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By Michael C. Ruppert


    FTW January 11, 2002 ­ Even as Attorney General John Ashcroft today recused himself from involvement in any Justice Department investigation into the mushrooming Enron scandal, larger conflicts of interest ­ potentially more damaging to the Bush Administration -- are becoming increasingly apparent. The conflicts involve the Chairman of the Securities and Exchange Commission (SEC), Harvey Pitt and the head of Congress’ investigative arm, the General Accounting Office (GAO), David Walker. Both agencies are charged with investigating allegedly criminal behavior by the energy trading firm, once the seventh largest company in America, which has now become the single largest bankruptcy in world history and may soon become the largest financial and political scandal in American history.
    As new revelations of Enron’s unethical and insider-based improprieties, apparently facilitated by more than $2 million in Bush campaign donations, continue to flash across TV screens on a daily, sometimes hourly, basis -- more serious allegations of criminal money-laundering activities by a respected financial expert suggest that what is already known about Enron’s behavior is but the barest tip of a razor sharp iceberg that could sink the Bush presidency.
    Spokespersons for Pitt and Walker both denied to FTW in interviews on January 10 that there is any reason for the heads of these two agencies, long regarded as the last and best protections against unchecked government corruption, to recuse themselves from Enron investigations even though their respective agencies have key statutory obligations to investigate the growing scandal.
    SEC Chairman Harvey Pitt, who took office in August of this year, after most of the acts leading to the Enron collapse had been committed, was, according to a Jan. 9, 2001 report by the Center for Public Integrity, a  partner in the law firm of Fried, Frank, Harris, Shriver and Jacobson. In that capacity he represented accounting firm Arthur Andersen, Enron’s auditor, which disclosed in a press release dated yesterday, that “in recent months individuals in the firm involved with the Enron engagement disposed of a significant but undetermined number of electronic and paper documents and correspondence related to the Enron engagement.”
    This is significant because Andersen, one of the big five accounting firms, had routinely signed off on falsified financial statements concealing almost $20 billion in “off-balance-sheet” debt from stock and bond holders, regulatory agencies and Enron employees. Many of Enron’s pre-bankruptcy 20,000 employees were barred by the company from cashing in their 401(k) retirement plans, primarily consisting of Enron stock, while key executives including Chairman Kenneth Lay, former President and CEO Jeff Skilling, and CFO Andrew Fastow reportedly personally made more than $1 billion selling Enron shares before the collapse.
    SEC spokeswoman Christi Harlan told FTW, “The Chairman filed an agreement that he would recuse himself from votes in any matters where he had a conflict of interest. The investigation is being run by the enforcement division and they keep him [Pitt] advised.
“Once the Commission launches an investigation to go forward they just do their thing. There’s no requirement for a vote until an action is recommended.”
    Harlan stated that the enforcement division acts autonomously from any input from the Chairman’s office and that the head of the division has management oversight for any investigations. This appears to be a different SEC practice from the long-respected partnership of SEC chairman Arthur Levitt and enforcement director Richard Walker who were known as a team for their single-minded and thorough non-partisan investigation of securities violations in the 1980s and 90s. Walker was recruited by Deutschebank shortly after the attacks of September 11th, 2001.
    When asked if, in spite of his past representation of Andersen, Pitt was confident that there would be no conflict of interest or any resultant influence on the Enron probe, Harlan said, “Absolutely!”
    Comptroller General of the United States David M. Walker, who heads the GAO, has an even more obvious dilemma. Until November 9, 1998 he was a partner, board member and global managing director at Andersen. As persistent questions bubble about Andersen’s possible complicity in Enron’s criminal falsification of financial statements Walker’s past relationship with Andersen management raises a question about his own ability to investigate in an unbiased fashion.
    GAO spokesman Jeff Nelligan told FTW, “There is no link, no reason to recuse at all. When Mr. Walker was at Arthur Andersen he had nothing to do with Enron and he left well before all of this took place. He’s been gone for three plus years now.”
    The possibility that Walker had no knowledge of Enron activities (Enron was Arthur Andersen’s second largest account paying Andersen some $52 million last year) is questionable given his position as a director and board member. And the statement that he was not at Andersen when Enron’s financial statements were being falsified is flatly contradicted by a 2001 Enron corporate filing with the SEC (form 8-K) which states that “Enron will restate its financial statements from 1997 to 2000 and the first and second quarters of 2001” to account for the fraudulent or grossly negligent financial statements given to the SEC by Enron executives and certified by Andersen.
    Walker was on the board of Andersen for almost two years while Enron was cooking the books and Andersen was signing off on it.
    Many of the Andersen connections and possible improprieties have been noted by Rep John Dingell (D), MI the ranking member of the House Energy and Commerce Committee. On December 5, 2001 Dingell wrote to Pitt with a series of detailed accounting questions that, when addressed in any one of eight announced Enron investigations, cannot help but draw Andersen deeper into the controversy.
    A January 3 letter from Vice President Dick Cheney (former CEO of oil construction giant Halliburton) to California Congressman Henry Waxman disclosed that between January and September of 2001 Enron executives, including Lay, had met on six occasion with Cheney’s National Energy Policy Development Group. The letter did not disclose details of the meetings but did reveal that the last such meeting occurred on October 10th just six days before Enron publicly announced the hidden debt, triggering the collapse of its share price.
    The October 10th meeting was approximately two weeks before Enron’s Chair, Ken Lay made calls, as reported by the Associated Press on January 10, to Treasury Secretary Paul O’Neil and Commerce Secretary Don Evans to discuss the fallout from Enron’s pending collapse. Lay is a long-time personal friend of George Herbert Walker Bush and has headed the company which has given over $2 million in hard and soft campaign donations to George W. Bush and the Republican Party since 1999.
    A pending constitutional crisis loomed this summer as the GAO and Waxman moved closer to suing the Vice President for refusing to let Congress know what his energy task force was debating behind the same closed doors that proved to be no barrier for Enron. Waxman’s letters, frequently copied to Dingell and Walker, established a robust paper trail closing off avenues of escape for the Administration in its repeated refusals to cooperate.
    A January 10th letter from Waxman to Attorney General John Ashcroft inquiring about his acceptance or more than $75,000 in campaign contributions from Enron during his 2000 Senate campaign from Missouri was followed, within hours, by Ashcroft’s announcement that he would have nothing to do with the Justice Department’s investigation of Enron. However, Ashcroft has chosen the less aggressive investigatory tactic of creating an in-house task force to investigate Enron, rather than empanelling a grand jury capable of bringing criminal charges.
    As of press time the Department of Justice has not returned a call from FTW asking why the less aggressive approach was chosen.
    Other Bush figures connected to or having a financial stake in Enron include Presidential advisor Karl Rove, U.S. Trade Representative Robert Zoellick (formerly on Enron’s advisory council) and multi-millionaire Secretary of the Army Thomas White who is a former Enron executive. Lawrence Lindsay, the President’s economic advisor, formerly served on an Enron advisory board. The newly elected Chairman of the Republican Party (RNC), former Montana Governor Marc Racicot, is Enron’s former chief lobbyist with the firm of Bracewell and Patterson. Racicot has indicated that he will not sever his relationships with the firm and may continue to lobby as he leads the Republican Party. As RNC he has unobstructed access to all key decisions and votes made by Republican members of Congress.
    Racicot is not subject to any governmental regulation or oversight because he is not a federal employee.
    Enron influence throughout the Bush Administration is nearly ubiquitous. Several news stories have reported that CEO Lay, who had supported Bush since his first run for Texas Governor has actually cast an imperial thumbs up or thumbs down on cabinet-level appointees and key regulatory officials including the head of the Federal Energy Regulatory Commission which controls electrical rates for providers and oil, gas and electricity movements throughout U.S. markets.
    When asked about Justice’s decision to create a task force instead of convening a grand jury, a former federal prosecutor with experience in government corruption and energy matters told FTW, on condition of anonymity, “I’m a little relieved by Ashcroft’s recusal but a task force is not a grand jury and cannot charge criminal offenses. There is still one or more steps removed from actual criminal charges. Given the evidence of criminal behavior a task force, then, is less than a perfect solution. It’s not really any solution.”
    The former prosecutor added that Andersen’s destruction of records, “is extraordinary. Andersen has known for many months that documents in their possession might very well become the subject of civil and criminal discovery. It was incumbent upon Andersen, at the moment that it knew that these documents might become a part of litigation, to suspend their records retention schedules. It was Andersen’s lawyers’ duty to advise Andersen to err on the side of retention. That is considered ‘best practices’ for record retention in virtually every major company. The decision makers who failed to flag the documents at the proper time critically ill served the partnership.”
    Catherine Austin Fitts, a former Assistant Secretary of Housing and Urban Development (HUD) and a past Managing Director of the Wall Street investment bank Dillon Read noted that Enron’s trading patterns, internet money movements and [other activities] were consistent with a large-scale money laundering operation.
    She told FTW, “The fact that subpoenas were not issued months ago to obtain all Enron Online off shore and onshore digital and paper trading records and corresponding bank records defies logic, unless one presumes that Enron's generous donations have bought them time for a shredding party that protects all the beneficiaries of the real dollars that flowed through the Enron money pipeline. If my years working on the clean up of BCCI and the S&L crisis taught me one thing that I would communicate today to the shareholders, retirees and employees who have been harmed, it is this: People like the people on the board of Enron absolutely make money on insider trading, bid rigging and fraud, and they do so with help from the highest levels. They are superb at financial fraud because they are superb at persuading people that they are respectable and legitimate. The money they steal buys a lot of respectability.
“Presume the worst form of fraud and criminal enterprise is plausible. If not, then we are looking at gross negligence that, according to traditional standards of fiduciary responsibility, in fact constitutes criminality and fraud. Either way the specifics come out -- intentional fraud or gross negligence -- the Enron board and management are criminals.  That is a fact. The rule of law says that they should be held to the same standards of accountability as the millions of people they and their institutions have evicted from their homes, thrown into jail, denied health care and jobs or had burnt at the proverbial stake. The rule of decency says that any American who will continue to do business or associate with these individuals is part of the culture of corruption that has neatly disconnected action from accountability.
“I will bet every last dollar I have that Enron was the largest laundromat of stolen and tax evading dollars in American history and that the Department of Justice's primary goal is cover-up --- to make sure that the money trail disappears forever.”
    Fitts is also well qualified to speak on issues of government impropriety. She has recently successfully beaten a five-year Department of Justice attempt to destroy her reputation after she had discovered mismanagement of government funds and other improprieties at HUD in the mid 1990s. Her ordeal has recently resulted in statements completely exonerating her and revealing that there was no legal basis for the government to have begun the investigations of her company, Hamilton Securities, in the first place. Emerging from the ordeal as a recognized innovative thinker on economics, Fitts routinely consults with major economic-financial research groups in the U.S. and Europe and has just participated in the New York Times drug policy forum with Nobel Laureate, economist Milton Friedman.

Mike Ruppert, 49, was born in Washington, D.C. An Honors graduate of UCLA in Political Science, he comes from a family rooted in intelligence and the military. As an undergraduate he interned for LA Police Chief Ed Davis and worked at 5 LAPD Divisions before graduating and becoming an officer in 1973. 

During Mike's five plus years of active service, he received thirteen citations and four commendations. Twice the CIA attempted to recruit Mike: the first time just before he graduated and again after he was a highly praised field officer and budding narcotics investigator. In 1977 he discovered CIA bringing drugs into the U.S. through New Orleans in an operation supervised by his then fiancée, a CIA agent. He began to speak out and was forced out of LAPD in November 1978 after being shot at and threatened. He has been speaking out publicly ever since. In 1981 he spoke out about CIA and drugs inside the White House during a visit to his college classmate Craig Fuller. Fuller later served as Chief of Staff to Vice President Bush.

As a freelance writer in the 80s he was published in The Los Angeles Times. Other stories include more than 30 on drug and alcohol dependence. Mike is a past member of the Board of Directors of the National Council on Alcoholism for the San Fernando Valley.

Michael Ruppert is the Publisher/Editor of “From The Wilderness,” a monthly newsletter read in 27 countries and by two committees and 20 members of the U.S. Congress. He may be reached at The FTW web site is located at

Reprinted with permission, Michael C. Ruppert and From The Wilderness Publications