A report by Public Citizen, the consumer advocacy group founded by Ralph Nader, has charged that Enron Corp. used its political connections to its advantage in the electric deregulation battle and was “completely dependent on the removal of government oversight.”

In its 28-page report, “Blind Faith: How Deregulation and Enron’s Influence over Government Looted Billions from Americans,” Public Citizen charges that Enron used 874 subsidiaries based in offshore tax havens, such as the Cayman Islands, to “park a lot of cash away from government officials.” Whether those offshore locations were part of Enron’s off-balance sheet financing practices, which have attracted congressional and regulatory scrutiny, is still to be determined. However, “the action came at the height of high West Coast energy prices, which would have allowed Enron to funnel billions in excess profits to offshore accounts,” Public Citizen said in its report.

Public Citizen policy analyst Tyson Slocum said, “Enron pushed a very specific agenda that sought to remove government oversight over a significant portion of its business operations, which allowed it to … manipulate deregulated state wholesale markets in California.” The report by Public Citizen charged that Enron’s primary business strategy was to “get government off their backs,” said Slocum. Public Citizen also targeted Sen. Phil Gramm (R-TX) and his wife, Wendy Gramm, who sits on Enron’s board of directors. Wendy Gramm is the former head of the Commodity Futures Trading Commission (CFTC).

Public Citizen noted in its report that Sen. Gramm advocated commodities trading provisions in the Commodity Futures Modernization Act of 2000, which includes deregulated energy trading language by excluding energy trading companies from the act’s jurisdiction and from CFTC oversight. Gramm was chairman of the Senate Banking Committee when the bill was passed. Sen. Gramm, in a statement, said he “did not participate in the development, drafting or negotiation of any provision in the (legislation) designed to affect the regulation of energy futures.” The senator’s only role, said his office, was in “assuring participation by (the) Securities and Exchange Commission in the regulation of single-stock futures and providing legal authority for over-the-counter ‘swaps.'”

Wendy Gramm is criticized by Public Citizen for pushing through regulations exempting over-the-counter energy trading from CFTC oversight shortly before leaving the Commission in 1993. Five weeks after her departure from the CFTC, Wendy Gramm joined Enron’s board and was a member of the Enron audit committee.

Public Citizen’s Slocum said that both the senator and his wife should be called before Congress to testify about their knowledge of Enron’s practices. The report may be found on Public Citizen’s web site at www.citizen.org.

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