The Texas company has been a scandal in other countries for a long time.
As the House of Representatives was about to begin debating a modest campaign finance reform bill, former Enron CEO Kenneth Lay was taking the Fifth before the Senate commerce committee. As the disgraced exec sat grim-faced at the witness table, Democratic Senator Fritz Hollings, chairman of the committee, used the nickname George W. Bush once conferred upon Lay, noting that there is "no better example than Kenny Boy of cash-and-carry government." Lay and Enron dumped millions of dollars into the political system--in hard-money contributions to candidates and soft-money donations to political parties--and spent millions more to hire politically wired lobbyists (including Republican Party chairman Marc Racicot) and to snag high-profile opinion leaders (like Bush economic adviser Lawrence Lindsey) as consultants. Executives were coerced to cut campaign checks to Bush and other politicians, Republican and Democrat. The goal was to game the system in Enron's favor--in regulatory agencies, in Congress, in state capitals, in the White House.
Enron, of course, was not unique in this regard. Why else would corporate executives invest millions in candidates and parties? If they're not receiving a return, shareholders should sue. (Enron may well have received favors from federal and state officials in the months and years before the company started collapsing and became too controversial to assist; the various Enron inquiries on Capitol Hill should be digging into this.) And the system seems to be working fine for most donors and the recipients, for the flow of money keeps increasing. In 2001 the two parties bagged $151 million in soft money--the large unlimited contributions given mainly by corporations, unions and millionaires--almost a 50 percent increase over 1999, the last nonelection year. The Republicans out-collected Democrats, $87.8 million to $63.1 million.
The Shays-Meehan bill, at the center of the latest House campaign finance debate, called for something of a ban on soft money for the national parties--a good move. But the legislation, similar to the McCain-Feingold bill in the Senate, still contained soft-money loopholes and, just as unfortunate, raised the limits on certain hard-money donations. If Shays-Meehan had been enacted years ago, it would have done little to slow down the Enron racketeers. That's why it's important for the debate to move beyond Shays-Meehan/McCain-Feingold. The long-term solution must be a system of public finance in which candidates can receive most of their campaign dollars in clean money, that is, funds that come from the no quid/no quo public till rather than the private pockets of the rent-a-politician crowd. The first run of clean-money systems in Maine and Arizona showed that such an alternative can work: There were more contested races, more women and minorities running and a more level playing field. The vast majority of both states' legislators and statewide officials will run "clean" this year, and it looks as though the Massachusetts Supreme Court will force the implementation of that state's clean election law for this year's election. Legislation is advancing in several other states.
In the past few years, the reform debate in Washington has been too modest. The authors of the reform bills deserve credit for pushing against a mighty tide of self-interest, but Enron shows how far special interests will go to rig the system. True reform has to go as far.
Is the Enron story one of outrageous mendacity or stupefying ignorance?
This letter was originally published on January 29, 2002 at www.michaelmoore.com
Having simmered on the back burner through the aftermath of September
11, Congress's effort to obtain records from Vice President Dick
Cheney's energy task force has now reached the boiling p
Back in the spotlight, he condemns the trading of political favors for cash.
There are no blue dresses to analyze in this one, or interns in berets to quiz. But make no mistake. The Enron scandal is the real thing--a window on the nexus of money and politics in Washington that is revealing our corrupted electoral, legislative and regulatory infrastructure.
Perhaps that's why the Bush White House is pushing the line that this is a business scandal, as opposed to a political one. But with mounting evidence that Enron executives were dictating Bush Administration appointments and policies affecting their company in particular and energy policy in general, Karl Rove is having a hard time getting his spin up to speed. Sure, there's a business component to the Enron affair. But, like most corporations these days, Enron was able to practice its brand of cutthroat cowboy capitalism only because of the ties it nurtured with the political class, which sets up the playing field on which businesses "compete." The Enron scandal reveals not just the lengths to which Wall Street and corporate America will go for obscene profits and personal enrichment at the expense of employees, shareholders and taxpayers but also the lengths to which politicians from Bush on down will go to help them.
Enron is about values, but not about the kinds of sexual peccadilloes condemned by Kenneth Starr and Ralph Reed--a notable beneficiary of Enron's largesse--or the traditional John Wayne-style flag-waving values of George W. Bush. As Michael Tomasky writes in the Washington Post, "'Values' can mean something else now, like integrity in business and government. It means that a president who ran on a promise of 'restoring dignity' to the White House ought to tell the truth about how long he's known the CEO who has been his biggest corporate backer. It means that the vice president should recognize as a simple ethical matter that the people...have a right to know which lobbyists he met with while formulating a major policy, just as Republicans demanded similar information from Clinton's health policy panel back in 1993."
If the political system works, if the opposition actually engages in opposition, if there is any justice--three huge ifs--the Enron scandal ought to shake Washington to the core and send tremors through the 2002 and 2004 elections. But that will happen only if Congress gets serious about performing its intended role in what is still supposed to be a system of checks and balances. The Senate must be aggressive not merely in issuing subpoenas to former Enron chief Ken Lay and his cronies but in pursuing the political players who associated with Lay. Representative John Conyers Jr., the Michigan Democrat who is the ranking member on the House Judiciary Committee, got to the heart of the matter when he announced that he will ask Rove to provide any information linking the Bush 2000 campaign with Enron. But Conyers will need a lot of help preventing the executive branch from weaving a cloak of invisibility around its inner operations (see Russ Baker on page 11).
Secrecy is a favored tool of the imperial presidency, and the Bush Administration's stonewalling on its Enron connections signals that it's declaring war on openness and is bent on quashing this scandal by any means. How about, for instance, distracting us with an endless war on an "axis of evil"?
Democrats must not be deterred by the Bush camp's attempts to erect a firewall of false patriotism as its defense against investigation. There are no longer any legal, moral or political grounds for not unleashing a multipronged, wide-ranging investigation into the Washington political culture that allowed an Enron--and how many more like it?--to operate unchecked. We already know a lot about who legally gave what to which politician, who lost pensions, who made out like bandits, how the scam worked, whose wheels were greased by soft money.
Now it's time for Congress to put the pieces together. Democrats in Congress should join reformer Republicans--yes, there are a few--to expose this scandal for what it is: a gamy display of excessive corporate power and a lack of economic democracy and government oversight. Congress needs to remember it's representing the people and deal with the tough issues raised by the cozy collusion between government and business (it should start with campaign finance reform in the House now and move on to putting labor and consumers on corporate boards, restoring defined benefits pensions, penalty-taxing excessive executive salaries, stopping stock price inflation and holding tricky auditors financially liable). The key vote on campaign finance is set for February 13. The outcome should tell us how serious the reform talk is.
Right till the end of January, Dita Sari, an Indonesian in her late 20s, was preparing to fly from her home near Jakarta to Salt Lake City to bask in the admiration of assorted do-gooders and celebrities mustered by the public relations department of Reebok for its thirteenth annual Human Rights Awards, overseen by a board including Jimmy Carter and Kerry Kennedy Cuomo. Make no mistake, the folks--usually somewhere between four and six--getting these annual Reebok awards have all been fine organizers and activists, committed to working for minorities, the disfranchised, the disabled, the underdogs in our wicked world.
Dita Sari's plan was to proceed to the podium in the Capitol Theater in downtown Salt Lake City, on February 7, and then, when offered the human rights award, reject it.
Now, this annual Reebok ceremony isn't up there with the Nobels, or the genius grants from MacArthur. Despite Reebok's best efforts, it's definitely a second-tier event. Nonetheless, it has paid off for Reebok. Says Jeff Ballinger, an antisweatshop activist who's organized with shoe workers in Indonesia for the past thirteen years, "With this kind of ceremony, Reebok gets its name into respectable company. When they give a prize to someone like Julie Su, a lawyer for immigrant workers in California, people who wouldn't be seen dead in Nikes are impressed."
Dita Sari got picked by Reebok's judges because she defied her government on the issue of independent trade unions. In her own words: "In 1995, I was arrested and tortured by the police, after leading a strike of 5,000 workers of Indoshoes Inti Industry. They demanded an increase of their wages (they were paid only US $1 for working eight hours a day), and maternity leave as well. This company operated in West Java, and produced shoes of Reebok and Adidas."
She got out of prison in 1999. Since then she's been building a union in plants across Java. It was there that she got a good look at Reebok's contractors, the underbosses of all the apparel, footwear, computer and toy companies. These contractors run their plants in a notoriously harsh manner.
Reebok's flacks can brandish armloads of studies, codes, monitoring reports, guidelines and kindred matter, all attesting to the company's dedication to fair treatment of anyone making consumer items with the name Reebok printed on them. But nothing has really changed. "We've created a cottage industry of monitors and inspectors and drafters of codes," Ballinger says, "but all these workers ever wanted was to sit down in dignity and negotiate with their bosses, and this has never happened."
Due in large part to the efforts of the workers and Western allies like Ballinger's Press for Change, the daily wage in Indonesia actually went up more than 300 percent between 1990 and 1997, at which point the Asian economic crisis struck. Inflation wiped out all those gains. Workers' daily pay is now half what it was before the crisis hit.
These were the points Dita Sari was going to make when she got to Salt Lake City. Then she learned that Reebok intended to schedule her and other recipients for some public events before the actual award ceremony. Rather than let Reebok benefit in any way from her presence, Dita Sari pulled the plug and at last word is in Jakarta trying to raise relief money for workers left destitute by the worst flooding in decades. She's sent the speech she was planning to give at the awards:
I have taken this award into very deep consideration. We finally decide not to accept this....
In Indonesia, there are five Reebok companies. Eighty percent of the workers are women. All companies are sub-contracted, often by South Korean companies such as Dung Jo and Tong Yang. Since the workers can only get around $1.50 a day, they then have to live in a slum area, surrounded by poor and unhealthy conditions, especially for their children. At the same time, Reebok collected millions of dollars of profit every year, directly contributed by these workers. The low pay and exploitation of the workers of Indonesia, Mexico and Vietnam are the main reasons why we will not accept this award.
But isn't Reebok at least trying to do something decent? The way Dita Sari sees things, the attempt is phony. All the awards in the world--all the window dressing with Desmond Tutu, Carly Simon, Sting, Robert Redford--doesn't alter the basic fact that workers in the Third World are being paid the absolute minimum to make a very profitable product. The labor cost of a $70 pair of sneakers made in China, Vietnam or Indonesia is $1 or less.
Is there such a thing as a virtuous sneaker? Ballinger cites Bata, a Toronto-based company that runs its own factory in Jakarta. Its executives sat down with the union and worked out a contract with significant improvements on issues that employees care about greatly, like seniority. Though the margin has fallen recently, wage scales are better than minimum. Instances of bullying and intimidation are far fewer. Bata's shoes are sold in Indonesia for what an Indonesian can afford: $10 or less.
Ten years ago another courageous Indonesian, Teten Masduki, was asked by the Levi Strauss company to broker a clinic to be built near a contractor's factory. Teten, uncompromising labor advocate that he is, refused, even though the assignment would have made him a local hero. His reason: a clinic wouldn't give the workers what they need, a voice, the power to bargain.
Teten Masduki and Dita Sari see the world clearly, a lot more clearly than the celebrities and activists massed at such events as the one organized by Reebok in Salt Lake City, which is already awash with Olympian bunkum about human brotherhood. Dita Sari turned down $50,000 from Reebok. Teten Masduki turned down a tempting position with Levi Strauss. These days he's been responsible for chasing out a corrupt attorney general from his post as head of Indonesia's Corruption Watch. Do-gooders should study these fine examples and stiffen their spines.
"I see Native people dying every day because they can't afford health insurance," Elouise Cobell said over the phone in mid-January from Washington, DC, as she prepared to testify against Interi