Enron Trader Tapes Available on the Internet Audio tapes that show how Enron executives manipulated the energy market and drove up prices won't be allowed in the ongoing trial of former Enron executives Kenneth Lay and Jeffery Skilling -- but they're already available on the Web, thanks to a previous lawsuit.
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Enron Trader Tapes Available on the Internet

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Enron Trader Tapes Available on the Internet

Enron Trader Tapes Available on the Internet

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ALEX CHADWICK, host:

As difficult as the Enron trial may be for Ken Lay and Jeffrey Skilling, at least they've won this ruling. Prosecutors cannot use recorded telephone conversations between various Enron traders from before the company's downfall. The trial judge said this week that because the defendants are not specifically charged with illegal trading and market manipulation in California, these tapes are not evidence. The jury won't hear them. But you can.

Unidentified Men: So the rumor's true, they're [expletive] taking all the money back from you guys? All that money you guys stole from those poor grandmothers in California? Yeah, Grandma Millie, man. Look, she's the one that couldn't figure out how to [expletive] vote on the butterfly ballot. Yeah, now she wants her [expletive] money back for all the power you've charged her, jammed right up her [expletives] for $250 a megawatt hour.

CHADWICK: That's a pair of Enron traders recorded five years ago. These tapes so represent the arrogance Enron is charged with. We thought they're worth hearing again, and we wanted to recall the story of how they became public. So we called Eric Christiansen. He's assistant general counsel to the Snohomish County Public Utilities District in Washington state.

Eric Christiansen, tell us, how is it that these tapes exist? Where did they come from?

Mr. ERIC CHRISTIANSEN (Assistant general counsel, Snohomish County Public Utilities District): Well, the tapes are routinely recorded by energy traders, the reason being that the electricity system has to be balanced from moment to moment so that you have the same amount of power going out as coming in, so these transactions are recorded very rapidly sometimes, and if there's a dispute later, then the companies go back and look at the tapes to find out what the transaction was actually intended to be.

CHADWICK: Do you know in the course of your research into this how common it would be for a company to go back and check these tapes? Is this something that happens once a month or once a year or almost never, or what?

Mr. CHRISTIANSEN: No, it's fairly common when there's a billing question or something like that. As far as I know, this is the first time that the tapes have been reviewed for periods of time consisting of several weeks or months and with the eye toward establishing broader wrongdoing on the part of the traders.

CHADWICK: When you listened to the tapes, when you first listened to them...

Mr. CHRISTIANSEN: Yes.

CHADWICK: Or read the transcripts, were you surprised? I mean, you already thought that Enron was doing wrong. I mean, you had reason to think there might be something there that would help you.

Mr. CHRISTIANSEN: Yes. I was surprised at the level of callousness and the - I guess they were so convinced that no one would ever figure out these complex schemes they were engaged in that they just didn't worry about being recorded in many cases. We expected that we would find evidence of these schemes that they were operating to milk the California and the West Coast power systems for money. I think we were quite surprised to find where they were discussing how they were stealing money from California, bragging about making money when there's a wildfire knocking out power lines and things like that.

CHADWICK: Here's one. Here's a trader by the name of Timothy Belden...

CHRISTIANSEN: Yes.

CHADWICK: Talking about what they are defrauding California for every day.

Mr. TIMOTHY BELDEN (former Enron trader) and Unidentified Man: He steals money from California to the tune of about a million...

Unidentified Man: Can you rephrase that?

Mr. Christiansen: Okay, he, um, he, he arbitrages the California market to the tune of a million bucks or two a day.

CHADWICK: Who's he talking to there?

CHRISTIANSEN: I believe he is talking to one of his higher-ups down in Houston. They have sort of routine calls where they try to resolve accounting matters, which get to be a little bit fuzzy when a lot of the money you're making comes from...

CHADWICK: Fraud.

Mr. CHRISTIANSEN: Non-routine transactions to say the least, yes. So this is in the midst of a discussion about how much money they should record as immediate profits and how much money they should defer. Which itself is a pretty shady accounting transaction.

CHADWICK: You work for a County Public Utilities District. You're a lawyer for them. How is it that you got this out and made it public? It didn't become public through the efforts of the FBI or the State of Washington, or the State of California, or Oregon, but just little County Public Utilities District.

Mr. CHRISTIANSEN: Yeah I think...

CHADWICK: I mean not to demean you or anything but...

Mr. CHRISTIANSEN: It's, I think it's pretty remarkable that much of the investigative work of what actually happened at Enron has had to be carried out by the victims of Enron, among them us, rather than by the Federal Regulators who basically turned their back on the West Coast for over a year while our economy was burning down and you know California was going through rolling blackouts, and the economy here in the North West was losing hundreds of thousands of jobs.

I think it's partly a consequence of the circumstance that we find ourselves in, although already having been once victimized by Enron they're still seeking more money from us and so as a defense to that we've basically pulled out all the stops, including trying to find all the evidence that others may have overlooked.

CHADWICK: When you say they're still trying to get more money out of you...

Mr. CHRISTIANSEN: Yes.

CHADWICK: Enron alleges that it is owed some money; entities like the Snohomish County Public Utilities District haven't paid up on.

Mr. CHRISTIANSEN: Right and we now know that they lied to us at the formation of the contract and you know black letter contract law that we shouldn't have to pay. Unfortunately we haven't been able to get to the point in litigation where we've been able to prove up on that claim but we think it's pretty much an open and shut case if we ever get to that point.

But the rate payers in this county that we represent, they've been a hundred percent behind us in doing whatever it takes to get out all the facts and to make sure that we don't pay any more money to what is really the most corrupt organization in the history of our industry, if not in the history of American capitalism.

CHADWICK: The most corrupt organization in the history of American capitalism, that would be quite a distinction don't you think?

Mr. CHRISTIANSEN: Yes. But one that I think the facts would justify. You know I think that's partly, can be laid to the feet of a political failure and a failure of regulation. But also I think it says a lot about the internal corporate culture at Enron so there were great incentives for people like Belden to come up with ways to make money by hook or by crook and people that did that were rewarded with fat bonuses. Belden for example got a five million dollar bonus one year.

CHADWICK: Eric Christiansen is Assistant General Counsel to the Snohomish County Public Utilities District in Washington State. Eric, thank you.

Mr. CHRISTIANSEN: Thank you.

CHADWICK: And this note, Timothy Belden and two other former Enron traders have already pleaded guilty to charges of fraud and are now awaiting sentencing. Mr. Belden is on the witness list for the current Enron trial. Other more junior Enron traders who were not indicted continue to work in the energy trading business.

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