Titans of the Enron Economy | The Nation


Titans of the Enron Economy

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FOR MORE INFORMATION: Titans of the Enron Economy is available free at
www.faireconomy.org and can be ordered by calling (877) 564-6833. For
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HABIT 8: Lobby lawmakers and regulators to eliminate pesky oversight, safety, environmental and other rules, and pass favorable regulations, subsidies, tax breaks and other items on the company wish list. Winner: Boeing.

About the Author

Holly Sklar
Holly Sklar's latest book is Raise the Floor: Wages and Policies That Work for All of Us (South End).
Scott Klinger
Scott Klinger is an Associate Fellow at Institute for Policy Studies.

Also by the Author

By manipulating offshore havens, bogus bailouts and other loopholes, US corporations have gotten their tax rates down to a forty-year low.

Using its famed stealth technology in Congress, Boeing circumvented military procurement practices when the Secretary of the Air Force directly submitted a controversial contract under which the Air Force would lease 100 large tanker aircraft from Boeing. Senator John McCain challenged both the process and the terms of the deal, which he said would cause the government to pay much more for the lease than if it purchased the planes outright. He added, "It's pork, and we shouldn't be paying for it." Boeing has paid for plenty of pork and prime rib, as the nation's fifth-largest lobbyist over the three years ending in 1999.

HABIT 9: Get the government to finance and insure dubious overseas investments, especially those opposed by the local citizenry. Winner: Halliburton.

While Vice President Dick Cheney was CEO of Halliburton, a leading global energy services and engineering/construction company, Halliburton received $1.5 billion in government financing and loan guarantees, a fifteenfold increase from the pre-Cheney days. The company also garnered $2.3 billion in direct government contracts, more than double the amount received in the five years preceding Cheney's half-decade tenure. Over the 1992-2000 period, in which Enron received $7.2 billion in government financing and loan guarantees, Halliburton was close behind at $6 billion. Not surprisingly, Halliburton doubled both its campaign finance and lobbying expenditures, to $1.2 million and $600,000 respectively, during Cheney's tenure.

Habit 10: Avoid taxes. Use tax deductions, credits and clever accounting to pay little or no tax, and hopefully even get tax rebates. Winner: WorldCom.

When you send or receive e-mail from an AOL account, fly on a commercial airliner or make long-distance calls on MCI, you are consuming services provided by WorldCom, the nation's largest operator of fiber-optics networks. WorldCom--now in serious financial trouble--has grown over the years through a series of dramatic acquisitions. These acquisitions, and the write-offs associated with them, are the principal force behind WorldCom's tax avoidance Enny. Though the company reported net income of $3.5 billion between 1996 and 1998, it received a tax rebate of $112.6 million. Another piece of the $1.3 billion of tax breaks WorldCom enjoyed over the three-year period came from stock options. Stock option deductions shaved $265 million off WorldCom's tax bill between 1996 and 1998.

Lifetime Achievement: General Electric

No company demonstrated greater leadership in "Bringing 10 Bad Habits to Life" than General Electric.

§ Between 1995 and 2000 (the last full year of Jack Welch's employment as CEO at GE), Welch ranked in the lowest 10 percent of CEOs for delivering shareholder returns commensurate with his pay level, according to BusinessWeek.

§ General Electric is the largest US company to lack an independent board.

§ Seventy-seven percent of GE's 401(k) was invested in General Electric stock as of November 2001.

§ In 2000 GE paid its independent auditor three times as much for non-audit work as it did for audit-oriented fees.

§ In 2000 GE's non-employee directors received average pay of $430,300. Meanwhile, many GE veterans no longer get a paycheck: Between 1981 and 2001, GE's US work force shrank more than 45 percent, from 285,000 to 158,000.

§ For the two years ending in 1999 GE spent $23.4 million on lobbying activities, ranking tenth among large companies. The lobbying paid off: GE received $806 million in Export-Import Bank loans and loan guarantees between 1998 and 2001. And between 1996 and 1998, GE got $6.9 billion in tax breaks.

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