush Jr. himself earned lucrative fees from Enron for speaking engagements.

Just before Racicot bolted Enron, Sen. Phil Gramm announced his retirement. Enron executives began feverishly selling stock options, which had reached a high of $96/share. In October 2001 Enron froze its employees’ 401K plan, locking them into a downward spiral in Enron’s stock price. On December 2, 2001 Enron declared Chapter 11 bankruptcy, making its shares worthless. Ten days later House Majority Leader Dick Armey (R-TX) announced his retirement. The Bush Justice Department announced an investigation, but Attorney General John Ashcroft recused himself from the case due to political contributions he received from Enron. Former Enron employee Deputy Attorney General Larry Thompson took over the investigation.

No less than fifteen Bush Administration officials owned Enron stock. Enron met at least six times with former Halliburton CEO Vice-President Dick Cheney to help craft a national energy policy. [4] Enron called Commerce Secretary and former Tom Brown natural gas executive Donald Evans, and Treasury Secretary and former ALCOA executive Paul O’Neill, to ask for a government bailout. On February 17, 2001 Enron executives met with O’Neill just three weeks into his appointment. O’Neill agreed to quash a law that limited Enron’s use of offshore shell companies to hide losses. [5]

Enron called Federal Energy Regulatory Commissioner Kenneth Hebert to pressure him to make a ruling favorable to the company. When Hebert refused President Bush relieved him of his job. Enron CEO Ken Lay was told by Bush to interview four candidates for the FERC post during the Bush transition to the White House. During the 2000 Presidential elections Enron was the biggest corporate funder of the Bush Campaign, giving $113,000 to the campaign, $100,000 for the inaugural ball and $5,000 to the Florida Recount Fund, which was presided over by James Baker. During 1999-2000 Enron doled out $2,439,000 in political contributions.

This was chump change compared to the $20 million Enron had given as bribes to Indian officials in 1993 when it moved into the power generation business in that country’s Maharashtra State. Enron snookered the Indians into a deal where they would pay $30 billion to Enron to provide electricity at rates 700% the national average. The Enron Dabhol plant produced the highest priced electricity in India. Maharashtra state officials wanted out. The US Ambassador to India chastised officials for even considering backing out of the deal. [6]

In 1999 the Indians finally sent Enron packing after both Human Rights Watch and Amnesty International cited Enron for human rights violations in handling opposition to Dabhol. Amnesty said women were dragged from their homes and beaten by thugs on Enron payroll.

There is a bigger story behind Enron’s failed Dabhol project in India. By the mid-1990’s the Unocal-led Centgas consortium, which proposed the Turkmenistan-Afghanistan-Pakistan natural gas pipeline to supply the Far East, began proposing an alternate route that would terminate at Multan, Pakistan on the Indian border in the heart of disputed Kashmir. A proposed 400-mile extension of the pipeline would bring cheap gas to India to supply the Dabhol plant, allowing Enron to be competitive in the Indian market. [7]

Were the last-ditch negotiations by the Bush Administration in summer 2001 with the Taliban an attempt to head off an Enron bankruptcy by pushing through the trans-Afghan pipeline necessary to bring Dabhol the cheap gas it needed to survive? The company sorely needed to recoup the over $3 billion it invested in the ultra-high-tech Dabhol facility just north of Bombay.

Enron’s partners in the project were Bechtel and GE. Enron had counted on a partnership in Qatar with the state-owned Qatar Gas & Pipeline Co. to supply Dabhol with cheap natural gas, but in April 1999 the project was canceled. With Central Asian gas reserves estimated at $3-$6 trillion, Enron looked north. While Centgas attempted to lay pipe across Taliban territory, Enron was busy laying pipe all across India, in anticipation of Centgas supply from Turkmenistan.

The US Trade & Development Agency was conducting feasibility studies on alternate gas routes should the Taliban continue to demand that any pipeline crossing their nation be open to local consumption, a condition unacceptable to Big Oil, which knew the gas would fetch a far higher price in the lucrative Japanese and South Korean markets they were targeting. Should an alternative Caspian Mountains to Turkey pipeline be built, Enron partners Bechtel and GE would get the contract to build it.

In February 2001 Cheney’s Energy Task Force called for a boost in oil and gas production in India, a move clearly designed to bail out Enron’s Dabhol white elephant. Cheney himself interceded to help Enron collect a $64 million debt from India during a June 27, 2001 meeting with Indian opposition leader Sonia Gandhi

A series of emails obtained by the Washington Post and New York Daily News reveal that the National Security Council had taken charge of a “Dabhol Working Group” during the summer of 2001, just as the Bush Administration was meeting with the Taliban. Bush Central Asian expert and long-time CIA agent Christine Rocca met with the Taliban Ambassador to Pakistan on August 2, 2001 to remind Mr. Zaeef of the $132 million the US had provided the Taliban already that year. [8]

In the end, neither the Four Horsemen nor Enron got their new Silk Road. Enron went belly up, 911 happened and bombs began raining down on Afghanistan.

South of the Border

When Argentina went into an economic tailspin, Enron was there to scoop up the Buenos Aires water system in an IMF privatization shell game. Enron took over an important oil and gas pipeline running between Argentina and Chile. Both acquisitions were facilitated by the Bush Sr. White House. According to La Nacion, George W. Bush came to Argentina in 1988 as an Enron lobbyist and met with Argentine Minister of Public Works, Rodolfo Terragno. Silverado S&L looter Neil Bush also lobbied Terragno. Bush told the minister to give Enron the first option to buy the country’s soon to be privatized energy complex. The Bush family has investments in Argentina. They are also friends of drug-scandal-ridden former President Carlos Menem, who was recently indicted.

By 1996 Enron Global Power & Pipelines had a controlling interest in a 4,100 mile natural gas pipeline system running throughout Argentina. It is the largest pipeline in South America with a capacity of 1.9 billion cubic feet of gas per day. On May 4, 1998 Enron's Comercializadora de Energia Argentina was granted the first power marketing license in Argentina’s newly deregulated privatized energy sector.

Two years earlier Enron teamed up with Royal Dutch/Shell to buy Bolivia’s denationalized 1,655 mile gas pipeline system, while acquiring another pipeline stretching from Bolivia to Brazil. Enron also controlled a major pipeline in Columbia. All of these investments were guaranteed by the US taxpayer through the Overseas Private Investment Corporation (OPIC). Enron’s bankruptcy leaves US taxpayers holding the bag for around $1 billion according to OPIC officials. [9]

Enron paid no federal income tax in four of the five years from 1996-2000 and was eligible for a $382 million tax refund under the new Bush tax plan. An October 2000 study conducted by Citizens for Tax Justice showed that of half of the Fortune 500 companies, 24% paid no federal income taxes for 1998. Enron avoided the tax man by declaring profits in tax haven countries, while declaring losses in the US, a practice incorporated by most US multinationals.

Enron had 692 subsidiaries in the Cayman Islands alone and numerous other ventures based in the equally drug money-infested Turks & Caicos. [10] Texas Sen. Phil Gramm and Texas House Majority Leader Rep. Dick Armey worked against President Clinton’s proposals to work with the EU in clamping down on these off-shore tax havens.

While Enron executives bailed out, its employees lost their retirement nest eggs. So did millions of US workers whose state pension funds were invested in Enron. In Florida, a New York investment firm called Alliance Capital bought 7.6 million shares in Enron at $82 per share for the Florida State Pension Fund.

The aptly-named Frank Savage was a director at Alliance and also sat on the board at Enron and Lockheed Martin. Later Alliance dumped the shares for less than a dollar each and thousands of Florida state employees lost everything while Enron officials such as Savage made off with $681 million as Enron plunged into the financial abyss.

Enron’s spooky board also included Herbert Winokur, who sat on the board of Cincinnati cocaine king Carl Lindner’s failed Penn Central; John Duncan, board member at Gulf & Western, owned by Lindner and Detroit mob boss Max Fischer; Ronnie Chan, board member of Standard Chartered, the London gold fixer and Hong Kong currency printer whose Dubai branch was used to wire money to the 911 hijackers; John Mendelsohn, chair of the Department of Medicine at Lawrence Rockefeller’s Sloan Kettering Cancer Center, where the Shah of Iran had been “treated”; and Lord John Wakeham, former British Secretary of State for Energy who headed NM Rothschild & Sons in London.

On January 24, 2002 former Enron Vice-President Cliff Baxter was found shot to death in his car. Baxter’s death was quickly ruled a suicide, but Baxter had resigned Enron in May 2001 when he uncovered unsavory business practices. He was described by co-workers as a bulldog who, “got to the bottom of things”. He would have been a key prosecution witness in any case put forth against the energy giant and its partners.

At the center of Enron’s shadier deals was a partnership known as LJM2. The partnership, which dealt in highly speculative Internet IPO’s, was underwritten by Merrill Lynch. Partners included Citigroup, Morgan Stanley, JP Morgan Chase, Deutsche Bank and Credit Suisse First Boston. These same firms fed the internet bubble and made billions running up these stocks before offloading the junk onto the general public. A February 21, 2002 Wall Street Journal article stated that JP Morgan Chase was also involved in questionable commodity trades with Enron.

On January 11, 2002 Enron Online was auctioned off by a bankruptcy court. These same bankers now circled around the Enron carcass. The Warburg family-controlled investment bank UBS Warburg was awarded the company for a price of $0, agreeing to share Enron Online profits with another Wall Street vulture -Lehman Brothers. [11]

On October 7, 2002 now-retired Texas Senator Phil Gramm was rewarded for the deregulation frenzy which he and his Enron board member wife Wendy helped create. Gramm was named Vice-President and partner at UBS Warburg. Lehman went under in 2008, leaving the Warburgs firmly in command.

[1] BBC World News. 1-9-02

[2] “Mr. & Mrs. Enron”. Erin E. Arvedlund. Barron’s. 12-10-01. p.MW15

[3] “The Enron Debacle Spotlights Huge Void in Financial Regulation”. Michael Schroeder and Greg Ip. Wall Street Journal. 12-13-01. p.1

[4] BBC World News. 1-9-02

[5] “Interview with Tyson Slocum” Free Speech TV. Boulder, CO. 1-24-02

[6] “Speech by Arundati Roy”. Free Speech TV. Boulder, CO. 1-24-02

[7] “Enron Cheney Taliban Connection?” Ron Callari. Albion Monitor. 2-28-02

[8] Ibid

[9] “With Help From a Friend, Enron Fleeces South America”. Tim Wheeler. People’s Weekly World. 2-23-02

[10] “How Enron Used the Off-Shore System to Hide Millions”. Lucy Komisar. San Diego Union-Tribune. 1-23-02

[11] CNN Headline News. 1-11-02

Dean Henderson is the author of seven books, including, Big Oil & Their Bankers in the Persian Gulf, Illuminati Agenda 21, Nephilim Crown 5G Apocalypse and Royal Bloodline Wetiko & The Great Remembering. Subscribe free to his Left Hook column at deanhenderson.substack.com