So another nugget which was carefully obscured by Enron’s opaque accounting was the fact that the company paid no income tax for four of its last five years. They took advantage of numerous loopholes which allowed them to launder profits through offshore tax havens, and actually wound up with $382 million in tax rebates.
The ironic part of this story is that the new Bush-appointed head of the SEC, Harvey Pitt, is saying that the need to do something about the inadequacies in financial reporting rules “cannot be ignored any longer”. Pitt, in case you’ve never heard of him used to make his living fighting the SEC as a securities lawyer. Our president has a long and not-distinguished career of putting foxes like this in charge of the various regulatory henhouses. There’s more than one way to reach Deregulation Nirvana.
In fairness, Pitt is saying the right things about reforming oversight accounting. We’ll see.
Many people have said it by now, but the real scandal in the Enron case is that pretty much every sleazy thing the company did was perfectly legal. Keep all this in mind when you hear a business lobbyist pushing for deregulation and less oversight in his industry. Whatever case can be made for dereg (and there often is one), the question we should be asking is how are we going to ensure that the market will not be gamed?
Oh, and by the way, it looks like the claim that Enron’s fall was a surprise to one and all has been pretty much debunked. Salon has a piece on just how much pre-collapse warning there was down on Smith Street.