The Enron Scandal is casting a long shadow across the land. As the top media story drives other worthy topics off the agenda for public policy consideration, virtually nothing is immune from the "Enron insight" or the "Enron angle". Recently at a high-powered breakfast chaired by former ag secretary Clayton Yeutter the topic was the stalemated farm legislation -- but Enron was lurking. Lobbyist conversation turned to the latest twist in the collapse of the Houston energy trading firm, which rose from obscurity to become the 7th largest US corporation last year.
Policymakers are running scared and trying to distance themselves from the Enron "taint" but it runs deep. And there are rumblings of another imminent meltdown among the corporate high flyers: Archer Daniels Midland (ADM) the Supermarkup to the World. Still controlled as a family fiefdom, ADM has outraged huge state pension funds in Florida and California which hold millions of shares of the company's stock, by failing to provide transparency in accounting during the long, drawn out pricefixing scandal. ADM stock prices nosedived from the mid 20s into the single digits, missing the entire bull market, while unseen millions were spent to mount an enormous legal counterattack which aimed at stalling the government investigation and maintaining ADM's contracts with USDA (even after a guilty plea).
These contracts including Food for Peace, school lunches and other programs were maintained -- along with a campaign contribution greased subsidy for a fuel additive called "ethanol". worth hundreds of millions to ADM. Coupled with the sugar subsidy which props up a phoney market for high fructose corn syrup -- another major ADM product, the inquiring mind wonders if ADM could survive without massive government subsidy -- which is rather entangled with the larger farm subsidy issue currently before Congress. The answer on the street is "NO".
As the current debate over farm policy makes clear -- ADM and its phalanx of controlled ag groups, such as the corn and soybean growers associations, farm bureau and others, DO NOT want to break the subsidy-riddled status quo -- even as smaller farmers and many others realize the current programs are dysfunctional and unsustainable. These groups have managed to infuriate the administration and the farmers by appearing opportunistic and greedy while other Americans were willing to tighten their belts. The White House now recognizes that behind the facade of phoney ag association managers pressing for more subsidy -- is the Ethanol King himself. Yep, the same miserable Pied Piper, who has practically single-handedly led American agriculture over the cliff, while enriching himself and family with grotesque offshore bonuses only slightly less generous than the "campaign finance" he doles out to both sides of the political spectrum.
No one wants another tragedy to engulf the country like Enron -- but no one has really wanted to look into ADM either. When the pricefixing scandal first broke in mid-1995, the Department of Justice started an investigation into multiple fraud evidence (on tape) and allegations, but this soon dissolved under political pressure into a bizarre, laser-beamed criminal takedown of the government's primary informant. Key higher-ups, such as Dwayne Andreas, received immunity as part of a $100 million plea agreement/fine. The public is watching Ken Lay now, but the real question may be which motorboat makes it to the Cayman Islands, or Cuba first.
If Enron's corrupting senior management had been confronted earlier -- even by a few braver accountants -- perhaps much of this fiasco could have been avoided. But perhaps not when you look at all those phoney subsidiaries. In ADM's case it might be less complicated -- and, maybe this administration will take a "big stick" to the management in Decatur. Thus averting a crisis while helping the farmer. Timing seems propitious, but action will be needed soon to avert an "Enron in agriculture."
Nicholas E. Hollis is president of the Agribusiness Council. See www.agribusinesscouncil.org or email email@example.com.