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Enron explained



Les Robinson forwards this: "ENRON EXPLAINED: In case you were wondering how Enron came into so much trouble, here is an explanation reputedly given by a Texas A&M professor to explain it in terms his students could understand:

Capitalism: You have two cows. You sell one and buy a bull. Your herd multiplies, and the economy grows. You sell them and retire on the income.

Enron Capitalism: You have two cows. You sell three of them to your publicly listed company, using letters of credit opened by your brother-in-law at the bank, then execute a debt/equity swap with an associated general offer so that you get all four cows back, with a tax exemption for five cows. The milk rights of the six cows are transferred via an intermediary to a Cayman Island company secretly owned by your CFO who sells the rights to all seven cows back to your listed company. The annual report says the company owns eight cows, with an option on six more. Now do you see why a company with $62 billion in assets is declaring bankruptcy?"

My comment: Texas A&M? That's Bush I territory,where his archives are. George W. has deposited there his papers as governor, and the state archivist is claiming he has a legal right to them. Is George W. trying to hide from the Freedom of Information Act? He is behind a devious scheme to scuttle election reform. The Enron case is just unfolding. The Cayman Island trick would fall into the domain of Michael Kopper, one of the Enron executives who took the Fifth Amendment. He received more than $10 million from Enron for a $125,000 investment. I have never seen anything like the hearing of Kenneth L. Ley, the founder of Enron, its chairman and CEO. After he took the Fifth Amendment, he had to sit there while committee members told him in brutal language what a crook he was. I would like to hear from WAISers about the reaction abroad. For example, are Argentines following the case?

Ronald Hilton - 2/13/02


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