Enron Traders Gloat over Misdeeds During California Power Crisis
Taped telephone conversations among Enron traders reveal open discussions about manipulating the California power market, taking generating units offline to raise prices and even stealing from grandmothers.
A utility outside of Seattle obtained the audiotapes from the Justice Department, which is investigating Enron’s part in the electricity market crisis that brought blackouts and skyrocketing prices to California in 2000-2001. The Snohomish County Public Utility District is suing Enron, saying it was overcharged during the crisis and should receive refunds. The suit says Enron should be ordered to surrender as much as $2 billion in unjust profits.
Trader conversations are routinely taped to keep a record of transactions, and millions of people heard portions of the sometimes-profane conversations on CBS News Tuesday.
In one excerpt, an employee praises another for manipulating California's energy market.
"He just ----s California," says the employee from Enron's West Coast trading desk in Portland, Ore., as reported in the Houston Chronicle. "He steals money from California to the tune of about a million."
"Will you rephrase that?" says another employee.
"OK, he, um, he arbitrages the California market to the tune of a million bucks or two a day," replies the first.
In one transcript, according to the Associated Press, a trader asks about "all the money you guys stole from those poor grandmothers of California."
An Enron trader responds, "Yeah, Grandma Millie, man. But she's the one who couldn't figure out how to (expletive) vote on the butterfly ballot."
CBS reported that Enron's lawyers argued the tapes merely prove "that people at Enron sometimes talked like Barnacle Bill the Sailor."
In another, an Enron trader identified as David discusses shutting down a steamer from a generating unit to increase prices.
John Forney, a former top trader in Enron's now-defunct Western trading operation, has been charged with wire fraud and conspiracy. Two other former Portland traders, Timothy Belden and Jeffrey Richter, have pleaded guilty to one count of wire fraud and are helping prosecutors.
U.S. Sen. Dianne Feinstein of California said in a statement that the tapes are "concrete evidence that there was manipulation and fraud perpetrated by energy companies" during the energy crisis.
"When I heard these tapes, I knew that we could not depend on any ethical conduct from traders in this energy market," she said, calling for a restructuring of the energy market. "Absent strong action, I have no doubt that this unethical, immoral and illegal behavior will continue."