Spitfire List Web site and blog of anti-fascist researcher and radio personality Dave Emory.

For The Record  

FTR #362 Networking: Enron, Saudi Arabia and 9/11

Listen:
MP3 Side 1 | Side 2
RealAudio

1. The first side of the program (and the first part of the second) consists of the reading of two documents from John Loftus concerning the role of Enron as a broker on behalf of U.S. energy companies negotiating with the Taliban for a proposed pipeline across Afghanistan. The documents are self-explanatory. In the context of Mr. Loftus’ analysis, recall some points concerning the compromising of U.S. intelligence in connection with the attacks. (This should not be misunderstood as constituting an endorsement by Mr. Loftus for the working hypothesis presented in For The Record programs concerning 9/11.) The lawsuit referred to in the Loftus pieces is discussed in FTR 357.

2. The first article is titled “What Congress Does not Know about Enron and 9/11.”

3. The second article is titled “The Enron Pipeline Connection to 9/11.” Note the role in this situation of the late John O’Neill, and recall reflections made upon his career in earlier broadcasts.

4. Next, the program highlights ex-CIA officer Robert Baer’s allegations concerning the unwillingness of the authorities to move on Bin Laden’s organization. (See No Evil; by Robert Baer; Copyright 2002 [HC]; Crown Publishers; ISBN 0-609-60987-4.)

5. Baer alleges that Khaldi Shaykh Mohammed (believed to be the mastermind of the 9/11 attacks) could have been apprehended. It appears from Baer’s account that he had been tipped off. “When he [Baer] had been working as chief of police in his government, he had become aware that his government was harboring an Osama bin Laden cell. The two main members of the cell, he said, were Shawqi Islambuli, whose brother had assassinated Anwar Sadat in 1981, and Khalid Shaykh Muhammad, whose area of expertise was airplane hijackings. The prince went on to tell us that when the FBI attempted to arrest Muhammad and Islambuli, his government had equipped them with alias passports and spirited them out of the country; both eventually settled in Prague. Getting out of the spy business proved a lot harder than I thought it would be. As if I’d never left, I passed everything I had learned from the ex-police chief back to the CIA in early 1998. Not surprisingly, there was no follow-up. No response.” (Ibid.; p. 270)

6. Saudi Arabia’s culpability in the attacks is highlighted by Baer’s description of his attempts to warn about 9/11. “It wasn’t until three years later, in the early summer of 2001, that an associate of my prince, a military officer still working for his government, informed me he was aware of a spectacular operation about to occur. He also claimed to possess the name of Osama bin Laden operatives in Yemen and Saudi Arabia. He provided us with a computer record of hundreds of secret bin Laden operatives in the Gulf. In August 2001, at the military officer’s request, I met with an aide to the Saudi defense minister, Prince Sultan bin’Abd-al’Aziz. The aide refused to look at the list or to pass them on to Sultan.” (Ibid.; pp. 270-271)

7. A spate of recent articles report that Khalid Sheikh Mohammad is suspected of masterminding the 9/11 attacks. (“Key 9/11 Planner Is Named” by Josh Meyer; Los Angeles Times; 6/5/2002; p. A1.)

8. “‘It looks like he’s the man, quite honestly,’ one Bush administration official said of Khalid Shaikh Mohammed, a key lieutenant to Osama bin Laden.” (Idem.)

9. In the context of the Loftus articles on Enron and 9/11, it is interesting to contemplate the timing of Enron CEO Jeffrey Skilling’s decision to resign. It was on August 14, 2001. It was in August of 2001 that the Taliban negotiations collapsed. (“Greed and Fear Return;” by Andrew Hill; Financial Times; 6/8/2002; p. 8.)

Discussion

One comment for “FTR #362 Networking: Enron, Saudi Arabia and 9/11”

  1. Well that’s sort of perfect in an awful way: former Enron CEO Jeffrey Skilling was released in February of this year. And he’s apparently not letting his past get in the way of a new future in oil and gas trading. So what does Skilling have in mind for his next act? Blockchain technology, the technology of choice for contemporary financial fraudsters.

    Specifically, he has apparently already held meetings with former senior colleagues from Enron to generate support for a new blockchain-based venture that would be a “digital platform connecting investors to oil and gas projects”. Yep, Old Enron executives + blockchains + oil and gas trading. That’s the plan. What could possibly go wrong?:

    The Financial Times

    Enron’s Jeff Skilling: out of jail and on the crypto trail

    By: Jemima Kelly
    March 25, 2019

    It takes a certain kind of person to open their arms to a man who’s just spent more than 12 years in US federal prison, having been convicted of securities fraud, conspiracy, insider trading, and making false statements.

    But according to the Wall Street Journal, who cite “people familiar with the matter”,, former Enron CEO Jeffrey Skilling has not only been holding meetings with former senior colleagues at the collapsed energy company, but also “others”, to garner support for a new business venture: a “digital platform connecting investors to oil and gas projects”.

    So what kind of “others” might be prepared to go into business with a man who was embroiled in the mother of corporate scandals — bringing down an accounting firm in the process — and who only got out of prison last month?

    According to the Journal:

    Mr. Skilling has met with individuals who specialise in cryptocurrency, blockchain and software development in recent weeks.

    Ah! Mais bien sur.

    The Journal also quotes a professor at Wayne State University Law School, who suggests that cryptoland might provide an ideal second chance for someone like Skilling:

    “It’s an area without a long memory,” he said. “In the cryptocurrency space, no one is going to care too much about Enron.”

    ———

    “Enron’s Jeff Skilling: out of jail and on the crypto trail” by Jemima Kelly; The Financial Times; 03/25/2019

    “But according to the Wall Street Journal, who cite “people familiar with the matter”,, former Enron CEO Jeffrey Skilling has not only been holding meetings with former senior colleagues at the collapsed energy company, but also “others”, to garner support for a new business venture: a “digital platform connecting investors to oil and gas projects”.

    So is anyone going to actually want to trade on a platform created by the crew behind one of the biggest financial frauds in history? We’ll see, but you have to be amused by this prediction: Enron was long ago no one is going to care:


    The Journal also quotes a professor at Wayne State University Law School, who suggests that cryptoland might provide an ideal second chance for someone like Skilling:

    “It’s an area without a long memory,” he said. “In the cryptocurrency space, no one is going to care too much about Enron.”

    And that is kind of a valid point: if there was any area of finance where someone with Skilling’s background might not have to worry about being negatively judged for his fraudulent past, it’s cryptocurrency. After all, most of the cryptocurrency industry at this point is built on some combination of fraud and/or facilitating criminality so Skilling’s will fit right in. Case in point: a new study found that almost all of the transactions on the largest unregulated Bitcoin exchanges are fake:

    CNBC

    Majority of bitcoin trading is a hoax, new study finds

    * Ninety-five percent of spot bitcoin trading volume is faked by unregulated exchanges, according to a study from Bitwise this week.
    * The firm analyzed the top 81 crypto exchanges by volume on industry site CoinMarketCap.com. They report an aggregated $6 billion in average daily bitcoin volume. The study finds that only $273 million of that is legitimate.
    * “People looked at cryptocurrency and said this market is a mess; that’s because they were looking at data that was manipulated,” says Matthew Hougan, global head of research at Bitwise.

    Kate Rooney
    Published 11:58 AM ET Fri, 22 March 2019 Updated 12:12 AM ET Sat, 23 March 2019

    New research is casting even more doubt on the legitimacy of bitcoin trading.

    An analysis published by Bitwise this week shows that 95 percent of bitcoin spot trading is faked by unregulated exchanges. The survey, first reported by The Wall Street Journal, echoes concerns by regulators that cryptocurrency markets are still ripe for manipulation.

    Bitwise, an asset manager in the process of trying to list the first-ever bitcoin exchange-traded fund, said it met with the Securities and Exchange Commission on Tuesday to discuss its application. As a part of the process, it submitted analysis that could help regulators cut through the noise.

    “People looked at cryptocurrency and said this market is a mess; that’s because they were looking at data that was manipulated,” said Matthew Hougan, global head of research at Bitwise. “When you cut away the echo chamber of these nonsense numbers, it should be an efficient, well-arbitraged market.”

    The analysis showed that “substantially all of the volume” reported on 71 out of the 81 exchanges was wash trading, a term that describes a person simultaneously selling and buying the same stock, or bitcoin in this case, to create the appearance of activity in the market. In other words, it’s not real.

    Those exchanges report an aggregated $6 billion in average daily bitcoin volume. The study finds that only $273 million of that is legitimate.

    “The idea that there’s fake volume has been rumored for a long time; we were just the first people to systematically look at which exchanges were delivering real volume,” Hougan told CNBC.

    The San Francisco-based firm compared at Coinbase Pro, which reports about $27 million in average daily volume in bitcoin. Its median “spread,” or difference between the price a seller wants and the price a buyer wants, for bitcoin was about 1 cent. That scenario passed Bitwise’s test for having real volume.

    But in another stark comparison, CoinBene — the biggest reported exchange on CoinMarketCap.com — has a nearly $15 spread. Hougan said they found other extreme examples of exchanges with a spread of more than $300.

    “It is surprising that an exchange with almost 18 times the volume of Coinbase Pro would have a spread that is 1,500 times larger,” Bitwise said in the report.

    Exchanges may have an incentive to report fake volume. Bad actors may look to attract listings for new initial coin offerings, or ICOs, who want their cryptocurrency on an exchange where more trading goes on, Bitwise said. Those fees can run from $1 million to $3 million per listing, according to data from Autonomous Next.

    U.S. regulators have taken a cautious approach to making bitcoin mainstream for traders. The SEC highlighted the risk of manipulation as reason for rejecting applications for other cryptocurrency ETFs. The office of New York Attorney General also flagged the issue in a recent report warning that exchanges are vulnerable. Because most cryptocurrency trading platforms don’t use the same monitoring tools as stock exchanges, SEC Chairman Jay Clayton has warned that investors may not get a fair assessment of bitcoin’s price.

    Hougan said this also explains why trading volume for regulated bitcoin futures has seemed weak. Chicago-based CME and Cboe began listing bitcoin derivatives at the end of 2017 but have had much lower volumes than the $6 billion reported by unregulated exchanges.

    “When you realize the size of the real bitcoin market, the CME starts to look a lot more significant,” Hougan said.

    ———-

    “Majority of bitcoin trading is a hoax, new study finds” by Kate Rooney; CNBC; 03/22/2019

    An analysis published by Bitwise this week shows that 95 percent of bitcoin spot trading is faked by unregulated exchanges. The survey, first reported by The Wall Street Journal, echoes concerns by regulators that cryptocurrency markets are still ripe for manipulation.”

    95 percent of bitcoin spot trading is fake. That’s based on an analysis of 81 different cryptocurrency exchanges. And for 71 of those 81 exchanges “substantially all of the volume” was just someone simultaneously buy and selling bitcoins that simply creates the appears of active trading. Surprise!


    The analysis showed that “substantially all of the volume” reported on 71 out of the 81 exchanges was wash trading, a term that describes a person simultaneously selling and buying the same stock, or bitcoin in this case, to create the appearance of activity in the market. In other words, it’s not real.

    Those exchanges report an aggregated $6 billion in average daily bitcoin volume. The study finds that only $273 million of that is legitimate.

    “The idea that there’s fake volume has been rumored for a long time; we were just the first people to systematically look at which exchanges were delivering real volume,” Hougan told CNBC.

    So are these exchanges aware that almost all of their trades are fake? Well, considering that people presumably have to pay the exchange a cut for these fake transactions it seems like a good bet that the exchanges are actively managing these fake trades themselves (in which case they would have to worry about the trading costs). And as the article notes, exchanges have a incentive to fake volume: the higher the volume, the more likely an exchange is to be selected for a potentially lucrative “initial coin offering” (ICO).


    Exchanges may have an incentive to report fake volume. Bad actors may look to attract listings for new initial coin offerings, or ICOs, who want their cryptocurrency on an exchange where more trading goes on, Bitwise said. Those fees can run from $1 million to $3 million per listing, according to data from Autonomous Next.

    So that’s the kind of marketplace Jeffrey Skilling and his former Enron senior colleagues are getting into. The kind of market where almost everything is fake. In other words, the perfect market for former Enron executives:

    BBC

    Enron ‘created fake trading room’

    Thursday, 21 February, 2002, 06:08 GMT

    Enron created a fake trading room in order to impress Wall Street analysts, a former top executive at the firm has admitted.

    Four years ago, the company built a command centre for its Enron Energy Services (EES) power supply arm, and ordered staff to pretend they were doing deals as analysts gathered in Houston for their annual meeting with the firm.

    EES later went on to be an active part of the business, but former chairman Kenneth Lay and ex-president Jeffrey Skilling rehearsed staff in looking busy, in the hope of convincing investors that it was already a going concern in 1998.

    The revelations come in an interview with Joseph Phelan, an ex-director of EES, published by the Reuters news agency.

    They are not the first time that former staff have alleged being persuaded to fake activity when visitors dropped by Enron’s Houston headquarters.

    Pretend profits?

    EES was intended to be the powerhouse of Enron’s business.

    It promised to manage the energy needs of large corporations for a flat fee, an area that was seen as highly promising.

    Although EES eventually became profitable, it had only a tiny handful of customers and staff in 1998.

    Mr Phelan said that staff were brought in from other floors to the EES “war room”, and telephone calls into the centre were scheduled in order to create a buzz.

    The whole operation was carefully choreographed in order to provide the most buoyant impression on analysts.

    Probes persist

    Regulators, investigators and politicians are currently trying to piece together exactly what was fact, and what fiction, in Enron’s business practices.

    Although the deceptions allegedly practised at EES were not illegal, they are seen as part of a culture of dishonesty that culminated in the misleading accounting that ultimately brought the firm down last year.

    The failed firm’s critics argue that Enron was an organisation rotten to the core, where malpractice was inculcated by Mr Lay and Mr Skilling.

    ———-

    “Enron ‘created fake trading room'”; BBC; 02/21/2002

    “EES later went on to be an active part of the business, but former chairman Kenneth Lay and ex-president Jeffrey Skilling rehearsed staff in looking busy, in the hope of convincing investors that it was already a going concern in 1998.”

    Yep, Jeffrey Skilling actually rehearsed with his employees the act of staging a busy energy trading room to impress investors and analysts:


    EES was intended to be the powerhouse of Enron’s business.

    It promised to manage the energy needs of large corporations for a flat fee, an area that was seen as highly promising.

    Although EES eventually became profitable, it had only a tiny handful of customers and staff in 1998.

    Mr Phelan said that staff were brought in from other floors to the EES “war room”, and telephone calls into the centre were scheduled in order to create a buzz.

    The whole operation was carefully choreographed in order to provide the most buoyant impression on analysts.

    And now he wants to create a blockchain-based oil and gas trading platform. So as we can see, Skilling clearly has the necessary skill sets for this market. The future is bright for Skilling. Maybe not so much for his eventual investors. Or anyone who actually uses his new trading platform.

    Posted by Pterrafractyl | March 27, 2019, 3:02 pm

Post a comment