Many Californians remember with distaste the corrupt Texas energy company Enron, which in 2000 masterminded California energy shortages and blackouts, and shut down pipelines to manipulate the energy market. Now, a former Enron trader who reaped hundreds of millions of dollars working for Enron has at last been revealed as the out-of-state billionaire who is funding efforts to dismantle public pensions in California.
A Sacramento group called Californians for Fiscal Reform (CFFR), headed by Marcia Fritz, has garnered attention with slick but fundamentally flawed reports on California pension systems. Fritz has steadfastly refused, until now, to say who was funding her attacks on public pensions. Now, on the eve of yet another report attacking public pensions, she has revealed her group’s secret benefactor: former Enron trader John D. Arnold, a billionaire Texas resident with no connection to California.
During 2000’s rolling blackouts, Enron CEO Ken Lay boasted to California regulators that his “smart guys” would beat any attempt to stop Enron’s manipulation of the California energy market. After Enron’s collapse, John Arnold used the millions he made there to start a hedge fund trading in natural gas. But his trading business may soon be curbed: just last month, the U.S. Commodity Futures Trading Commission imposed new rules on large traders of natural gas out of concerns that speculation in that market rewarded only traders while costing consumers and businesses billions.
Enron was at its core a complete fraud, a company that made millions for itself and its employees through sustained, deliberate and carefully planned accounting fraud. It’s no surprise then, that a “pension reform” group bankrolled by a former Enron trader would gin up reports and use outdated, skewed data to attack public pensions. And the fact that these reports are authored by the man who worked as director of finance for former Governor Arnold Schwarzenegger doesn’t help the group’s credibility.
Considering the Enron connection, we’re also not surprised by the belief by some that CFFR, registered as a 501(c) (3) group, is coming close to violating government restrictions on political activities.
John Arnold himself has refused to comment on his involvement, other than to have a representative say that Arnold’s intrusion into California is just the beginning of his efforts to change public pension systems nationwide. But if Mr. Arnold, through his efforts, insists on affecting the lives of millions of Americans, the least he could do is saunter out from behind the gates of his 20,000-square-foot Houston mansion and explain his reasons to all the “little people.”
