Before it went belly-up, Enron gained favorable treatments by lobbying Congress, federal and state governments, and various regulatory agencies. Little gifts that included the removal of price controls on natural gas, allowing certain types of debt off the book, and blocking government regulations on its derivatives trading.
Now a new study has found that fraudulent firms spend more on lobbying, and use their connections to avoid getting caught.
The study, Corporate lobbying and fraud detection by the University of Minnesota's Frank Yu and indiana university's Xiaoyun Yu, found that fraudulent firms spent 77 per cent more on lobbying than clean companies, 29 per cent more during their fraud periods. On average, they were able to evade detection 113 days longer than companies that didn't lobby. The academics calculate the delay is worth $40.75 million.
Enron, of course, was the most perverse example of buying influence and protection. As John Dean, Richard Nixon's former counsel wrote in this piece more than five years ago, it was a sound investment:
"Notwithstanding protestations to the contrary, American businessmen don't make large political contributions because they love their country. Rather they are investments, on which they want a return," Dean writes."Enron's contributions may have help slow detection of its troubles, and helped the company fly under the radar for as long as was possible given what now appear to be some egregious accounting and business practices."
It is not the clean and honest people who need to play with the law rather cheats and frauds. This is why in many countries the gangsters and drug dealers are entering into politics so that they can clear their way out.