Kenny Boy and Grandma Millie
Enron Corp. employees spoke of “stealing” up to $2 million a day from California during the 2000-01 energy crisis and suggested that their market-gaming ploys would be presented to top management, possibly including Jeffrey K. Skilling and Kenneth L. Lay, according to documents released Monday.
The evidence of apparent scheming — in one recorded conversation, traders brag about taking money from “Grandma Millie” in California — is in a filing by a utility in Snohomish County, Wash.
[…]
While it has long been established that Enron engaged in market-gaming tactics — two top traders have pleaded guilty to fraud-related charges for manipulating California’s energy market and a third awaits trial — the 450 pages of recorded conversations provide another vivid look into the organization’s exploitive subculture.
They also suggest that knowledge of alleged wrongdoing may have reached the level of Skilling, Enron’s former chief executive, and Lay, the former chairman.
In a Sept. 14, 2000, conversation, an employee named “Sue” from Enron’s governmental affairs operation checks in with a trader named “Bob” for information that could be used in an in-house presentation to corporate executives.
“This is the time of year when government affairs has to prove how valuable it is to Ken Lay and Jeff Skilling,” Sue said, according to the transcript.
The Snohomish utility identified Sue as Susan J. Mara, Enron’s California director of regulatory affairs until December 2001, when she and thousands of others lost their jobs as the result of Enron’s financial collapse.
In talking with Bob, whose identity couldn’t immediately be learned, Mara touts Enron’s success in delaying a lowering of energy price caps by state officials.
Then, still seeking helpful material for the planned executive presentation, she asks: “Do you know when you started overscheduling load and making buckets of money on that?”
Overscheduling load — a tactic that Enron traders famously dubbed “Fat Boy” — involved purposely overstating how much electricity would be needed in the future, creating the appearance of power shortages and leading to inflated prices.
Mara, who is now an energy consultant, said Monday that the recorded conversation came about as she gathered information for a budget presentation to be made to executives at corporate headquarters in Houston. “We had to show what our accomplishments were for the year,” she said.
Mara said she didn’t recall what the final presentation contained or which executives heard it. The presentation was not prepared expressly for Skilling and Lay, she said, even though her statement in the recorded conversation implied that they would hear it.
The trading tactics discussed on the recording weren’t considered illegal or manipulative by Enron, Mara added.
[…]
Federal prosecutors in February brought a range of fraud charges against Skilling for his actions when he was at the helm at Enron, but none was related to trading in the California market. Lay has not been charged.
In a different conversation in the transcripts, Enron’s West Coast trading chief, Timothy N. Belden, discusses the profitability of the company’s strategies in California, particularly those executed by a trading desk led by Jeffrey S. Richter:
“Well he makes … between one and two [million] a day, which never shows up on any curve shift…. He steals money from California to the tune of about a million — ”
At this point the other speaker interrupts, asking Belden to rephrase what he just said.
“OK,” Belden says. “He, um, he arbitrages the California market to the tune of a million bucks or two a day.”
We were told by President Cheney that the problem was too many environmental regulations. They screwed Grandma Millie and then blamed it on Gray Davis.
Say what you will about Republican competence, but they are really good at screwing people over. I’d go so far as to say they’re gifted.