Are Enron execs being held to account for California Energy Swindle?

May 2, 2006 4:19 PM

Enron execs are being charged with '31 counts of fraud, conspiracy, insider trading and lying to auditors' (BBC). This seems to cover the loss of pensions and investors' stakes but what about their manipulation of electricity prices in California -- swindling old grannies and perhaps (indirectly) causing loss of life. Are they on trial for this? Was it illegal? What gives?

I write this after just reading Skilling has left the stand and also having recently watched "Enron: The Smartest Guys in the Room". Prior to this I never realised the full extent of their cynical exploits in California: It was winter time (thus time of low electricity usage) and the state had spare generation capacity even in summer. But there were brownouts aplenty and consumers were royally screwed. If they get off scot-free on the current charges by blaming Andrew Fastow for financial mismanagement, surely they can be nailed on this instead. Or spanked. Or something.

posted by NailsTheCat to Law & Government (4 answers total)

Best answer: Tim Belden was the head of Enron's Western trading desk and plead guilty to conspiracy to commit wire fraud. He actually testified against Skilling in this trial.

The company itself also got hit with a $1.52 billion fine, but that was in 2005, after the bankruptcy, so who knews whether the state or people will ever get any of that money.
posted by smackfu at 6:11 PM on May 2, 2006

Best answer: In a case like this where so many laws were broken, prosecutors will choose the charges they think they have the best chance of proving.

I think that the problem with manipulation of the California electric market is proving individual culpability by particular executives. Remember, Enron isn't on trial, individual executives are, and they can't be tossed in jail for things the corporation did. They can only be tossed in jail for things they personally did which the prosecutor can prove to a jury.
posted by Steven C. Den Beste at 7:48 PM on May 2, 2006

I'm pretty sure I remember that The Governator, as one of his first acts in office, "forgave the debt" owed to CA by Enron - in other words, the fine was never paid, or it was reduced to basically nothing.

I lived in San Fran during the time of the blackouts, and was incredulous that Enron could keep sticking it to us without any consequences, other than execs getting filthy rich and funnelling $$$ into the Republican Party.
posted by shifafa at 6:50 PM on May 3, 2006

Response by poster: "forgave the debt" What the... Astounding.

I just did a little more searching on the interwebs:
...it was revealed that Schwarzenegger met with Enron executives during the height of the crisis

Ken Lay meets with Arnold Schwarzenegger, Michael Milken, and 12 other California Republicans at the Peninsula Hotel in Beverly Hills. There they share (according to Enron emails) "an insider's conversation of what's going on with the energy situation." Later, during his campaign for governor, Schwarzenegger claims he is unable to remember anything about the meeting, including whether he even met Ken Lay.

Thanks for pointing me in that direction shifafa.
posted by NailsTheCat at 7:29 AM on May 5, 2006