Posted on 28-2-2002

Endrun
Introduced by Alan Marston

Enron could easily be painted as an abberation, and the blame pinned on a
few greedy, heartless individuals in its boardroom. Easily painted, but not
hitting the spot. Everyone who has bought a bottle or a can of anything
ever, is touched by Enron, because Enron is the quintessential corporate
.... that got too big.

Anything can get too big and collapse, infact that is the way of all
`successful' things. The painting we should be looking at is on the wall,
along with the writing - there is a problem with the corporate way, a
fundamental systemic problem that touches us all and which bowled over
first Enron, now Williams and who knows how may to come and how many has
beens. That problem is the machine mentality and it is crystallised in the
heads of those whose philosophy underpins corporatism, accountants. The
philosophy of our age is an absolute belief in numbers, the ultimate
resting place of rational thought. A belief which nevertheless has to live
in a universe and on a small planet that does not run-by-numbers. The clash
between the bean-counter and the bean, between the corporate tower and the
organic earth is felt everytime something doesn't go according to `the
plan', and that's always. Its not that the corporate is necessarily evil,
or those that work for it necessarily corrupt and/or incompetent (though
they may be), its the system, it doesn't work, it diverts, it twists, it
squeezes, it pushes and finally it kills.

Is there a way out. Yes, but its not a straight and narrow path. Everyone
who wants to can ease there way out step by step, each one built on raised
awareness and the courage to act accordingly, and alone. The individual
won't change the system, it will collapse bit by bit of its own momentum.
This is the age of individualism, that is its great gift, and its curse,
use it how you will, because you can't turn away.


Enron 2
By Wayne Madsen
Special to CorpWatch, February 14, 2002 www.corpwatch.org

Last month, the Tulsa, Oklahoma-based Williams Companies, an amalgamation
of energy companies and communications subsidiaries, announced it might
face potential losses of as much as $100 million because of deals it made
with Enron. However, a few weeks later, Williams was hit with a class
action lawsuit from stockholders that claims the firm engaged in the same
type of business practices and accounting "irregularities" that bankrupted
Enron. Although Williams executives claimed the company was simply a victim
of Enron, they were covering up the company's own Enron-like activities
with tentacles stretching beyond Tulsa to the corridors of power in
Washington, according to the suit.

Williams' financial mess could well be termed "Enron II." Like Enron,
Williams saw their revenues and their stock plummet. In the last 3 months
of 2001 Williams' lost $71 million in their communications subsidiary alone
and the value of their communications stock fell from a high of $61 per
share to just 67 cents.

Like Enron, Williams has been a large contributor to Republican candidates.
According to the Federal Election Commission, during the 1999-2000 campaign
cycle, Williams and its corporate big wigs gave the GOP $98,425. And, like
Enron, that money bought access. Williams' Chairman Keith Bailey, now a
defendant in the shareholders class action suit, served on President-elect
Bush's transition team on education. Should Williams go the same way as
Enron, more questions are likely to be asked in Washington about the
securities and financial fraud thread that apparently runs through members
of the Bush administration and its largest political supporters.

Williams' influence extends to Capitol Hill. The GOP quickly echoed
Williams' public relations spin on the company's rapid losses. On February
6, Steve Largent, the Republican Congressman from Tulsa and candidate for
Governor of Oklahoma, told the House Commerce and Energy Committee (on
which he sits) that Williams' $100 million fourth quarter loss was caused
by "unmet obligations by Enron." Largent also complained that Wall Street
was unfairly comparing companies like Williams to Enron, adding, "this is a
guilt by association type mentality." Largent accepted $5,500 from Williams
in his last congressional race, according to the Center for Responsive
Politics.

From Pipelines to Telecom

Like Enron, Williams is originally a natural gas pipeline company that
figured it could make money in telecommunications. Williams execs thought
they could make windfall profits by building a fiber optic network along
the company's pipeline rights-of-way and leasing network services to
telecommunications and Internet providers. Williams subsequently spun off a
telecommunications subsidiary, Williams Communications Group.

Williams, convinced it could make millions in potential profits from the
communications arena, began inflating the value of its stock through
various partnerships. According to its own Securities and Exchange
Commission 10K filing, in 1999 Williams convinced SBC Communications
(previously Pacific Bell), Intel Corp, and the privatized Telefonos de
Mexico (TELMEX) to invest in Williams Communications common stock. Williams
Communications operating units, including one called Strategic Investments,
began to "secure long-term, high-capacity commitments for traffic on its
network," thereby boosting the value of its stock. The company did this
despite investment house warnings that the market for such services was
vapid. Williams' top management ignored warnings by market analysts that
there was an "over-supply of fiber-optic capacity."

The complaint filed on behalf of Williams' shareholders by the law firms
Morrel, West, Saffa, Craige & Hicks and Schatz & Nobel, alleges that
Williams' top management ignored warnings by market analysts that there was
an "over-supply of fiber-optic capacity" in the broadband market. The
shareholder complaint states, "almost 100 million miles of optical fiber --
more than enough to reach the sun -- were laid around the world" at the
same time Williams' top management was hyping value of its fiber network to
investors.

When the bottom dropped out of the fiber market, lenders refused advance
money to fiber broadband service providers like Williams. However, the
aggrieved Williams' shareholders claim the company "consistently and
adamantly contended that [Williams Communications] was not being adversely
affected by any over-capacity or over-supply conditions." However, Williams
knew it was in deep financial trouble due to the communications glut just
like every other company in the business, including Enron.

Williams' employees began to feel the pinch when Communications President
and Chief Executive Officer Howard Janzen announced last June that 500 job
cuts were "necessary as the company re-evaluated its costs." A spokesperson
for the Northern Oklahoma AFL-CIO said the lay-offs were having a
"devastating effect" on the Tulsa economy. The fact that Williams Companies
is "not union-friendly" left fired employees with no protection or
recourse, according to the AFL-CIO.

Williams' optimistic statements in the face of certain financial losses
could have come from the playbook of former Enron Chairman Ken Lay, who was
told similar tales to his investors and employees about his own company.
And as was the case with Enron and its auditor Arthur Andersen, Williams'
auditor, Ernst & Young, appears to have gone along with the fancy footwork
and creative accounting practices of the top management. At the very least,
Ernst and Young signed off on Williams' 10K SEC filing.

Hiding Debt

As the bottom dropped out of the fiber optics market, demand in the natural
gas market was at an all time high. The shareholder lawsuit alleges that in
order to protect itself from the communications losses, Williams decided to
spin off its anemic subsidiary to remove from corporate balance sheets its
"mounting losses and rising expenses. The suit alleges that they did this
"before it was revealed that these costs and expenses were continuing to
escalate beyond announced expectations, and before investors came to
realize the true impaired condition of Williams communications."
Almost 100 million miles of optical fiber -- more than enough to reach the
sun -- were laid around the world at the same time Williams' top management
was hyping value of its fiber network to investors.

But in order to sell off its loss maker, Williams had to guarantee $2.5
billion of the subsidiary's debt. The lawsuit maintains that in
guaranteeing that debt Williams exposed its shareholders to a huge
undisclosed financial liability. While Wall Street was being rocked by
continuing revelations concerning fraud at Enron, Williams dealt the market
another blow when, on January 29, it announced that it was delaying the
release of its 2001 earnings report "pending an internal assessment of
Williams' contingent obligations to Williams Communications." The stock of
both companies fell precipitously.

Williams was given an opportunity to comment for this article but it
declined. The company also refused to disclose when the release of its 2001
earnings report would occur. A company spokesperson said, "In the context
of what the article concerns, we cannot comment on the release of the
report." Nevertheless, on February 6, without the benefit of seeing its
2001 earnings, Wall Street analysts at Salomon Smith Barney recommended
Williams Energy stock as a "buy." Congress and the Securities and Exchange
Commission are currently investigating similar inflated recommendations by
Wall Street analysts on Enron stock when all the financial indicators were
pointing down.

Despite the ongoing revelations, Williams web site proclaims, "Honest
relationships and trust are essential for long-term business success. We
deal fairly in all our business relations." Similarly Enron's 2000 Annual
Report asserts: "We work with customers and prospects openly, honestly and
sincerely. When we say we will do something, we will do it; when we say we
cannot or will not do something, then we won't do it."

Following the disclosure that Enron was actually one huge Ponzi scheme that
enriched the Texas friends of George W. Bush and pumped hundreds of
thousands of dollars into the president's campaign coffers, observers
wonder how many other such schemes are hiding behind the corporate veil of
secret partnerships and off-the-books operations. Considering Bush's oily
ties to Enron and Williams, the American people, like the unfortunate
shareholders of those two companies, deserve honest answers to this and
other tough questions.


Wayne Madsen is a Washington-based journalist who covers intelligence,
national security, and foreign affairs. He is also a Senior Fellow of the
Electronic Privacy Information Center (EPIC) in Washington, DC and author
of "Genocide and Covert Operations in Africa 1993-1999" (Mellen Press).