“Enron Lives! in Waxman-Markey. The sooner the public, media, and intelligentsia realize this, the faster cap-and-trade can be put in the dustbin of bad ideas.”
- Cap-and-Trade: The Temple of Enron, MasterResource, May 14, 2009.
Joseph Romm holds a Ph.D. (in physics) from MIT and works for a 501(c)3 foundation. Being highly educated and in the education business, to most of us, means being careful and fair in our arguments–and avoiding reckless ad hominem argument. But not so with Joe as evidenced by his very inaccurate recent post against me.
In “George Will and WattsUpWithThat embrace a proud former shill for a man convicted on fraud and conspiracy charges,” Romm argues that I must be corrupt because of my former association with Enron and Ken Lay–and thus George Will and the mega-site WattsUpWithThat are party to corruption too.
I am surprised that Romm has taken this tack, for I have continually turned the tables on him regarding Enron. I am disappointed (but not surprised) that he ignored my posts and other readily available information that contradicts his argument and insinuations.
As I will again document for Romm’s information, I was a whistle blower against Enron’s climate alarmism and rent-seeking activities as director of public policy analysis and Ken Lay’s speechwriter.
But more than that, Enron’s fate is the perfect argument against the Romm-beloved HR 2454, the Waxman-Markey cap-and-trade bill, or what I call the Enron Revitalization Act of 2009. Last year I did a reason.tv video about Enron, Obama’s Enron Problem, and I have posted repeatedly about how Enron’s failure and fraud were closely related to its “sustainable energy” strategy with solar, wind, and energy efficiency.
And to complete the argument, guess what company is antithetical to Enron in terms of corporate culture, energy strategy, and financial results? It is the company Romm loves to hate–Exxon Mobil, the anti-Enron!
Challenging Enron at Enron
At the website Political Capitalism, I have penned a short history and posted memos on my public-policy conflicts at Enron, information that Romm has ignored. Some Enron executives wanted me to be fired, and I reached an agreement with Ken Lay personally to not publish anything critical of windpower in order to stay with the company (Enron Wind was struggling, and we could not sell it when we needed to, which resulted in Enron’s first crime.)
But I continued to fight against windpower internally, just as I did against climate alarmism via an internal climate-science review (I will post on this later, but one incident regarding NCAR scientist Tom Wigley in that effort is described here.) Externally, I challenged climate alarmism via the Institute for Energy Research (IER), which I founded in 1989 as my independent voice for speaking and publishing.
Here are some highlights from posted memos that tell an important part of the Rob Bradley/Enron story:
Ken Karas to Hap Boyd (7-15-1997): “Rob’t Bradley is still at it [against wind]! This guy works for Enron?”
Ken Karas to Tom White (3-7-1998): “Does Bradley still work for Enron? If so, I believe he should be terminated. This article [“Are the Merits of Windpower Overblown?”] is pure yellow journalism…. ”
Tom White to Ken Lay (3-9-1998): “I am sorry to bother you with a matter that I thought was closed. I am not sure whether this article was written before or after you issued orders [to Bradley to stop], but in any case, it does damage to our wind business and seems to violate our business conduct policy.”
Ken Karas to Tom White (6-3-1998): “Our buddy Bradley strikes again! … Bradley has some really clear views on the world that don’t comport with what we are trying to accomplish and seems unable to muzzle himself.”
Tom White to Ken Lay (6-8-1998): “Sorry to bother you with this…. Rob is obviously not a fan of renewables or the global warming issue. Unfortunately, he works for a company that is.”
Ken Karas to Ken Lay (7-17-1998): “I find it amazing that even in a memo to you he cannot help but take either ignorant or misleading shots at us. I have seen nothing from him on wind that is objective, unbiased, or balanced.”
- Hap T. Boyd was director of government affairs for Enron Wind Corp.
- Ken C. Karas was chairman & CEO of Enron Wind Corp.
- Thomas E. White was chairman & CEO of Enron Renewables Energy Corp.
- Kenneth L. Lay was chairman & CEO of Enron Corp.
Post Enron Collapse
I was part of the four thousand person layoff of December 3, 2001. I immediately raised money from a number of Houston individuals and foundations to write a lessons-learned history of the rise and fall of Enron (now a trilogy) and took IER full-time.
The first volume in this effort, Capitalism at Work: Business, Government, and Energy, has been published. The book reviews, such as one in the Energy Law Journal, have been positive. My interpretation of Enron and Ken Lay lays the blame on political capitalism, not free-market capitalism as others have argued. Enron, indeed, was the most politically active energy company in history, as summarized in my 13-page introduction. (The book can be ordered here.)
I did not know the extent of the wrongdoing at Enron. I had a corporate staff position, and the most fraudulent activity was happening in two divisions: Enron Energy Services and Enron Broadband Services. The company I thought I knew on December 3, 2001, was not the company that I came to know in the ensuring weeks, months, and years.
During most of my last seven years at Enron, I prepared speeches for Ken Lay (he gave many–too many–talks, such as five alone at the World Economic Forum in Davos in early 2001). I do not remember having purposefully used a bad number, and Ken Lay never asked me to use a bad number that I knew about. I was always getting numbers from others that I took at face value.
I did know that Enron was government dependent and a PR machine, which troubled me. But I thought we were profitable in general with more hits than misses. Little did I know the difference between GAAP accounting profits and cash flow!
Before the fateful trial of Ken Lay and Jeff Skilling, I was invited by the Houston Forum to give a talk unraveling what I termed the Ken Lay Paradox. My speech, Ken Lay Deconstructed, was shown nationally by C-SPAN in their “American Perspectives” series. The Houston Chronicle also covered the event. The themes from my talk are captured in the following interview by Roger Donway for The New Individualist, titled The Fall of Ken Lay.
I have given speeches on Enron and Ken Lay at colleges and universities, and I speak on corporate ethics and best business practices at conferences and academic seminars. The government never contacted me in any way about Enron’s crimes. Neither did the defendants find me of interest. Contra Romm, most have seen me as the public-policy conscience of a gone-wrong company and value my ex post insights. I believe my reputation will continue to grow with my next two books, Edison to Enron: Energy Markets and Political Strategies (2010), and Enron and Ken Lay: An American Tragedy (2011).
Joe Romm and Enron: This Gets Interesting
Joe Romm was an enabler, an intellectual bodyguard, of what turned out to be the most fraudulent division of Enron, Enron Energy Services. I offer evidence for this conclusion in two posts: Joe Romm and Enron: For the Record (May 5, 2009) and Joe Romm and Enron: More For the Record (May 8, 2009).
Also, in “Market Conservation vs. Government Conservationism: Understanding the Limits to Energy Efficiency and ‘New-Economy’ ESCOs,” I explain the failure of EES’s energy outsourcing model so hailed by Romm–and note the failure of Romm’s own nonprofit, the Center for Energy and Climate Solutions. What happened to CECS? Why is so little information available on the Internet? Why did Romm go from applied energy efficiency (per his degree) to a pundit for climate and energy alarmism?
Romm still believes in fraudulent EES, suggesting that he did not follow the Enron trials. As he wrote in his controversial post:
Well, I have had the misfortune of knowing Bradley for a long time, since Enron Energy Services (EES) reached out to many leading experts on energy efficiency, and they really liked by book, Cool Companies. Certainly none of the energy efficiency folks were aware of what Enron was doing or they would have quit immediately. I don’t even know if anyone in EES management knew what Ken Lay and his buddies in top management were doing to fraudulently rip-off the public.
And I have no idea whether Bradley knew of the fraudulent activity, but he certainly knew what kind of company he was working for.
But the causality is reversed. Enron Energy Services had an astronomical $1 billion of losses to hide. The government prosecuted Lay and Skilling for EES’s fraud, which included mark-to-model accounting that turned money-losing contracts into “profitable” ones. Joe Romm’s cheerleading was not for a good cause as it turned out, something he still might not understand.
A Romm Misrepresentation
Still less excusable is where Romm’s post cuts off a quotation to mislead the reader (his readers). Romm quotes from my email to him and James Hansen, a trenchant cap-and-trade critic:
I wish you (and him) could have been in the Enron government affairs meetings on CO2 trading–we were going to game it to death and make money coming and going. And no one was quaking about the future of global climate.
Here is the whole paragraph (note the last sentence!):
Hansen should call you out on cap-and-trade. I wish you (and him) could have been in the Enron government affairs meetings on CO2 trading–we were going to game it to death and make money coming and going. And no one was quaking about the future of global climate. I think they (not me–I was not amused) were thinking about ENE (the stock price).
Most people would not leave out the last sentence because of simple right and wrong, or at least because they would not want to be caught and exposed. Neither reason seems to have been enough in this case.
I was advised to let Romm’s inflammatory and inaccurate post go unanswered. But this response adds to the historical record by showing:
Ironically, the email exchange quoted by Romm began when I defended James Hansen (to Hansen) against Romm regarding cap-and-trade. Romm was errant to criticize Hansen on this score, just like he is wrong to try to Enronize me. So I will let Dr. Hansen have the last word. Wrote he about Waxman-Markey (some 780 pages ago):
“Governments are retreating to feckless ‘cap-and-trade’, a minor tweak to business-as-usual….
“Why is this cap-and-trade temple of doom worshipped? The 648-page cap-and-trade monstrosity that is being foisted on the U.S. Congress provides the answer. Not a single Congressperson has read it. They don’t need to – they just need to add more paragraphs to support their own special interests. By the way, the Congress people do not write most of those paragraphs—they are ‘ suggested’ by people in alligator shoes.”
Enron is Exhibit A against Joe Romm and Waxman-Markey, not against me.