On Thursday, May 25, Enron founder Ken Lay and former Enron CEO Jeffrey Skilling were found guilty on multiple charges totaling hundreds of years of jail time—though they will likely be sentenced to far less. But analysts familiar with the broader picture say it was merely the tip of the iceberg, leaving unpunished the vast majority of illegal practices by a wide range of actors—and leaving the public stuck with the bill for most of their crimes.

“Its gratifying to see them convict these two executives, but what should really have been on trial was the system. It’s deregulation that we ought to be locking away for the rest of our natural lives,” said Bob Finkelstein, executive director of The Utility Reform Network (TURN), "California allowed these corporate criminals to drive policy decisions, and the results were disastrous," he added.

“Ken Lay is going to jail. But his brain child is still the assumed policy of the state and federal administrations,” said Doug Heller, executive director of the Santa Monica-based Foundation for Taxpayer and Consumer Rights (FTCR).

While Enron was far from being the only firm involved in energy de-regulation, its meteoric growth, aggressive lobbying, and strong ties to George W. Bush made it the trend-setter, as it briefly rose into the top 10 of all US businesses in value. While such growth was not the original goal or selling point of deregulation—lower prices, and greater innovation were—it was taken after the fact as proof that de-regulation worked miracles, despite the fact that consumer prices have increased, rather than fallen.

A number of civil suits promise some measure of justice—a $6.6 billion civil settlement for shareholders involving three banks was announced the same day.

“They [the banks] should now be indicted. They're co-conspirators with Lay,” said investigative reporter Greg Palast on KPFK’s Democracy Now, the next day. “But in fact they were let off the hook.”

Ratepayers have fared significantly worse than shareholders, and will continue doing so, Finkelstein noted, “While Lay is locked up in prison, consumers will continue to be locked into the higher rates that are the direct result of his crimes," he said.

Fraudulent trading schemes with names like “Get Shorty” and “Death Star” were used to create and take profits from artificial shortages, driving energy prices up to $1400 per killowatt during California’s phony energy shortage in 2000-2001. (As the documentary Enron: The Smartest Guys in the Room explains, Enron first employed fraudulent trading schemes within two years of its founding in July 1985, when two “rouge employees” who initiated the practice were allowed to stay on, rather than being fired, because Lay insisted they were making too much money for Enron.) Long-term contracts signed later to “solve” the crisis then locked in rates significantly above pre-crisis levels.

Last July, California Attorney General Bill Lockyer signed a $1.52 billion settlement on behalf of California ratepayers. “But only $47.5 million of the settlement is guaranteed,” the San Jose Mercury News noted at the time, “and as little as $200 million of the remainder may be paid because of the way the company's assets are structured by a federal bankruptcy court in New York.”

In contrast, Finkelstein estimates that Enron and other energy-trading companies cost California somewhere between $30 and $40 billion. This is down considerably from earlier estimates, after some high-priced long-term contracts were re-negotiated, but still far beyond the relative pittance that’s been won back in lawsuits.

The Al Capone of Electricity

Lay, known affectionately as “Kenny Boy” by his longtime friend George Bush, was convicted on

six counts of fraud and conspiracy and four counts of bank fraud in a separate non-jury trial. .Skilling was convicted of 18 counts of fraud and conspiracy and one count of insider trading, while being acquitted on nine counts of insider trading. Lay faces a maximum of 165 years in prison, Skilling, 185.

In reality, "They're both facing 20-plus years," said Kirby Behre, a former federal prosecutor in Washington who wrote the government's white-collar sentencing guide. "You do 20 years, and that's entirely conceivable, you're looking at life. And people don't age well in prison.

Still, Palast was not impressed. “This is the Al Capone of electricity, Ken Lay, and like Al Capone, who got convicted of not filing his taxes -- after machine gunning people, right? --here Ken Lay, who is really the master financial criminal of the late 20th century, part of a crew, part of a mob, he's only sent up the river for very limited charges,” Palast said.

Others may use less colorful language, but make the same points.

Charlie Cray, Director of the Center for Corporate Policy, also cited the lack of prosecution of “lawyers, bankers, and accountants” associated with Enron. Bush Administration prosecutors, “let the aiders and abetters of the hook,” Cray said. “We can see these folks as gatekeeper in a market system,” he explained, but they failed to do their jobs. Cray attributed this partly to “tort reform” which has made it harder for investors to hold corporate officers—and those they work with—accountable.

Reversing such “reforms” was one of four “particular solutions” Cray cited in dealing with the Enron debacle, and preventing future recurrences.

Reversing de-regulation topped the list, “in terms of energy and banking in particular.” In additional to loosening procedures, he pointed to “the eradication of structural restraints on cross-sector ties, which allowed companies to get out of their core areas of competence.” Second was dealing with the problem of corporate governance, “that shareholders don’t have much say at all,” including the issue of executive compensation, “the fact that in many cases pay is not linked at all with performance.”

A 2002 study, however, did find that pay was linked with corporate malfeasance. "Executive Excess 2002,” by United for a Fair Economy and the Institute for Policy Studies found that CEOs of 23 large companies under investigation earned an average of $62 million from 1999 to 2001—70 percent above the average of $36 million for all CEOs in Business Week’s annual executive pay survey.

Cray’s third item was tort reform, and fourth was reversing “the gutting of, or not maintaining enforcement budgets, personnel and impetus” especially for rapidly expanding markets.

But beyond these specific problems requiring reform, “The deeper thing is the fundamental equation of corporate power with that of the political system,” Cray said. “There’s no space for bringing these kinds of reforms to the Hill or elsewhere.”

Public financing of elections, bubbling up from the state and local levels, are part of addressing the larger problem. So, too, is regaining the sense of government responsibility to protect the common good.

“There’s a long-term rightwing attack on government [that] has lots of consequences that extends far beyond the market,” he said, alluding to Hurricane Katrina as a vivid reminder of how a crippled government response devastates people’s lives. To reverse that trend it’s important for people to “see themselves as citizens, rather than just as consumers or investors.” Corporate crime is a real threat to our country, he noted. “It’s astonishing. It far outweighs crime in the streets.”

A Political Scandal

Since its creation during Reagan’s second term, Enron has participated in the growing clout of corporate power, punching beyond its weight by strategically spending money on politics, both directly, and via its employees, topped by Ken Lay himself.

From 1992 to 2000, Enron contributed to both major party presidential candidates—almost a quarter million dollars, but gave nine times as much to Republicans ($222,450) as to Democrats ($24,750), with the lion’s share going to Bush, Jr ($113,800) and Dole ($95,650). But Enron gave Bush much more than that—$736,800 total, including $312,500 for his two campaigns for Texas governor, $300,000 for his Presidential Inaugural, and $10,500 for the Florida recount fight.

Until its collapse in October 2001, Enron was easily Bush’s biggest donor. Yet, Bush easily distanced himself from the scandal, a few short weeks after 9/11, labeling it “a business scandal, not a political scandal.” This despite the fact that (1) Bush’s top advisor, Karl Rove (aka “Bush’s Brain”) held $250,000 in Enron stocks before selling them in June 2001. (2) Enron executives, advisors, lawyers and lobbyists were appointed to dozens of posts within the Bush Administration, including Secretary of the Army Thomas White. (3) Lay had actually hand-picked three members of the Federal Energy Regulatory Commission (FERC), the body charged with regulating Enron’s primary business. (4) A May 2002 report "Bush Administration Contacts with Enron," found a minimum of 112 contacts between the Administration and Enron in 2001. [Points 1-3… where did this information come from?]

If the media was reluctant to scrutinize Bush so soon after 9/11, another factor muted the criticism: the sheer extent of how political it really was. In Congressional races, Enron was more even-handed, which came in handy for muting Democratic criticism of Bush’s Enron ties. From 1989 to 2001, Enron and its employees had contributed almost $6 million to federal candidates, favoring Republicans almost 3-1, but still gave Democrats $1.5 million—including 29 Senators (averaging $3,811) and 71 House members (averaging $3,622), easily enough to embarrass them. Enron also spent almost $9 million in lobbying Congress from 1997 to 2001, further muting criticism among Beltway insiders.[according to what?]

Enron was also involved at the state level, as well as in overseas deregulation, and played a role in selling energy deregulation in California in the mid-1990s, though not as much as it spent in Texas. Two other forces were paramount in California—large energy customers who wanted out of buying from utilities, and large utilities who wanted bailouts for nuclear plants that cost far more than promised, whose energy was prohibitively expensive as a result. The Center for Public Integrity estimated that three major utilities spent $69 million from 1994 to 2000 on lobbying and campaign contributions, netting a deal that guaranteed $28.5 billion of ratepayer money for paying off their bad investments in nuclear power—a return of 413 to 1.

But it didn’t take long after the law went into effect in 1998 for Enron and other energy traders to join the gravy train, extracting enormous profits while producing no tangible benefits. Within two years, they would be producing enormous harm, even forcing the utilities into bankruptcy.

Gray Davis, who became governor in 1998, had no significant involvement in energy deregulation, but as a “business-friendly” centrist who raised record amounts from corporate donors, he was psychologically, ideologically and politically ill-prepared for swift, sweeping action as the manufactured energy crisis that began in San Diego went statewide in 2000. By December 15, spot energy prices reached $1400 per megawatt, compared to $45 per megawatt average one year earlier.

Davis is convinced the crisis cost him his job. "There's no question," he said. "I was at 62 percent in the polls in February 2001, and by late fall I was in the 40s." Through shrewd campaigning, he won re-election in 2002, but the state’s continuing economic woes—made worse by Republicans legislators’ refusal to compromise on the budget—left him vulnerable to an unprecedented well-financed recall campaign.

On May 17, 2001, just 10 days after two consecutive days of rolling blackouts, Arnold Schwarzenegger was one of 11 people meeting with Ken Lay at the Peninsula Beverly Hills hotel, a meeting intended to gain business community support for Enron's "comprehensive solution" to the energy crisis. The San Francisco Chronicle reported, “His prescription called for more rate increases, an end to state and federal investigations and less rather than more regulation.”

Not surprisingly, when Schwarzenegger replaced Davis, confrontation gave way to “positive” talk, a series of sweetheart deals, and further deregulation plans.

Even Democratic legislators seem to have learned nothing, FTCR’s Doug Heller points out. “Look at this 70-0 vote to pass cable deregulation,” he said, referring to a June 1 vote in the assembly. “You’ve got the working assumption in Sacramento, without skeptic and without critic, that deregulation lowers rates. And that was the same exact mentality in Sacramento in 1996, when energy deregulation was passed.”

“Enron exposed the dark side of American corporate business ideology, and that’s the real lesson of Enron,” Charlie Cray concluded. But it’s a lesson the politicians have yet to learn.