Enron and on and on and on...

When we say we will do something, we will do it; when we say we cannot or will not do something, then we won't do it. ….

We are satisfied with nothing less than the very best in everything we do.

We will continue to raise the bar for everyone. The great fun here will be for all of us to discover just how good we can really be….

We are dedicated to conducting business according to all applicable local and international laws and regulations, including but not limited to, the U.S. Foreign Corrupt Practices Act, and with the highest professional and ethical standards.

These are fairly typical - albeit largely meaningless - statements from a corporation espousing the ‘ethical’ basis upon which they do business. For what it’s worth, the above are all extracts from Enron’s Human Rights Statement.1 That’s right, Enron, the name that has become the leitmotif for the latest stage of crony, crooked capitalism. Enron, the company that seduced political leaders on both sides of the Atlantic, only to have years of criminality exposed in its dramatic fall from grace. Well, it was a fall from grace of sorts, since it was preceded by its corporate masters cashing in their over-priced shares and retreating to their gated communities in the leafiest suburbs of Houston. In the meantime, thousands of employees and pension-holders saw their life savings - and futures - wiped out at the stroke of the pen which signed the plea for Chapter 11 bankruptcy.

Of course, as we now know, Enron was not the only, or indeed the worst, of recent corporate frauds that have become exposed. The corporate liars have been crawling out of every nook and cranny in Wall Street, as company after company continues to issue ‘revised profits statements’ in the light of their recognition of "inappropriate accounting". In effect, those are admissions that they have been systematically lying to stock markets, investors and employees - including some of the largest Transnationals such as Procter & Gamble, Bristol Myers Squibb, Ford, General Motors and Merrill Lynch.

Twelve weeks after taking over as Chairman of the Securities and Exchange Commission, the key financial regulator in the US, William H. Donaldson, stated that: “I’m surprised at the day-in and day-out, steady level of malfeasance” (sanitising turn of phrase, but he means crime). That week, regulators had reached a $1.4bn “settlement” with ten leading Wall Street firms on charges that they routinely issued false reports to win business. Such settlements are a substitute for criminal proceedings - which so far have been restricted to middle management, rather than the big CEOs who made the real profits in the 1990s.

On one level, none of this is particularly surprising. In the wake of Enron, Bush had promised to establish a “financial crimes SWAT team”, talking tough about corporate criminals. But he clearly did not mean the companies themselves - only the odd rotten apple that could be ceremoniously paraded in front of the cameras to give the impression of decisive action. Even that limited toughness has remained largely rhetorical, while events elsewhere have deflected attention from his promised crackdown on fraudsters. But we should not be wholly dismissive of any of these moves against financial crime, whether they result in dollar settlements or a few individuals being sacrificed. Because what it clearly signals is an explicit recognition that self-regulation and ethical management have categorically failed. Even if there remain voices calling for responsible and ethical voluntary measures to be taken by corporate America to deal with the current crisis, the recognition that self-regulation has failed is not insignificant. For it raises - even if only rhetorically- the problem of corporate conduct as a crime control problem.

There is another aspect to this rhetorical shift as regards the control of financial crimes that needs to be explored, however. All governments have historically chosen to regulate less rather than more, passing and enforcing laws designed to control business activity only when under external pressure to do so. Unsurprisingly, the source of the most successful pressure has been businesses itself - for some forms of financial crimes impact upon businesses, undermine ‘confidence’ and are generally antithetical to the smooth running of capitalism. Henderson, on becoming Chairman of SEC, said that his mission was to restore investor trust in the markets. At the same time, then, we need to recognise that pressures for regulation are almost always least successful when they seek to develop or improve ‘social’ protection - that is, laws designed to protect consumers or workers health and safety, the environment, and so on. And this takes us back to Enron.

For if the Enron case has become the paradigmatic case of financial fraud at the turn of the century, there has been much less attention to the fact that this was a firm that faced sustained criticism for the social and environmental impact of some of its activities. Notwithstanding its fine Human Rights statement, Enron was a systematically corrupt company sustained by a systematically corrupt global corporate order, maintained not least through the frantic wheeling and dealing of the Bush administration. In perhaps its most notorious escapade, Enron’s role at the head of a US consortium DPC2, established to build the huge Maheshwar dam complex in the Indian state of Madhya Pradesh, attracted widespread international criticism. Building the dam - designed overwhelmingly to provide electricity for large business operations rather than for private households - involved the wholesale destruction of 61 villages. Few of them, if any, received any compensation for the submerging of their homes and their land. In 2002 a Human Rights Watch report documented opposition to another Enron-led project, the development of a power plant in Maharashtra. In this case, once again local (peaceful) opposition to the project was repelled with brutal violence. Private guards and public police implicated in the violence were either paid for or employed by Enron’s subsidiary in charge of the project. The report noted:

immense influence that Enron exercised over the central and Maharashtra governments….the company's interaction with villagers whose legitimate concerns for their livelihood and environment were ignored or dismissed leading them to oppose the project…met with serious, sometimes brutal human rights violations carried out on behalf of the state's and the company's interests.

The Indian social justice campaigner Arundhati Roy has noted that Enron’s deals in India have been tied up on the back of elaborate system of bribery involving key players in Enron and the Indian state authorities. And this is by no means unique to the way in which Enron conducts its business. Enron is currently under investigation for tax evasion by the Bolivian authorities and for bribing state officials (a breach of the law that was singled out for special mention in Enron’s ethical business statement, the Foreign Corrupt Practices Act). Piling irony upon irony, recent accusations of the use of US military intelligence by Enron to gain advantage over international competitors have been justified by US government sources on the basis that the company had been disadvantaged in the past by the persistent use of bribes by foreign companies!

In Bolivia, the Enron consortium is not only in the frame for financial corruption, but for social and environmental crimes. The company is facing legal action in Bolivia for one incident that involved the spillage of 29,000 barrels of oil and caused an estimated $6million worth of economic costs to the local economy and extensive environmental damage.

And there is the biggest insult to add to this injury. The terms of Chapter 11 bankruptcy have reigned in Enron’s domestic operations and of course their financial transactions, but did leave the company relatively free to continue their socially catastrophic trade in third world countries. Of course, Western governments care little about such abuses of power in far-flung economies. As the occupation of Iraq most grotesquely illustrates, populations and resources are simply pawns in the state-backed game of corporate exploitation.

While the Blair Government has backed the imperial designs of the Bush administration to the hilt, at the same time it has lined up with its European counterparts - even France and Germany - in resisting the extension of tighter US-inspired regulations on the accountancy industry. In fact, and quite incredibly, earlier this year Patricia Hewitt responded to a parliamentary question by noting that the Government was considering sheltering auditors from being sued for negligence. The details had yet to be sorted out, but a review of company law would limit auditors' liability.

Without the cataclysmic fallout of an Enron or WorldCom style collapse, the rhetoric of self-regulation, voluntary compliance and even cutting ‘red tape’ remains dominant New Labour discourse. Moreover there remains a staggering faith in ‘business ethics’ and corporate social responsibility even among social democratic broadsheet commentators such as Will Hutton and Hugo Young. Seduced by the prospects for a humane capitalism, those ideologues of responsible business have not learnt what first year business undergraduate students know as instinct - that ‘business ethics’ and ‘corporate social responsibility’ are oxymorons, espoused by morons. Yet it is a safe bet that the discourse of corporate crime will emerge in this country, if only because the endemic criminality of capitalist corporations is bound to, eventually, provide our very own, home-grown Enron-style disaster.

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1. The full statement is available at http://www.enron.com/corp/pressroom/responsibility/human_rights_statement.html

2. Dabhol Power Company - the joint venture between the three US based multinational corporations, Enron (with an 80% share), General Electrical Corporation (10%) and Bechtel Enterprises Incorporated (10%).

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