Secretary of the Army White: Give Away Your Ill-Begotten Gains from the Enron Ponzi Scheme

A BUZZFLASH EDITORIAL

April 10, 2002

If you steal a gallon of milk because you have no money, you go to jail. If you amass a personal fortune of millions of dollars as a result of an elaborate corporate Ponzi scheme, you get appointed to the Bush administration.

Out of the legion of Enron-related men and women appointed to the Bush administration (aka "Enron on the Potomac"), Army Secretary Thomas White stands out as one of the most visible symbols of how Bush has made corporate greed a "resume asset" for Executive Branch appointment.

White's real and potential conflicts of interest are so numerous, it's a bit like opening a closet jammed to the gills with unsorted evidence files. Pull the door toward you and the paper comes tumbling out in such a rush, you just want to get out of the way. Let's start with the little tidbit that White sold more than $3 million dollars in Enron stock in October of 2001, just before the company went belly up. Prior to, and during, the stock sale, White and his wife engaged in more than 70 reported calls to Enron execs (additional calls may have also been made).

While Enron employees and stockholders ended up getting the shaft, White made out like a bandit. And on top of everything, he forgot to disclose that he continued to hold Enron stock options after he was required to sell them when he became Army Secretary.

White's Enron compensation for 2001 was:

- Salary - $5.5 million
- Severance Pay - $1 million
- Payment of Phantom Stock - $13 million
- Sale of Enron Stock between June and Oct. 2001 - $12.1 million

That's quite a bundle for someone who was vice-chairman of Enron Energy Services, one of the Enron divisions at the center of its infamous financial corruption. An article in "The Nation" notes (http://www.thenation.com/capitalgames/index.mhtml?bid=3&pid=41), "This division has been accused of overstating its profits by hundreds of millions of dollars through the use of funny-numbers accounting that sometimes involved Enron's now-infamous secret partnerships. EES was Enron at its most Enronish.... Enron Energy Services was a mess. Right before White left, the company restated its 2000 revenues to $1.8 billion from $4.6 billion. Whoops -- only off by nearly $3 billion. In essence, White's unit was a fraud."

Enron was an elaborate variation on a Ponzi scheme that duped investors of billions of dollars. Thomas White's personal fortune was amassed from dollars that people invested, impressed by its phony growth, believing that Enron was a legitimately run business. It was a con artist's scheme with the imprimatur of the Texas financial and political elite, including the current occupant of the White House.

Because of the circumstances under which White gained his fortune, BuzzFlash.com is calling upon him to give back the more than $31 million he received in 2001. No, we're not asking White to give it back to Enron. We're asking him to contribute the money to charity. Might we recommend homeless shelters as one of the recipients? Or how about contributing it to a fund for Enron employees who lost their pensions?

Secretary White can make a gesture toward some face-saving accountability by giving back his Enron bucks. It's now clear that the ill-begotten money he received last year wasn't due to business success -- it was the direct result of the illusion created by Enron's phony business and accounting practices.

By turning over his Enron money to appropriate charities, Secretary White would set a precedent for all the senior Enron executives who walked away with millions of dollars while thousands of Enron workers lost their life savings.

We don't necessarily believe that White can fully redeem himself. But he can certainly try.

If a homeless man sets up a shell game in Times Square, he'll be arrested for conning people out of their money. In Bush's America, being a key executive in a company that engages in the same kind of behavior, only with Texas-size stakes, gets you appointed Secretary of the Army.

A BUZZFLASH EDITORIAL

BuzzFlash extra: Learn more about a Ponzi scheme. See http://www.mark-knutson.com.

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