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Trial of the True Believers

The mindset that led Enron to defraud millions of people is the same that created the Bush administration's legal quagmires.
 
 
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As the trial of Enron's Jeff Skilling and Ken Lay enters its second week, journalists are again pointing to the connections between the Bush family and administration and the former corporate Goliath. It's certainly not difficult to unearth the laundry list of ties between Bush's tight-knit Republican circle and the company that cheated Americans out of over $1 billion in retirement funds and some 4,500 jobs.

But perhaps the more interesting connection between the Bush administration and Enron is how people from both entities have flouted the law by spinning their own versions of reality and defending their actions with claims of good intent.

No one can deny Ken Lay and Jeff Skilling's leadership of Enron was creative. As Peter Elkind, senior writer at Fortune and co-author of " The Smartest Guys in the Room," told AlterNet in a recent interview, "It was the most innovative company in America, we just didn't know how innovative."

Enron traders were encouraged to seek out every loophole in any law that stood in the way of Enron making another buck. This kind of market manipulation has been referred to as a "phantom deal." In the case of the California energy crisis, there was no shortage of electricity, and yet Enron was getting profits by shutting down power plants to artificially push up the price. Without creating anything, Enron was making billions in profits.

But while many of their deals -- as well as the company's profits -- were "phantom," the fallout from the company's collapse was hardly apparitional. Even now, the repercussions of the energy crisis are being felt. Residents in many parts of California are paying record electricity costs as the remaining debt hovers. Thousands of employees lost their jobs, and an even larger number of people lost retirement benefits.

Despite the diligent cataloguing of the many disingenuous deals made by Enron, the outcome of Skilling and Lay's trial is hardly predictable. That's because the prosecution team has to prove that Skilling and Lay intended to mislead investors, and that they knew the company was headed for disaster. But Skilling and Lay repeatedly insist that they were true believers and never thought the company would collapse. This may come down to the issue of what Skilling and Lay allowed themselves to believe.

It may come as no surprise, then, that both men are eager to take the stand. Rather than feeling ashamed or repentant for the collapse of Enron, Skilling and Lay's lawyers have promised the jury that both men will take the stand. In fact, they're eager to let jurors know just how passionately they felt about Enron.

From Peter Elkind and Bethany McLean's interviews in "The Smartest Guys in the Room," it becomes clear that Enron was a cult of personalities -- driven in large part by Jeff Skilling. It was Skilling's repeated refusal to accept defeat that revealed the chink in Enron's armor: The only thing keeping Enron from failing was Skilling and Lay's desperate insistence that Enron was a success.

The alternate reality that Skilling and Lay had so successfully fabricated, by keeping it sealed off from the public and using every loophole to keep afloat, collapsed as soon as the public started asking questions. And while the illegitimacy of the company's deals revealed Enron to be a house of cards, the repercussions from its collapse -- high energy prices, the loss of jobs and retirement funds -- remain a stark reminder of the very real consequences of allowing those with a fervent ideology access to unchecked power. For those so driven, facts become secondary, mere details to be fabricated in order to further furnish their version of reality.

It's an interesting irony that the more incapable Skilling and Lay are of seeing how their actions were wrong or illegal, the more likely they are to escape discipline. Fortune writer Roger Parloff likens this kind of defense to the "Emperor's clothes" metaphor:

To commit most crimes, one has to intend to do something wrong. Accordingly, truly deluding oneself -- gullibly trusting a deceitful subordinate (in the emperor's case, the tailor), relying on yes-men advisors, resting undue confidence on one's own innovative brilliance -- is a defense. An individual cannot be a criminal unless he has a certain baseline level of self-knowledge. Without that, psychiatrists may have labels for him, but the penal code does not.

In the world of seeking legal relief, it is harder to legally prosecute someone who truly believes in their own sense of reality, regardless of how clearly it may conflict with that of the general public. It's a strange incentive to believe your own lies, to surround yourself with nothing but what you want to hear and people who will support your version of reality.

It seems impeccable timing that, parallel to the Enron trial, the Bush administration is being called to account for its warrantless spying program. The Senate Judiciary Committee, headed up by Arlen Specter, is now pushing the administration to explain why it has created a completely alternate system to the legal wiretap methods in place.

As laid out in the DoJ legal briefing, the president feels justified in his actions because he deems it his "responsibility" under the Constitution to protect Americans. That is to say, the president's intentions to protect the public give him the right to find every legal loophole possible to redefine "torture," drag the United States into an arguably endless war and generally turn our entire legal system on its head -- the detainment of Guantanamo detainees without charge or trial and the extralegal wiretapping of Americans all point to the new legal supposition that, in the war on terror, we are all guilty until proven innocent.

And, in true Enron fashion, the administration continually refuses to discuss its inner workings or justifications, continually assuaging the public with repeated claims that everything is just fine, and that one would have to be a fool to question the president's integrity.

Driven to justify a worldview in which global terrorism is a unified, extinguishable evil force, facts have become secondary to the importance of the vision. One need only recall the Downing Street Memo to see that facts have never stood in the way of this administration's agenda. It's a tactic that is seen in those the president has chosen to surround himself with as well. Jeanne of the blog Body and Soul, recently wondered whether the administration was trying to make Americans crazy by so blatantly contradicting basic information. She points to White House spokesman Scott McClellan's response to a press inquiry:

QUESTION: There are allegations that we sent people to Syria to be tortured.
McCLELLAN: To Syria?
QUESTION: Yes. You've never heard of any allegations like that?
McCLELLAN: No, I've never heard that one. That's a new one.
QUESTION: Syria? You haven't heard that one?
McCLELLAN: That's a new one.

Hard to believe considering the Washington Post published these allegations on page A1. Not to mention they also appeared in the New York Times , the Associated Press, and the New Yorker . Even if McClellan doesn't read the news, perhaps he could recall being asked the very same question regarding Syria a year ago. When asked about allegations, the president and his spokesmen either play dumb or insist that the allegation, regardless of how widespread the evidence, is false.

This week's Senate Judiciary hearings just might be the start of unraveling the administration's alternate sense of reality. As Specter rightly points out in his questions for Attorney General Alberto Gonzales, with well-established programs like FISA in place, the rational question is: Why does the administration continue to put our safety secondary to its agenda to expand executive power? Specter writes, "The FISA Court has a record establishing its reliability for non-disclosure or leaking contrasted with concerns that disclosure to many members of Congress involved a high risk of disclosure or leaking. The FISA Court is at least as reliable, if not more so, than the Executive Branch on avoiding disclosure or leaks."

Shayana Kadidal, one of the lawyers at the Center for Constitutional Rights (CCR) bringing legal action against the president and security agencies, explained to AlterNet why the wiretap program has endangered our security. Apart from the hollow justifications the president utilizes to defend the NSA program, its incredibly broad reach has left security agencies swamped with bum leads. Another piece of related legislation [PDF], the Electronic Frontier Foundation (EFF) vs. AT&T, characterizes the NSA program as "the biggest fishing expedition ever devised." EFF charges that AT&T, by providing the NSA with access to its customers records, is violating the First and Fourth amendments of the Constitution.

True to the new "guilty until proven innocent" ideology, the NSA "collects and analyzes a vast amount of communications traffic data to identify persons whose communications patterns the government believes may link them, even if indirectly, to investigatory targets." Kadidal notes that the waste and duplication in this form of intelligence gathering is preventing law enforcement agencies from focusing its resources on areas of real threat.

And even if useful information is obtained, it cannot be legally used to protect Americans. James Risen, in his recent book "State of War", notes some 10 percent to 20 percent of FISA wiretap orders are now based on evidence that has been illegally collected through the NSA program. Risen writes:

Because the intelligence based on the warrantless wiretaps would almost certainly not be admissible in an American court, it is possible that the Bush administration is not attempting to take those cases to trial. Several high-profile terrorism-related cases since 9/11 have ended in plea bargains and out-of-court settlements; few have actually gone to trial. One reason for that legal strategy may be that the administration is fearful of getting caught conducting illegal surveillance operations.

The point is that the logic simply doesn't add up. So, why is the administration holding on so relentlessly to this alternate reality? Shayana Kadidal points to Vice President Dick Cheney's recent remark that there needs to be a reversal of what he has perceived as an erosion of executive power.

"Realistically," says Kadidal, "when you look at this program, it's really an attempt to say, 'We don't need Congressional approval, we don't need to go to a judge, these are all powers that ought to inherently belong to the presidency. And Congress, even when it legislates specifically, ought to not have the power to take away from the presidency.'" What it comes down to, says Kadidal, is ideology, facts be damned.

By seeking out loopholes in laws in order to fit their agenda, and deluding the public (and possibly themselves) into thinking that these things were done in public interest, both Enron and the Bush administration have proven masters of generating alternate realities. They are symbols of a new paradigm wherein claims of following the specific letter of the law are accompanied by an incredible contempt for the substance of it.

Many of those following the Enron trial have argued that this case will set a precedent for what will and will not be tolerated in the business world. But the implications of the trial stretch much further. This trial is less about the laws that Skilling and Lay broke and more to do with whether or not supposedly "good intentions" and a deliberately skewed sense of reality can excuse unconscionable actions.

As the Bush administration gears up to defend its NSA program -- to the Senate Judiciary Committee, to the Center for Constitutional Rights and to the American Civil Liberties Union, we will see a conflict of realities. While these organizations will be fueled by logic and legality, the administration will be desperately clinging to its ideological stance, pushing to keep an ever-more-fragile house of cards intact.

Onnesha Roychoudhuri is an editorial fellow at AlterNet.