Knappster: National press jumps on Nevada's Enron scandal

By George Knapp

Nevada officials have been gruff and dismissive in response to allegations leveled by Nevada Power Co. about the coziness of certain government entities with the infamous Enron Corp. We've all been assured there is nothing to it, that this is a desperation move by the power company, that the shenanigans with Enron involved only a single rogue trader at a single agency, and that he was put out of action in the early going.

No matter how this comes out in the legal wash--and there is a long way to go before it ever gets to that--the story is an embarrassment to our state. Up until this past weekend, most media outlets were still trying to ignore the unfolding story, possibly because it's too darned complicated for their pointy little heads. But now the tale of alleged treachery and dirty dealing is, as we say in the biz, growing legs.

The Washington Post, for one, ran a big story about the burgeoning scandal. The Post noted that Nevada Power is now suing the Colorado River Commission and its employees, along with several other parties, because of CRC's chummy arrangements with Enron a few years ago. A Washington lawyer for Nevada Power told the Post that "Enron ripped off Nevada utilities and their ratepayers for hundreds of millions of dollars" and that there is now "compelling evidence" that Enron enlisted the help of a Nevada agency (CRC) in this conspiracy." How do you think this kind of publicity plays back in D.C., where Nevada is already fighting several high-profile battles?

An article in the Los Angeles Times was even tougher. Referring to the highly illuminating audio recordings of CRC's chief electricity trader as he spoke with Enron, Southern Nevada Water Authority and many other entities, the Times speculated that the trader tapes "may give California officials fresh ammunition in their fight to prove that consumers deserve $9 billion in refunds" because of widespread market manipulation by Enron and its partners, one of which was the CRC.

The Houston Chronicle ran its own version of the L.A. Times story. Energy Daily, an industry publication read by everyone in the electricity business, ran a Page One account of the ongoing dispute.

Nevadans have been told that this is all largely a fabrication by Nevada Power, and that it will all go away soon enough. But that does not appear to be accurate. For one thing, the Federal Energy Regulatory Commission reached some of the same conclusions more than a year ago, following an extensive investigation of Enron and CRC. Other Enron partners have already been forced to pay $26 million to FERC for what they did. CRC is nearly alone among Enron partners in that it still hasn't settled with FERC. (CRC 's board just authorized $450,000 for lawyers in this case.)

Authorities in California are pursuing their own investigation because they plan to go after not only Enron, but anyone who helped Enron in its disastrous manipulation of the electricity market. Federal authorities in California are preparing criminal indictments against another energy giant that allegedly participated in the scheme. Oh, and let's not forget the two Enron executives who have already pleaded guilty to federal charges in this case. Coincidentally, those two guys worked in the Enron office that was so often called by CRC's employees.

Knappster has also seen a new filing sent by Nevada Power to FERC, one that references the hundreds of audio recordings involving CRC, Enron and the Southern Nevada Water Authority. This filing ominously notes that depositions have already been taken of CRC employees, and that those depositions show the story told by CRC staffers to the feds has dramatically changed since they were put under oath.

In the long run, it may be tough to "connect all the dots," as Nevada Power's Pat Shalmy has suggested. But the story is proceeding on several fronts and in several media outlets. This kind of attention can't be good for our state.

Quote of the week

"Of course the people don't want war. But after all, it's the leaders of the country who determine the policy, and it's always a simple matter to drag the people along, whether it's a democracy, a fascist dictatorship, a parliament, or a communist dictatorship. Voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked, and denounce the pacifists for lack of patriotism and exposing the country to greater danger."--Hermann Goering at the Nuremberg Trials.

Names, faces, places

The incomparable Joe Buntrock was laid to rest this week after suffering a heart attack at age 54. Joe was well known along the Strip after managing swimming pool operations at the Sahara, Hacienda, Aladdin, Circus Circus and Stardust at different times over the past 20 years. Friends remember him as a larger-than-life character known for outrageous antics and a vivid imagination. Many years ago, Knappster shared a house with Buntrock and two other womanizing hound dogs, a place that rightfully earned the nickname Heartbreak Hotel. Joe's family and friends have been hit hard by his sudden passing. ... A journalism colleague in far-off Macau sent word this week that Steve Wynn's people have been telling the locals that Wynn plans to break ground on his Macanese gambling palace "mid-year." Wynn's rival, Sheldon Adelson, is expected to open his first Macau operation next month. ... No one is saying much about last week's tragic and mysterious plane crash on a remote Nevada test range, but this reporter has heard that the pilot of the ill-fated plane was a "high-level government employee," probably a GS-14, and that he likely worked for the CIA. The cone of silence has been dropped over the circumstances surrounding the crash. Makes you wonder what the pilot and his four civilian passengers were working on out there. ... The thieves who robbed the Elvis-a-Rama of priceless jewelry and other items made a pretty stupid mistake during the heist, according to informed sources. Expect to hear about it very soon. ... The pollen problem seems to get worse every year, and every March, Knappster is ready to either move out of town or chop off his nose. Luckily, allergist Dr. Jim Christensen has prevented either from happening. His magic elixirs not only stop the allergy symptoms but have given me super powers as well. ... Knappster heard a kick-ass local blues band last week. If DejaBlue comes to a place in your 'hood, check 'em out.