Power Politics
The spectacular collapse of energy trader Enron and the disgrace of its auditor Andersen has thrown a new light into the mucky, murky world of high finance, where accounting isn't just creative, it's positively surreal.

Much of the complex trading which led to Enron's downfall was only possible as a result of years of lobbying for deregulation of finance and the energy industry. Enron's own contribution was considerable: a Washington monitoring group, the Centre for Responsive Politics, has estimated that the company donated $5.8m (£4m) to candidates in federal elections over the last twelve years, including donations to 71 out of 100 current senators and 188 out of 435 House of Representatives members. 73% of this money went to Republican candidates - hardly surprising given Enron boss Kenneth 'Kenny Boy' Lay's close relationship with fellow Texas oilmen George Bush Snr and Jr.

In the US, Enron lobbied for the opening up of the Arctic National Wildlife Refuge to oil drilling and worked on deregulating energy trading (after changing the rules on energy swaps, the chair of the Commodity Futures Trading Commission resigned to become an Enron director). Dick Cheney is currently refusing, on grounds of confidentiality, to release documents on meetings with Enron about the formulation of US energy policy.

In the UK, government influence comes cheaper. Enron is thought to have given around £36,000 to New Labour, in exchange for a trouble-free takeover of Wessex Water (in 1998, shortly fter paying £15,000 for a gala dinner at the Labour conference), a CBE for Enron Europe chair Ralph Hodge (in 2001) and privileged access to trade and industry ministers including John Battle, Margaret Beckett, Peter Mandelson, Stephen Byers and Helen Liddell, which ultimately contributed to the lifting of the moratorium on gas-fired power stations in 2000.

In the US, the cost of the collapse was not spread evenly. As apparently forewarned executives cashed in their share options over the last year or so, while the share price tumbled, employees who had invested their pensions in company stock were prevented from pulling their money out as the share price dropped from $85 to less than $1 at the collapse - many employees have been left with virtually no retirement provision and are suing Enron.

Andersen may also go to the wall as revelations of its conflicts of interest and professional misconduct mount up. The company was barred from official contracts in the UK for 12 years following its role in the DeLorean Cars scandal in 1985. Since 1997, Andersen has been profiting from the Private Finance Initiative, not least by producing a supposedly independent report in 2000 which recommended that PFI was value for money - hardly surprising from a company which made £7.9m from PFI-related government consultancy work in 2001 alone...
At the time of writing, so-called Enronitis is spreading - US telecoms company Global Crossing has gone down under similar circumstances, concerns are being raised over conglomerate Tyco, and the Shays-Meehan campaign finance reform bill (which would restrict corporations' donations to political parties and ban much corporate-funded political advertising on TV in the run-up to elections) has passed the US Congress. Similarly, reformers in the US are now pushing for changes to regulation of accounting, pensions, banking and the energy industry in an attempt to stop this happening again, while the media and financiers run around trying to pretend it's all an anomaly and global capitalism's fine, honest.

As usual, the message is failing to get through that the real reason Enron and so many others cooked the books for short-term gain is the same as the reason they trample on human rights - the market system gives them every incentive to do so and only the faint deterrent of illegality to stop them. Companies like Enron - massive, complicated, so rich and powerful they can buy governments, ignorant of any good but their own growth and profit, are a danger not only to everyone who comes near them (workers, customers, investors, innocent bystanders to their operations), but to rational behaviour and to democracy itself. At root, Enron's collapse demonstrates the utter rottenness of corporate structures and the indefensibility of corporate goals, a problem it will take more than accounting regulations to remove.