Enron Verdict

A big story today is the guilty verdict on Enron executives Kenneth Lay and Jeffrey Skilling. There are many interesting issues involved in this, but the one that I wish to draw to attention of readers here is that Lay and Skilling were not found guilty of stealing money or looting the treasury, but of dishonesty and withholding the truth.

For example, see this summary of the prosecutor’s closing argument:

But all the talk from lawyers ended Wednesday morning at 10:35, when prosecutor Sean Berkowitz summed up the government’s case against the defendants with a simple maneuver.

Berkowitz pulled out a large poster, which he displayed on an easel. On the one side, in big, capital letters, was the word, "TRUTH," and on the other, "LIES." After all the intricately detailed testimony that came before the jury about "dirty hedges," "goodwill write-downs," "monetizations" and "dark fiber sales," the black-and-white chart boiled it down to those two words.

"These men lied," he declared. "They withheld the truth.
They put themselves ahead of the investors. I’m asking you to send them a message, that it’s not all right. You can’t buy justice. You have to earn it."

The people who bought Enron’s stock, Berkowitz said, "weren’t entitled to much, but they were entitled to honesty." After he finished, deliberations began.

It looks like the sentences are going to be stiff.

"But even if they are convicted of just one count each, their sentences are sure to be stiff. Judge Lake, for one, has already shown that he takes corporate fraud seriously.

He sentenced Jamie Olis, a former vice president of finance at Dynegy Inc., to 24 years in prison for his role in a $300 million accounting scam at the Houston energy firm.

Last year, the Fifth US Circuit Court of Appeals in New Orleans threw out the sentence, but upheld the fraud conviction. Lake has not yet resentenced Mr. Olis.

"These men [Lay and Skilling] are going to be in jail for decades if convicted," says Mr. Zamansky.

There is some very interesting blog commentary on the Enron here/

In this case, the verdicts are going to be appealed. Lay and Skilling did not necessarily do the actual fraudulent calculations themselves. Andrew Fastow has already been convicted as the main architect of the fraudulent calculations. The question for Lay and Skilling is whether they remained "deliberately ignorant".

The relationship of the frauds at the heart of the present charges to the Enron collapse is interesting and I don’t think that it is well understood. The frauds in the present charges are a series of limited partnerships that were concocted to disguise writeoffs. But the losses in these limited partnerships were not what caused the collapse of Enron. The losses in these limited partnerships were a very small fraction of the total writeoffs involved in Enron. Had all these limited partnerships made good, the Enron collapse would have been delayed only a little while. The real problem with Enron is that they made a lot of crappy investments with minimal due diligence. But Lay and Skilling were not charged with making lousy investments. They were charged in connection with things that probably constituted less than 5% of the total collapse in monetary terms, if that.

But while the direct impact of the frauds on the balance sheet was (I think) not the direct cause of the collapse, the leverage was fantastic as the frauds made Enron look profitable, which was essential for it to keep raising money. If they had reported even a slight loss at any time, the wheels would have fallen off the money raising, people would have asked questions. So they avoided taking writeofs, developed ever more fantastic methods of parking non-performing assets , just to get knife-edge profits. Even slight profits were enough to satisfy the "consensus" of investors that this was one terrific company. In fact, by "consensus", in 2000, Enron was voted the best-managed firm in the U.S. and convicted felon Andrew Fastow was the "consensus" financial executive of the year.

In Eichenwald’s terrific book on Enron, the first person credited with noticing the problems was a short seller, who really came out of left field. He simply noticed what was, in effect, a statistical anomaly – the profits were miniscule relative to the capital employed and they always came out fractionally positive. When you had large fluxes in and out, it didn’t make sense that the knife edge always came out just positive. He wondered what accounting decisions had been made. I think like a short seller. Whenever I see knife edge balances, like the knife edge balance by which the net index from modern proxies comes out a hair warmer than the index from medieval proxies in many multiproxy studies, I wonder what accounting decisions were made. You can dress it up in statistical language, but civilians can think of the issues as being accounting decisions. Sometimes you need to look at more than one thing. Andrew Fastow did.

I often talk here about the need for full, true and plain disclosure. I don’t say this out of any belief that businessmen are more honest than academics. I don’t think that at all. All I’m saying is that breaches of the obligation of full, true and plain disclosure are serious and people are being sent to jail for breaching these obligations. Maybe not enough. Withholding the truth, as noted above, is a form of criminal dishonesty just as much as overt lying and was clearly involved in the charges against these two Enron executives. Codes of academic conduct have fairly similar obligations and the omission of adverse results can amount to misconduct, in much the same way that withholding truth from investors can amount to fraud.

89 Comments

  1. Steve Sadlov
    Posted May 26, 2006 at 10:31 AM | Permalink | Reply

    Indeed, the knife edge anology is pertinent. If slightly “corrected” each of the many small things used to create the Hockey Stick would add up to something quite a bit different. In fact, in the extreme, they would add up to a future scenario, utterly opposite from, but nevertheless just as frightening as, a “global warming tipping point.” All the efforts going into planning for increased sea levels, ice free areas, and northern movement of biomes for naught, while the snows spread, the ice increases, and the continental ice fronts break out from their current constraints.

  2. Charles
    Posted May 26, 2006 at 10:55 AM | Permalink | Reply

    Well said.

  3. Doug L
    Posted May 26, 2006 at 11:20 AM | Permalink | Reply

    ABC reports: Prosecution: Lay Testimony Helped Our Case

    “John Hueston, the prosecutor who cross-examined Lay, Enron’s founder, on the witness stand, says that Lay’s testimony in which he “played the blame game” may have cost him the case. ”

    “I think when a defendant takes the stand, the outcome then is in their hands,” Hueston said. “And in those first few hours of cross-examination, that’s when the credibility is truly at stake. I felt then was the time for us to make our case, to put it forward and that’s when the credibility of Ken Lay folded. ”

    http://abcnews.go.com/GMA/LegalCenter/story?id=2007526&page=1

  4. Francois Ouellette
    Posted May 26, 2006 at 11:20 AM | Permalink | Reply

    Steve,

    As far as I know, and I could be wrong, there are no laws against scientific fraud. In other words, someone who is publishing a fraudulous scientific paper cannot be charged with any crime (at least in the US and Canada). Therefore, while there are no incentives NOT to publish false results, apart from losing your reputation if you’re caught, there are a lot of incentives to just do it. The peer review system just doesn’t work: the recent stem cell fraud, as well as Jon Hendrick Shon’s fraud at Bell Labs, and a number of others clearly demonstrate that journals like Nature and Science, not to mention the myriad other scientific journals, are ineffective at weeding out the fraudulous papers. Even plainly incorrect papers, as MBH98 appears to be, get a free pass.

    Yet most scientists support the peer review system as it is, but I’ve come to the conclusion that the system serves everybody well but not for the right reasons. A peer-reviewed paper has this aura of scientific credibility which keeps those who publish on their pedestal with respect to mere mortals (e.g. recent comments by Carl C.). Secondly, the journals also have this aura of credibility which means that they keep being purchased by academics and libraries around the world. Scientific publishing is a huge industry. Finally, grant agencies love the system because it gives them some kind of objective measurement of scientific quality (that the measurement does not make sense is irrelevant).

    So in the end, I compare scientists who publish fraudulous, or just manipulated results to wedding crashers. A wedding reception is a fun event, with lots of free food and free booze, but you just don’t let everybody in. However, if you dress properly, and are friendly to everyone, nobody will notice that you were uninvited. Peer review is just that: your paper has to be properly dressed, and you must be friendly to the community. And that’s true of any kind of fraud, Enron included: it has to LOOK good.

    That we should rely on peer reviewed papers for public policy is a very risky thing to do, and I think that’s the main point of your blog. If public policy is heavily influenced by, say, the MBH98 paper, and it turns out to be false, even if not fraudulous, but it has passed peer review by sheer complacency within the scientific community, then we are in big trouble.

    So in the end, a process like the IPCC reports should include a thorough auditing of the research by independent parties, much the same way that financial results are audited externally.

  5. Reid
    Posted May 26, 2006 at 11:40 AM | Permalink | Reply

    Most people are unaware that Enron was the biggest corporate backer of the Kyoto Treaty in the US. Enron stood to reap billions from carbon credit trading and their main gas business would also get a boost. Ken Lay personally lobbies Bush on many occassions to no avail.

  6. Steve McIntyre
    Posted May 26, 2006 at 11:44 AM | Permalink | Reply

    #4. Francois, here’s a link discussing a case where an academic researcher was charged criminally with fraud.

  7. ET SidViscous
    Posted May 26, 2006 at 11:48 AM | Permalink | Reply

    “In other words, someone who is publishing a fraudulous scientific paper cannot be charged with any crime (at least in the US and Canada).”

    I think it would depend on whether or not the paper defrauded someone/thing out of money, but the link would be tenuous and a complicated court case.

    But it should be noted that Hwang http://www.theregister.co.uk/2006/05/12/hwang_charges/ is facing charges. Interesting, the charges are on embezzlement and ethics. So it might be possible to press charges here. If one paper is used to procure more funding, then the case could be made (in fact I think the case could be made for fraud as well). Though I don’t think there are any ethics laws here (or in Canada).

    But all of it is pretty irrelevant. So much as we would like to think that we are a nation/s of laws, the reality is that we are a nation/s of politics. To prosecute such a thing would take governmental will to do so, which is unlikely to happen in the short term. Probably less likely in the long term. Had it not been such a political issue, had it not received so much world wide press, I don’t think Hwang would be up on charges, just had his funding pulled.

    What is the phrase. “Live by the sword, die by the sword.”

    While I think Enron is definitely guilty, I think the stiff sentences are more political than legal. Not that they aren’t deserved.

  8. Steve McIntyre
    Posted May 26, 2006 at 11:50 AM | Permalink | Reply

    #5. I saved a copy of Enron’s position paper on trading a few years ago. I’ll have to look for it and I’ll post it up in a few days. I try to stay away from policy discussions, but I’m probably one of the few people here whose actually done some international trading business, and I can think of lots of reasons why trading in ephemeral carbon credits is a lousy policy if we’ve got a real climate crisis on our hands. On the other hand, think of the splash in terms of commissions if there were billions of dollars of trading. No wonder lobbyists love Kyoto.

  9. ET SidViscous
    Posted May 26, 2006 at 12:01 PM | Permalink | Reply

    think of the splash in terms of power if there were billions of dollars of trading.

    There has been some discusion on the political pressuring on Russia in reference to this.

    * political not electrical

  10. Steve Sadlov
    Posted May 26, 2006 at 12:21 PM | Permalink | Reply

    On the topic of carbon credit trading and the overarching seeming broad “consensus” even amongst many corporate leaders, of AGW: Any time you see something which seems to have seized popular culture as well as corporate PR and which has vast implications in terms of public policy and the economy, be immediately suspicious. As noted, the money flows alone, which may result, provide the motive for the crime. Skimming just a slim fraction of a large volume can reap huge personal wealth for those doing the skimming. In this whole area of reputed AGW, reputed “Peak Oil” and general resurgence of Malthusian thought, with the resultant perceived commodity strictures and run ups, the opportunities for the unscrupulous to play on the herd mentality, emotional investing and the fear factor are immense. Look at all the funny money that’s been made of late in these regards. The words “irrational exuberance” come to mind.

  11. Stewart
    Posted May 26, 2006 at 1:12 PM | Permalink | Reply

    Last night on the news they featured an elderly man who had retired from his job at an Enron-owned power company with $1.3Million of Enron stock, now gone. He is living on Social Security now. I think the blame here is about 80% on the executives who promoted employee ownership of the stock without explaining that given their highly leveraged investments, Enron was a very, very risky stock to own. And if it was 100% of your investment portfolio, you were dangerously exposed. The elderly man had worked for the power company for thirty years, since long before Enron existed. He had a credible right to expect that his company was not that risky. But he still bears a small part of the blame for not diversifying.

    I think the sins of Lay, Skilling and others were committed both before and after the company started losing money. The crash would have occurred regardless of the accounting fraud. And remember, if Lay had been honest and warned employees that Enron was in trouble, the stock would still have crashed and the employees would perhaps have lost just as much.

  12. ET SidViscous
    Posted May 26, 2006 at 1:55 PM | Permalink | Reply

    “Public policy is being made in California based on the IPCC Reports”

    But your spreading the link further when you look at it like that. And so far as I know there is no recourse for a citizen to sue based upon a law. In legal eyes, if Cali makes a law, regardless of the basis for that law, it’s law and becomes kind of true. Therefore you couldn’t sue, Obviously you could on a civil level. But regardless, good luck with that. First getting people from ceral land to sign up, and b, getting a Cali Judge or Jury to side with your case. They’d likely run you out of the state or burn you at the stake.

  13. miniTAX
    Posted May 26, 2006 at 1:59 PM | Permalink | Reply

    Yes, Enron is a good parallel with the hockey stick.
    Same tools, same goal.Obsfucation and facts hiding for bogus results.

    No direct money is lost with GW, only the credibility of the authors and as bonus the credibility of the science.

  14. ET SidViscous
    Posted May 26, 2006 at 2:01 PM | Permalink | Reply

    #12

    I have a friend who has all of his investments in the company he works for. It is probably the single biggest mistake you can make from a financial perspective. Company sees bad times, you could loose your job AND your investments. In fact the company has seen bad times, and his portfolio has taken a beating. He has purchased I don’t know how much stock in the mid $60s, currently trading at $4.40. Sadly he thinks buying the stock is a sign of loyalty to the company.

    If you need any further proof, just look at long time employees of Kodak, of which I know more than a few. Employees of Kodak had no reason to suspect their company was a risky investment. Then digital cameras came along.

  15. Bruce
    Posted May 26, 2006 at 2:32 PM | Permalink | Reply

    Wikipedia says “In the broadest sense, a fraud is a deception made for personal gain, although it has a more specific legal meaning, the exact details varying between jurisdictions. Many hoaxes are fraudulent, although those not made for personal gain are not best described in this way. Not all frauds are hoaxes – electoral fraud, for example. Fraud permeates many areas of life, including art, archaeology and science. In the broad legal sense a fraud is any crime or civil wrong for gain that utilises some deception practiced on the victim as its principal method.”

    I think that it is arguable that those in climate science who knowingly mislead and misrepresent information with a view to scaring the public, knowing that a concerned public creates an environment where governments will make grant funds available for further research and investigations, are guilty of fraud.

    It is self-evident that the AGW issue has led to a situation where governments all over the world have made funds available for climate science, when the fact is that if the AGW issue hadn’t arisen, there is no way that those funds would have been made available.

    The work of Steve McIntyre, Ross McKitrick, Ian Castles, David Henderson and many others who have had the courage to say that the emperor has no clothes, has shown that much of the “science” that supports the AGW hypothesis is faulty, flawed, of poor quality, and not consistent with sound practice in relevant areas such as statistics.

    Whether or not poor quality climate science is fraud or not would appear to depend on whether the proponents knowingly misrepresented the situation, and whether they did so for personal gain. Stephen Schneider’s oft quoted comment is interesting in this context.

    “On the one hand, as scientists we are ethically bound to the scientific method, in effect promising to tell the truth, the whole truth, and nothing but – which means that we must include all the doubts, the caveats, the ifs, ands, and buts. On the other hand, we are not just scientists but human beings as well. And like most people we’d like to see the world a better place, which in this context translates into our working to reduce the risk of potentially disastrous climatic change. To do that we need [Scientists should consider stretching the truth] to get some broadbased support, to capture the public’s imagination. That, of course, entails getting loads of media coverage. So we have to offer up scary scenarios, make simplified, dramatic statements, and make little mention of any doubts we might have. This ‘double ethical bind’ we frequently find ourselves in cannot be solved by any formula. Each of us has to decide what the right balance is between being effective and being honest. I hope that means being both.” (Note: I understand this to be the full quote from:http://home.att.net/~rpuchalsky/sci_env/sch_quote.html, where Stephen Schneider explains the context of the statement he made)

    Does that amount to an admission of fraud? It would be interesting to see that issue argued in a court of law. What it would presumably hang on is whether the proponents knowingly misled, and if they did so, was it for personal gain. Whether or not it is fraud, it is certainly unethical, and very likely to breach the ethical codes of the organisations that the scientists belong to.

    My impression is that the climate scientists and their cheerleaders are not engaging in fraud in the strictest terms. It seems clear that these people are truly terrified of the awful consequences for humanity if the AGW hypothesis does prove true, and they are engaging in behaviour designed to warn the world’s population that something has to be done if we are to avoid those awful consequences. They appear to be operating from a belief system that has them convinced that they are “right”, and that people questioning their statements are “deniers” who are sentencing the human population to their terrible fate. It would therefore be arguable that they are not knowingly misleading us, and are therefore not guilty of fraud. It would seem clear though, that they do gain personally through continued access to grant funds, employment etc etc.

    Many of the climate scientists and their cheerleaders have harshly criticised the work of those questioning them. However, it is clear that the questioning is both justified and required. Let us accept the most generous interpretation that the climate scientists are motivated by their genuine concerns and high ideals. It is no less the case that their aim is to influence the way that public funds are disbursed, and to date they have been very effective in securing funds, when it is clear that if they hadn’t adopted the positions that they have adopted, the funds wouldn’t be available. Under these circumstances, as Steve points out, it is reasonable that those providing the funds (in the end We The People) question the statements made to ensure that they are true plain and fair.

    The parallels to the commercial world are actually very close. Promoters are pushing a story line designed to raise funds. In the commercial world there are very strict hurdles designed to ensure that promoters are forced to justify their statements as being sound, including disciplined verification processes designed to establish an evidentiary track record that the promoters did what “a reasonable man” would do to ensure that the statements made are in fact true plain and fair. There are also very harsh penalties (as the Enron folk will soon find out) for those who knowingly mislead.

    The world of science operates somewhat differently than the commercial world, but ultimately claims based on poor quality science will be shown up for what they are. As this blog is showing, the more that the proponents stick to their position, filibuster, avoid release of data and methods, the more intense the pressure on them becomes. In part, this is because the pressure applied by the questioners is uncovering poor practice in many areas.

    No wonder the questioners are not the pin-up boys for the climate science brigade.

  16. Steve Sadlov
    Posted May 26, 2006 at 3:03 PM | Permalink | Reply

    The following was just posted for the RC censors’ review, hoping to be published to the ENSO thread:

    “And the meta message – are you sure, are you really, really sure? We are winding up the masses to believe that the future will be quite a warm one. Maybe even Jurassic warm. Warm I can deal with. However, if either A we are simply dead wrong about the impact of GHGs and / or B we are missing the forest (solar/astronimical and tectonic things) for the trees (gas mixture things) and the actual future, among the several possible futures, turns out to be one of cooling – possibly the outright end of the current interglacial, then all those people wound up to believe in a warm future are going to be cold, hungry and out for blood. I, for one, would not want to be anywhere near that little shindig. I see Skilling and Lay are in the news today …. “

  17. Steve Bloom
    Posted May 26, 2006 at 3:41 PM | Permalink | Reply

    Steve S., you’ve been told before (and given a link, I’m pretty sure) that the current interglacial isn’t going away very soon due to the current trend in Milankovitch cycles. If I recall the figure correctly, “not very soon” means something like 30,000 years, which is to say we are in the first part of a *long* interglacial with no reason to expect major climate swings(assuming the absence of other factors such as anthropogenic interference or a really large-scale vulcanism event). Regarding Jurassic-level warming, I completely agree that such a world might be a pleasant place to live. The issue is the abruptness of the transition. A good current example is the imminent (@50 year) departure of the Tibetan glaciers. Is that a problem for people a few thousand years from now? Arguably not. Is it a problem for the couple hundred million people who depend on those glaciers for a reliable(ish) year-round water supply? I think it might be, especially since the effects are already becoming noticeable.

  18. Steve Sadlov
    Posted May 26, 2006 at 3:53 PM | Permalink | Reply

    RE: #18. And I’ll ask you as well… are you sure, are you really, really sure? Milankovitch cycles – that is certainly one explanation of a possible causal factor (among others, it’s likely a multifactor situation) of the seeming quantum behavior within longer ice ages. It is not proven, and there are conflicting data (Google “Devil’s Hole” for starters, also note that the Yucca Mountain assumes the onset of glaciation breakout between 1K and 10K years in the future – that is essentially the DoE’s bet ….). My comment about warmer being better than colder is in the relative sense. When you take a no holds barred look at the downsides of extreme (and unlikely) worst case warming versus those of the end of the interglacial, to me, the worst case warming scenario is my own personal lesser evil. More will die from the end of the interglacial and I stand firmly by that statement. So, given all that, gambling on warming, and gambling on the resulting “forcing” of societal behavior due to belief in a warming outcome, is a serious ethical burden to undertake. I am not personally willing to undertake it. How about you?

  19. Reid
    Posted May 26, 2006 at 4:48 PM | Permalink | Reply

    I just saw a debate on Global Warming on CNBC. To quote Stephen Moore, “The Federal government funds $5 billion a year for climate research. Climatologists are producing the kind of science they have been incentivized to do.” In other words, alarmism brings in the money.

    When living in Boulder in the late 90’s I knew a senior scientist at NCAR who admitted to me that any scientist at NCAR who adopted a skeptical viewpoint would have serious problems with their career.

    Alarmism has been a permanent feature of human life since the dawn of civilization. It is a path to money, power and influence. And sometimes the alarmists are correct. In the last 10,000 years, alarmists have predicted 72,000 of the last 20 great disasters to afflict humans. And they have predicted 1,200 times that the world would end on a specific day. Y2K? Fortunately, life goes on.

  20. Steve Bloom
    Posted May 26, 2006 at 5:04 PM | Permalink | Reply

    Re #19: I’m sure enough. The Devil’s Hole stuff is interesting, but not up to date. (And I must say this is a very strange place to find someone relying on a *single* proxy record!) If you check Google Scholar for this area of research, you’ll find that Carl Wunsch was the leading critic of the Milankovitch hypothesis a few years ago, but subsequent to that he seems to have spent a lot more time on the problem (along with Peter Huybers). The latest published results from them resolved the basic issue. Now Huybers seems to have nailed the remaining loose end, giving a consistent view of the entire Pleistocene glaciation (although I’m not sure what the final publicarion status of this paper is). Also see these further just-published results from Huybers and Curry. It’s all fascinating stuff, albeit a little thick going at times.

    (I also just happened to spot this on Huybers’ site, although I haven’t had a chance to read it to see if it’s yet another paper or if it’s just a different version of one of the others. I suppose demanding that he post a narrative relating all of them together would be a bit much.)

  21. Steve Bloom
    Posted May 26, 2006 at 5:09 PM | Permalink | Reply

    Re #20: Could we have a complete list of those, Reid? Oh, you just made those numbers up to make yourself feel superior? How sad.

  22. Reid
    Posted May 26, 2006 at 5:19 PM | Permalink | Reply

    Re #22: My numbers have been published in Science and Nature magazines. They have also been peer reviewed by a consensus group of scientists. I have the data but won’t share it with you because you just want to tear down my lifes work.

    Disclaimer to Science and Nature: Please don’t sue me. The comment is satire. It just rhymes with the truth.

  23. Posted May 26, 2006 at 5:24 PM | Permalink | Reply

    #6 Steve, thanks for the link. Do I understand correctly that he was charged mostly for putting the false results in his grant applications, and not for publishing in journals per se? In that case, it’s a fraudulent (not fraudulous, sorry if my French keeps creeping in…) use of public funds, and there’s a good legal case for prosecuting. Also, much like the Canadian sponsorship scandal, if you receive public funds to perform some work and don’t do it, it is criminal fraud.

    On the other hand, take the case of Dr. Chandra of Memorial University. The University was well aware that he was falsifying results, and did not act for almost ten years, out of fear of being sued itself. Most of his research funds were from industry though. And I don’t think the industry guys would bother sueing him and spend more in legal fees than the grant itself.

    Hwang is in South Korea and they don’t fool around with that sort of public scandal over there.

    In the case of Jon Hendrick Shon, it’s an industrial lab, so the funding was from internal sources. He was fired of course, but not sued in any way as far as I know, and not charged of anything.

    MBH, if guilty of anything, it would be of incompetence, but also maybe of lying after the fact to hide their incompetence (about r2 etc.)

    I personnally believe that there is much more fraud than the public is aware of. Again that’s my own experience in the academic world. I’m aware of at least two cases, and that means I was close enough to have firsthand knowledge(talking to students or colleagues). There’s a fine line between fraud and just making the results “look good”. You never show all of your results, especially in experimental science. You always select “the good ones”. Then you may just delete a data point or two, because they’re “anomalous”. At what point does it become fraud?

    I’ve been thinking that there could be a sort of ISO9001 certification for research labs, a quality assurance system. That would mean that the lab would have to adhere to certain standards and procedures, and have documented evidence for it. To obtain the certification, the lab would have to be audited, and could be the subject of random audits. Just like ISO9001, you could have a “stamp” that would give some level of credibility on your publications, maybe more than peer review in the end. Just like a quality assurance system, it would not guarantee “quality”, but if there is an error somewhere, it would be traceable, as all the results and methodology etc. would be properly archived according to a standard and documented system. I understand that journals like Nature and Science do ask for such archival, but we have seen that it is a very inefficient policy.

  24. Posted May 26, 2006 at 5:31 PM | Permalink | Reply

    Re #24. I have been thinking of academic behaviour in terms of ‘results management’. This would include the spectrum of exaggeration, mis-reporting, creative statistics, ‘cherry picking’ to outright fabrication. Some point in the spectrum becomes justicable but I am not sure where. But as scientists its important to discourage all forms of result management.

  25. ET SidViscous
    Posted May 26, 2006 at 5:33 PM | Permalink | Reply

    Francois You might want to look into the Dr. Poehlman thing a bit. Turns out he ended up in the Universite de Montreal. But apparently he’s left there now.

    I’m not sure about your ISO suggestion. I’ve seen ISO implemented in a variety of companies. There’s a huge push when the voluntary inspections are scheduled, then things turn to normal after they leave.

  26. Doug L
    Posted May 26, 2006 at 8:06 PM | Permalink | Reply

    Re #26

    There are Dilbert cartoons on ISO, here’s a paraphrased summary of one:

    Boss: “We’ll be having an ISO 9000 audit soon. They’ll check to see if we follow our documented procedures. I’ve decided to divide our preparation into two groups: unethical and unproductive”

    Employee one to employee two: “I’ll train our department to lie to the auditor. You can document our inane procedures”

    Employee two: “No fair you did unethical last time too.”

  27. Francois Ouellette
    Posted May 26, 2006 at 8:20 PM | Permalink | Reply

    #26-27

    Sure, ISO can be a bit of a joke. There is an non insignificant amount of “corruption” in that system, because you have to pay auditors to get your certification, and some are not quite so honest… A lot of companies don’t take it seriously either, they just want the stamp. And as I said, it’s no guarantee of quality. A company I knew would sell absolute crap, but it was traceable crap…

    Eric, the Poehlman case is another excellent case (thanks!) where a lot of papers went straight through peer review. Here’s another recent article I found at:

    http://www.canada.com/national/nationalpost/news/cnspolitics/story.html?id=a320fffa-9ff7-48b6-b975-86cdef0b4228

    Excerpt: “CIHR (Canadian Institute of Health Research) says it awarded more than $12-million to projects in which researchers have been found to be violating research ethics or integrity rules since 2003. They worked at Dalhousie University, McGill University, McMaster University, Sunnybrook & Women’s College Health Sciences Centre in Toronto, the University of Alberta, the University of British Columbia, Universite de Montreal, and Universite de Sherbrooke.”

    also: “CIHR has also complained that its investigations are hampered by government secrecy and unco-operative universities”

    Not pretty.

  28. ET SidViscous
    Posted May 26, 2006 at 8:21 PM | Permalink | Reply

    It’s funny because it’s true.

  29. Reid
    Posted May 27, 2006 at 3:22 AM | Permalink | Reply

    Scientific dishonesty can occassionally serve a useful purpose. Recall physicist Alan Sokal’s 1996 paper on Quantum Gravity intended to fool postmodern academics. It was a spectacularly successful hoax that showed postmodern thinkers are intellectual frauds.

  30. Louis Hissink
    Posted May 27, 2006 at 4:35 AM | Permalink | Reply

    Steve,

    peripheral to that, we in AIG have noticed that the “critters” are out, (code for shonky speculators), so expect another BrEx or its modern variant in the near future.

    I’ll punt it’s in energy stocks.

  31. Steve McIntyre
    Posted May 27, 2006 at 5:50 AM | Permalink | Reply

    John Hunter, I got tired you of hijacking threads. I thought that the Sea Level thread had run its course and said that I’d re-open it in a week if people felt that they still had something to say. I’ve transferred a number of comments over to that thread which remains closed. Surely your life can’t be so empty that you have to hijack another thread.

    Carl Christensen, you need to get some counselling. Seriously. I’ve indulged your venting for a while. If you want me to create a special trolling thread for you to vent, along the lines of the one for Hunter, I’ll do so. If you comment on something remotely substantive, that’s fine, but I’m tired of your name-calling. It’s clogging up threads.

  32. Nick
    Posted May 27, 2006 at 5:57 AM | Permalink | Reply

    John Hunter, there’s a proverb that says, “never wrestle with a pig in mud – you’ll only get dirty and the pig will enjoy it”. For a serious scientist to argue with the collection of right-wing cranks who post here is definitely wresting a pig in mud. Most of them hide behind the anonymity of the internet and seem very close to conspiracy-theory territory with their obsession with Michael Mann – who they appear to regard as some sort of criminal. The best response to this site from a professional scientist is to treat it as some sort of social science experiment, rather like the UFO enthusiast sites, and visit it just for entertainment. That’s what I do.

    Cheers,

    Nick.

  33. Posted May 27, 2006 at 5:58 AM | Permalink | Reply

    Errr, Steve, your blob is basically 90% right-winger Free Republic types screeching about “evil scientists.” I happen to find it amusing and do enjoy a good flame-fest of idiots. Apologies if you think that’s “lese majeste” to your glorious self, but since you continually embed yourself in a dung-heap, you can’t complain if people say you stink.

    You basically give a forum for your feeble-minded cheerleaders to bash the scientists that, let’s face it, they’re jealous of OR it conflicts with their ideology. Then when you get a bona-fide scientist here (Hunter, not me!), you whinge everytime he mildly fights back.
    Then you whinge he’s “hijacking threads” — threads that you claim your minion “Brave Sir John A” WANTED, which you closed. And JH subsequently posted once or twice here, and you’re screeching he hi-jacked it? Are you going to email his boss for disciplinary actions? Or get the Republicans to subpoena his records? Hell, I bet Howard will kow-tow to whatever your Bush buddies bitch about! ;-)

    anyway: pot/kettle, motes/beams etc.

    PS — I will say this in your defense — at least you allow people to put up a defense, whether flamers like me or scientists like JH, I will admit RC is a bit lame about that (I am not an RC fan either BTW — the sad/silly thing is both your site & RC acts as the be-all/end-all, i.e. if you’re not polarized into either camp you don’t exist).

  34. Steve McIntyre
    Posted May 27, 2006 at 6:09 AM | Permalink | Reply

    Carl, if you paid any attention, you’d see that a couple of leading scientists in the multiproxy field have posted substantive comments on this blog in the last couple of days. Why don’t you pay some attention, maybe you’ll learn something.

  35. Posted May 27, 2006 at 6:17 AM | Permalink | Reply

    That’s good. For that matter it’s still probably skewed towards many more “leading scientists” on RC. But still the vast majority of “leading scientists” avoid blogs like the plague, for I think obvious reasons (peer-review scientific journals & conferences is the best platform etc).

    My guess is you may get 0.1% of “leading scientists” here, 10% @ RC, and 89.9% see these sorts of “science blogs” as a joke and stay away! ;-) The problem being, the unwashed public would think that there is a “great debate” via the existence of these two blogs, who don’t represent everybody by any stretch of the imagination. For example, I’d say someone like Hans van Storch isn’t quite lined up with you as you’d think, or quite “against” RC as they’d think. But in this concocted, bullsh*** polarized blog world, it’s like you have to be on one “team.”

    Which is why I say it’s more analogous to the bulls**t “debate” in the US that the right-wing fundamentalist Christians have come up with — i.e. a lot of blogs & sites for “Creationism” and “Intelligent Design” makes one think that there is a “debate” versus evolutionary biology. When in fact, that is not the case at all. I think that is quite analogous to the global warming “debate.”

    And as far as your Enron analogies, that’s a good reason for scientists to stay away from this site. That would be akin to RC posting “McIntyre & McKitrick — You Have Blood On Your Hands” and babbling that every AGW-induced disaster is because of you swaying dimwitted right-wing politicians etc. Enjoy flipping tables!

  36. Nick
    Posted May 27, 2006 at 6:28 AM | Permalink | Reply

    I particularly liked this bit in what McIntyre wrote above,

    “I often talk here about the need for full, true and plain disclosure. I don’t say this out of any belief that businessmen are more honest than academics. I don’t think that at all. All I’m saying is that breaches of the obligation of full, true and plain disclosure are serious and people are being sent to jail for breaching these obligations. Maybe not enough.”

    The final “not enough” is delightful. Perhaps he shouldn’t be so coy and should tell us exactly who from the academic community he thinks should be sent to prison for breaches of obligation.

  37. Posted May 27, 2006 at 6:40 AM | Permalink | Reply

    Good point, Nick. With this thread, and his cohort touting a paper on “due diligence” — why don’t they just come out and say who should be prosecuted. I imagine Mann heads the list of those they’d like to see in an orange jumpsuit, led away in shackles?

  38. Steve McIntyre
    Posted May 27, 2006 at 7:43 AM | Permalink | Reply

    #37. Actually I meant "not enough" in a corporate context. I just don’t want people to think that it’s my opinion that every corporate malfeasor has been run to ground. However some of them have been, including Lay and Skilling.

    The purpose of posting up on Lay and Skilling, aside from the fact that the story interests me, is that academics sometimes say – well, businesses don’t always disclose adverse results, so don’t come and lecture us about our obligations. Here’s a case where the obligations to disclose adverse results was taken seriously.

    I’m not suggesting that the fact situations are similar in any academic cases. I’ve posted up on Bre-X in the past and Enron was in the news yesterday in a big way.

    Do I think that climate scientists should disclose adverse results? you bet.

    For promotional businesses, there are standards governing what can and can’t be in press releases and what you can’t omit. Do I think that organizations like climateprediction.net should comply with similar standards? Sure.

  39. jae
    Posted May 27, 2006 at 7:43 AM | Permalink | Reply

    Carl: If you hate blogs so much, why the HELL do you stick around? To rant and rave and vent? Just take your Ridilin, and stay away. You are a disgusting representative of the climate modeling community.

  40. Dave Dardinger
    Posted May 27, 2006 at 8:06 AM | Permalink | Reply

    re:#36

    [ignore Carl mode off]

    While a waste of time, I would like to point out the difference between a pseudo-scientific fundy site and this one. At a fundy site the people trying to persuade them provide actual facts instead of just hand waving and links to articles which don’t say what they claim they say.

    Here it’s Steve who provides facts, equations, graphs, arguments etc. and the warmers who provide insults, wave hand and claim that people haven’t read the articles they point at because we (or Steve) reach different conclusions, but refuse to actually quote anything from said articles to prove their points.

    [ignore Carl mode on]

  41. Jim Erlandson
    Posted May 27, 2006 at 8:07 AM | Permalink | Reply

    The peer review process is designed to root out incompetence and is ineffective in preventing fraud just as Generally Accepted Accounting Practice (GAAP) failed to prevent the Enron disaster. Scientific fraud is best prevented/discovered by the institutions paying for the research (government agencies, foundations, charities, industry) through carefully written contracts and aggressive audits. Drug companies have learned that if they fail to audit their contractors and enforce standards then a plaintiff’s lawyer will and the cost in dollars will be astronomical. Similarly a foundation has an obligation to its donors ensure the quality and accuracy of the research it is funding.

    The institutions employing the scientists and hosting the research are also well positioned for auditing and enforcing standards. And its in their best interests to do so. Successful and important projects enhance the institution’s reputation and attract research contracts while fraud and scandal scare away grants, donors, faculty and top students.

    Ironically, if the dendro research proves to be … wrong … the journals will be able to say how enforcement of their archiving policies helped expose the errors. I hope they don’t fail to acknowledge Steve M’s role in getting those policies enforced.

    I guess I’m just another feeble-minded cheerleader.

  42. Posted May 27, 2006 at 8:11 AM | Permalink | Reply

    jae: As I’ve said before, this site is for entertainment purposes, and it’s mildly better than downloading porn! ;-) The faux disgust & outrage with scientists which you & Steve & the other right-wing nutters emote is duly noted. Since you guys are so disgusted & outraged about all sorts of scientists, I’m surprised you guys haven’t all shot yourselves in existential angst! I mean, really, can you guys cite 10 papers that are pro-AGW that you find nothing wrong with? Certainly in the entire corpus of climate science literature, there has to be SOMETHING that you have to admit “gee, this scientist/paper makes perfect sense.”

    Steve: So now you are claiming science (and cp.net) is a “promotional business” that has to conform to standards? Standards which, presumably, second-rate mining engineers & economists will no doubt concoct at the behest of their corporate overlords, no doubt! ;-)

    Anyway, scientists often publish & discuss adverse results & problems. Hell, we’ve done it on cp.net with that SO2/DMS file error that you guys are having a circle jerk over. You dopes pick a few extreme examples (the S. Korean crooked biologist, the Canadian crooked nutritionist), and then broadly brushstroke this across all of science (well all of climate science at least)! Maybe you can tell your buddies in the Repuglican party to just subpoena more people, Adolph!

  43. Reid
    Posted May 27, 2006 at 8:28 AM | Permalink | Reply

    Re #39: The Enron fiasco is analogous to the AGW debate in many ways. When a couple of obscure analysts claimed Enron had massive financial problems they were derided as incompetents. Just like M&M and every other AGW dissenter has been labeled. One of the skeptical analysts who issued a sell recommendation was subsequently fired.

    There was a consensus in the analytical community that Enron was a great investment. Instead of refuting the skeptical view by opening up the books on off-balance-sheet items, the investment community was told that Arthur Andersen was the company auditor and therefore the skeptics had no case. Very much like how AGW promoters claim the IPCC has peer reviewed the science. And also analagous to the withholding of data by certain scientists in the AGW community. We all know the data would be freely available to everyone and their brother if the science was solid.

    The skeptics were correct on Enron. They are correct on AGW as well.

  44. kim
    Posted May 27, 2006 at 8:30 AM | Permalink | Reply

    I choose Godwin’s Law……Adjudicato.
    ========================

  45. per
    Posted May 27, 2006 at 8:49 AM | Permalink | Reply

    Dear CC
    I note your recent posting, including “right-wing nutters”, and “Adolph”. Name-calling reflects on you.

    I have some difficulty in following your logic whenever you try and suggest something substantive. For example, I find it difficult to understand how a piece of science can be “pro-AGW”; good science describes what if finds, and cares not what the implications are. Your question then becomes rhetorical; there are many papers which are fully discussed on this site.

    I also find it difficult to follow your logic about disclosure. There are ethical standards for scientists set out by the UK research councils, and the US NAS; there are standards set out by scientific journals, such as Nature and Science. Why should you find it exceptional that scientists who fail to meet such standards, and are then discovered to have hidden adverse results, and misrepresented their results, should be criticised ?

    Why should it be right that scientists should be able to publish papers, and hide the original data so that their results cannot be checked ? This is frequently publically-funded research, where there are no issues of commercial confidence, or IPR. What we have seen clearly documented on this site is that there are several examples where checking of the original data yields examples of wrong data use, erroneous but favourable statistics, and cherry-picking of data to get the right result. These must be serious issues for any scientist to become concerned about.

    yours
    per

  46. Posted May 27, 2006 at 8:56 AM | Permalink | Reply

    You’re the dopes that take a scientific paper and tout it as “pro-AGW.” I find it hilarious how you nitpick at everything you fear is “pro-AGW.” As I said, I’d love to see a list of papers that you clowns say pass your “audit.” Surely there must be something out there that does this, yet shows that an increase in anthropogenic greenhouse gases has a warming effect? Statistically, it would seem pretty absurd that every single damn paper in Nature or Science or GRL that would lend itself to a “pro-AGW” interpretation, is wrong!

  47. TCO
    Posted May 27, 2006 at 8:57 AM | Permalink | Reply

    The biggest crime in Enron was not the fraud or even the lies to investors. It was the McKinsey-supplied cover story for the company (from people that really didn’t know Brealey and Myers solidly–like the thoughtful sidebars in that book). It was the refusal to really be curious about what causes what, and instead to buy into smoke and mirrors and explanations long on buzzwords and fancy language, but short on real logical analysis.

  48. Posted May 27, 2006 at 9:00 AM | Permalink | Reply

    Actually, which everyone is conveniently ignoring, is that the biggest crime & cover-up was with, errr, the auditors (Anderson etc), who were biased dickheads and played along to enjoy the profits from ripping off employees & shareholders. Hmmm, sound familiar?

  49. Francois Ouellette
    Posted May 27, 2006 at 9:02 AM | Permalink | Reply

    Carl,

    I do get tired of your senseless accusations of right wingers etc.

    As for the cases of scientific fraud or misconduct, which are one of my interests and one of the reasons I stick around, I think you would do well to learn more about them.

    I’ve said it before, I’m no climate scientist, but I know a lot about making science, publishing papers, reviewing them, etc. I’ve been on grant committees, and have reviewed a number of grant proposals. I’ve also been in industry, both private and public companies, at high enough management positions (V.P. level) to see how things are done, I’ve been through an IPO (and a big one at that). In one of the public companies I worked for, the CEO has been found guilty of issuing a misleading press release to pump the stock, and was fined $900,000 (he had sold $1.5M worth of stock in the process…). That was after I had left, but I could tell you more horror stories about him which I witnessed from within. In the academic world, I’ve reviewed papers that were clearly fabricated results, yet as a reviewer, I had to give the benefit of the doubt to the authors, since I was in no position to prove what I suspected. That professor was drowning in grant money, yet everyone around him knew he was a fraud.

    Maybe you should take a look at this article :

    excerpt: “More than 5 percent of scientists answering a confidential questionnaire admitted to having tossed out data because the information contradicted their previous research or said they had circumvented some human research protections. Ten percent admitted they had inappropriately included their names or those of others as authors on published research reports. And more than 15 percent admitted they had changed a study’s design or results to satisfy a sponsor, or ignored observations because they had a “gut feeling” they were inaccurate.”

    The ususal defense of “fraud is rare”, or “the peer review is good enough as it is” just does not stand any close scrutiny. The scientific publishing system is definitely sick, and it’s not getting any better.

    Now you can make all sorts of senseless assumptions or accusations as per my political opinions (of which you know nothing), but I believe that I have a little more experience than you have in talking about those matters. You are welcome to make substantive contributions to that debate, or just posting your own opinion on it, but I would personnally appreciate if you would stop slandering everyone here, including me.

  50. Posted May 27, 2006 at 9:04 AM | Permalink | Reply

    jeez, I never said all scientists were angels, but to believe the hype here you’d have to think that something like 75-100% are frauds! Again, you guys cavilierly “disprove” every single damn Nature or Science paper, mirabile dictu!

  51. Steve McIntyre
    Posted May 27, 2006 at 9:12 AM | Permalink | Reply

    #48. TCO, the lies to investors were fraud. The fraud was the crime.

    The lack of curiosity wasn’t really a “crime”, but it was sure a lack of competence among the analysts. One of the early comments in Eichenwald’s book was that no one really understood what Enron did or how it made its money. They all assumed that someone else knew. Something to think about.

  52. Steve McIntyre
    Posted May 27, 2006 at 9:16 AM | Permalink | Reply

    #49. The National Science Foundation has primary responsibility for ensuring that recipients of its grants comply with archiving terms and have an obligation to audit compliance. They are completely passive and don’t do their job. They prefer to bathe in the glow of publicity for the people they fund. They have a very small audit function and they don;t do it. They make the worst business auditor in the world seem competent. Sound familiar?

  53. Roger Bell
    Posted May 27, 2006 at 9:21 AM | Permalink | Reply

    Going back to post # 15, at least some of the employees in the research side of Kodak must have sensed that the film business was going to have problems in the future. For example, the world’s astronomical observatories were busily changing their detectors from film to charged coupled devices. Should the research guys have warned people of the likely problem in the future?
    Roger Bell

  54. TCO
    Posted May 27, 2006 at 9:39 AM | Permalink | Reply

    Steve: I need to read the Eichenwald book. When I said “biggest crime”, I did not mean literally the crime with the most serious penalties. I meant the worst aspect. Your remark about “everyone thought everyone else knew about it” is exactly what I consider the “worst crime” and is what I saw personally.

    Another sad aspect was that a lot of the fluffy bad thinking was spread to other clients and industries. And that those mistaken have never still really been pinned down or thought about they did wrong thoughtfully. Look at the recent statements by Ian Davis that the Enron downfall was just the result of a bank run. How can someone who is supposed to be a thought leader make such a remark and not do the analysis of different bank runs and how much value was recouped in them (in the Great Depression, it was in the 90%s I think), how can he not say that insight and attention should have been focused on the perilous nature that the company was prone to such a problem, etc. etc.

    However, the worst aspect of the “worst crime” is that the bad thinking is not just bad thinking. It can crowd out all the good thinking. There are a myriad of business improvements that can be made to the betterment of business owners and of the whole economy. But people trumpeting “new and improved business thinking” crowd that out, with their various silly new business models.

  55. ET SidViscous
    Posted May 27, 2006 at 12:31 PM | Permalink | Reply

    #54 “at least some of the employees in the research side of Kodak must have sensed that the film business was going to have problems in the future. ”

    Yes they did realize that. The problem is that they tried to get into the digital side (I worked for a company that subcontracted on the design for one of the cameras) and did a poor job of it. Yes Observatories were going the CCD route, but at the time CCD devices of high resolution were expensive. So you get the kind of stuff like “It will never become a popular device, it’s too expensive” kind of thing. Then prices come down. The issue is that they didn’t do a good job of it, and they were competing against new players that could do a better job of it (Since it was an electoncis thing).

    But part of the problem is that even if someone in Kodal saw the change, and the risk coming, they couldn’t do anything about it. They had one of those stock option things where they were controlled as to how/when they could sell. I recall talking with the son of an old time employee at the time the stock was in serious trouble. “Why don’t they sell” “that’s the problem, they can’t”

  56. Terry
    Posted May 27, 2006 at 12:45 PM | Permalink | Reply

    Carl:

    I was about to write you a snarky reply telling you to just shut up because you are wasting space. But then, you added this to one of your posts:

    PS “¢’‚¬? I will say this in your defense “¢’‚¬? at least you allow people to put up a defense, whether flamers like me or scientists like JH, I will admit RC is a bit lame about that (I am not an RC fan either BTW “¢’‚¬? the sad/silly thing is both your site & RC acts as the be-all/end-all, i.e. if you’re not polarized into either camp you don’t exist).

    which actually puts you reasonably close to my thinking.

    So instead of a snarky reply, I will instead gently admonish you to please hold down the rants and the nyah-nyah type posts. A few are ok, because you have to allow for some trash from the hoi polloi. But you are posting TOO MANY and they don’t add anything to anything you have said before (they are mostly just allegations that someone should be ignored because you don’t like their political views), and they are tiresome to wade through.

    Yes, the cheerleaders here and on RC are tiresome.

    But, as you note, there is at least some real back and forth on ClimateAudit. (While RC has improved somewhat on allowing opposing views, they will censor even the most polite and serious post if it brings up an uncomfortable problem too clearly.

  57. ET SidViscous
    Posted May 27, 2006 at 3:04 PM | Permalink | Reply

    Damn Dyslexia, I always do this with these companies.

    My references to Kodak were meant to be for Polaroid.

  58. TCO
    Posted May 27, 2006 at 8:41 PM | Permalink | Reply

    Steve,

    Please re-open the Hunter sea level thread. I could care less if that thing was a den of flames. I never looked at it anyway and it served it’s purpose of segregating the convicts to an island so that the rest of the world was more pleasant.

  59. Reid
    Posted May 27, 2006 at 8:45 PM | Permalink | Reply

    Re #65: You are correct that this thread is about Enron and not science.

    So the worlds greatest corporate backer of Kyoto turns out to be massively corrupt and their extreme support for Kyoto is now never mentioned in polite company. The corporate corruption at Enron is no different than the scientific corruption on AGW.

    The big climb down is now starting by governments who signed onto Kyoto. Nobody is more expendable in the coming years than quack scientists who guided “enlightened” governments to sign onto Kyoto.

  60. Steve McIntyre
    Posted May 27, 2006 at 9:53 PM | Permalink | Reply

    I’ve re-opened the Hunter troll thread, so John Hunter, will you please confine your self to your trolling corner in order to be polite to other readers, when you are raising hobby horses. Why would I know where John A is? It’s the week-end, he has a family. What does it matter? What earthly business is it of yours?

    On your data, you haven’t made it available through an FTP site. To my knowledge, he hasn’t seen it. You say you’ve archived at a national archive. What more is there to say? Even if he had possession of it, which to my knowledge, he doesn’t, why would he be in a position to start discussing it within five minutes? Maybe he’d be in a position to discuss in a few months. What would be the point of discussing things? Why do you care?

    This is my blog. I pay for it out of my own pocket as I do everything else. I don’t have any associations with any oil producing company. I was involved with a mining company that was used as a shell in a reverse takeover for an oil exploration company. The company does not presently produce and has no interest in Kyoto. There are several companies with similar names, which you have confused in the past. I’m not going to educate you in corporate structure. We’ve been through this before. I’m not going to argue with about it. No one pays me to do this, oil producer or otherwise. Last summer, you were reduced to asking whether any company had ever given me paper supplies. If public money is being spent, as it is, on numerous groups trying to disprove my points, I wouldn’t mind some being sent my way to support what I’m doing.

    If you want to talk about Enron, fine. If you want to talk about John A, please don’t. Once again, for the sake of politeness to other readers, please use the thread to which your name is attached for trolling comments of any kind as they will be promptly deleted from other threads.

  61. nanny_govt_sucks
    Posted May 27, 2006 at 9:57 PM | Permalink | Reply

    The Australian Government “¢’‚¬? yes, the same government which has refused to sign to up to Kyoto.

    Government, all governments, will benefit from the expanded power and control over people’s lives and the workings of the economy in the policy that proponents of AGW are promoting. For those who wish to see a more centralized government, or all power vested in the UN, Global Warming alarmism is a godsend.

    From increased tax revenues to the ability for some politicians and bureaucrats to forcibly implement their version of a luddite utopia, governments all over the world stand to gain from misguided alarmist-promoted policy. We all know that Kyoto won’t do squat. But Kyoto is only part of the controlling legislation coming down the pipe at you courtesy of your local elected leaders.

    Will anyone mention the less-government “solution” of eliminating corporate welfare for the fossil fuel industry? Unlikely. The subtle hidden agenda is MORE government control, not less, and effective CO2 emission-reduction strategies will have to take a back seat.

  62. Steve McIntyre
    Posted May 27, 2006 at 10:05 PM | Permalink | Reply

    #62. please dial back the ranting about governments. You can do so elsewhere.

  63. Steve Latham
    Posted May 29, 2006 at 6:06 PM | Permalink | Reply

    Reid, please supply some links. I suppose I should google how/when Enron supported Kyoto, etc., but something seems a bit fishy about that. I listened to a Democracy Now report (http://www.democracynow.org/index.pl?issue=20060526) that suggested the Bush admin to have done just what the energy companies wanted. It’s an hour long and probably politically unsavory to most folks here and some of the exerpts aren’t very elucidating. On the other hand, quite a bit of it seems very good to me (note, I have not followed the whole Enron thing very much). I hope someone with more background will check it out and give me their review. Was Bush influencing the EPA at the time it gave the award to Enron? (I haven’t read that thread yet.)

  64. Steve Latham
    Posted May 29, 2006 at 6:08 PM | Permalink | Reply

    Ah, I should’ve read that other thread first — 1998 — okay, forget the last two sentences of my previous comment.

  65. TCO
    Posted May 29, 2006 at 7:06 PM | Permalink | Reply

    Enron was big with the centrist Clinton democrats (some of whom I worked with). It was all part of the New Economy silliness in the Clinton economic miracle.

  66. Francois Ouellette
    Posted May 29, 2006 at 7:32 PM | Permalink | Reply

    #51 Carl, I don’t know where you get your percentages. There’s no need for 75% of scientific papers to be fraudulent to realize that a peer-reviewed paper is no guarantee that the paper is (a) error-free, and (b) honest. In the case of Dr. Chandra, some of his papers were not only fraudulent (which is not something a reviewer can so easily spot), but they also contained obvious errors. In the end, he was caught because his made-up data had phony statistics, and it actually took an expert statistician to figure it out. Does that sound familiar?

    There also seems to be a constant in many fraud cases that the perpetrator had a very strong reputation in his field, and had a lot of media exposure. I don’t know if that’s just because the less spectacular science is not scrutinized as closely, maybe it is so. But it nevertheless seems like what drives a scientist to fraud is the ever stronger pressure to perform, and live up to his image. And to me that’s another reason why climate science should be closely watched: it has all the right ingredients to induce its practitioners into the path going from exaggeration to manipulation to fraud. In a sense, it’s very similar to the context in which the Enron fraud occured: being in the right field at the right time, with lots of media attention, and initial successes followed by more successes, but then you’ve got to keep going stronger and stronger.

    Anyway, you don’t seem to have been in the academic world for very long, so maybe you still have a naive view of it. But then maybe I am cynical. Scientists are mostly honest, but they are caught in a system that is absurd, with a pressure to perform more and more for less and less funding. They can’t all be geniuses. And science is becoming more and more complex, it’s harder and harder to keep up with your field, let alone what’s happening outside of your own field. I think the overall quality is degrading slowly. Everybody wants the quick result that they can publish and make a big splash, but you don’t see deep insights that lead to real breakthroughs.

    Most big corporations used to have labs where the researchers had a lot of freedom to pursue original ideas: Bell Labs, IBM, Xerox, etc.. A lot of Nobel prizes came out of there, with things like the transistor or high temperature superconductivity. They all changed that in the 80’s to focus on “near term” research that brings immediate profit. But “near term” ideas are quickly exhausted, so you end up going in circles, rehashing the same old stuff all the time. It’s really hard nowadays to come up with new provocative ideas. I mean it was always hard, but it’s even harder now. Look at climate science: there’s no way you can propose original theories without being accused of being a sell-out to big oil companies. Do you realize how insane that is? Personnally, I like science, but I don’t like religion.

  67. Reid
    Posted May 29, 2006 at 7:50 PM | Permalink | Reply

    Re #64: Ken Lay in 1997 honored by the Climate Institute for Enron’s dedication to wind, solar and greenhouse emmission reduction. Other honorees include Al Gore. http://www.climate.org/pubs/climate_alert/articles/10.6/ci_awardsprizes.shtml

    Enron was the key big corporate supporter of Kyoto who funded alarmists to push global warming for corporate profit. http://www.tcsdaily.com/article.aspx?id=042502B

    The AGW alarmists claim that any association with oil companies invalidates a skeptical scientists viewpoint. The AGW community is is closely tied to Enron.

    No suprise there. AGW is aligned with the biggest corporate crooks in history. The skeptics are aligned with the worlds greatest and most productive corporations. ExxonMobil, etc…

  68. Steve Sadlov
    Posted May 30, 2006 at 9:45 AM | Permalink | Reply

    RE: Carl “the neo fascist” Christensen’s undying spew. A rare, purely political comment: When we look out at the world and get real about people’s politics and true phlosophical underpinnings, some strange bedfellows become apparent. For example, scratch the surface of a typical “Green” and one will encounter either a watermelon (Green on the outside, Red on the inside) or, even worse, a sort of strange, semi anarchistic, “Green” volk oriented “populist” whose playbook resembles a hybrid of Mein Kampf, the writings of Margaret Sanger, and the scribblings of the Unibomber. Whether “left” or “right” some of the more radical Greens are perhaps best characterized as having a yen for despotism and supreme authoritarian structures. To characterize this site as “Right Wing” misses the truths about Western political traditions. I personally find this site a breath of fresh air, remeniscent of the English Country Party or the early Republican Democratic Party (in the US).

  69. Posted May 30, 2006 at 9:55 AM | Permalink | Reply

    Oh boohoo. Psychotic right-wingers have full power in the USA, yet you’re trying to claim “victim” status. Scratch a dimwitted climateidiot.org cheerleader and you get an anti-science Creationist religious zealot, trying to flip the tables that they were always on the side of the Nazis, OK City bombers, war-mongerers in Vietnam & Iraq, etc. I’d take a Green over Cheney’s pals any day. “Now watch this drive!

  70. Posted May 30, 2006 at 9:56 AM | Permalink | Reply

    PS — look up Enron’s contributions, including their free & full use of their corporate jet to Bush & Cheney. Your lame attempts to “flip flop” that Clinton was their best buddy is hilarioud. “Kenny Boy” gave 5 times as much to the Repukes.

  71. Michael Jankowski
    Posted May 30, 2006 at 11:12 AM | Permalink | Reply

    Too funny, Carl. Lay gave more money to Repubs than to Dems, therefore the Enron scandal is somehow tied to Repubs/Bush?!?!?

    BTW, Enron’s money to the Repubs didn’t buy what they wanted, otherwise they’d still be one of those companies shaken by scandal but well alive today. Enron hoped Bush would compromise in the global warming issue and promote a Kyoto-esque carbon trading scheme in the US. Bush unequivacally said “no.”

    You failed to show how all of the others involved in the Enron scandal – the other Enron employees, the Arthur Andersen accountants, the Merrill Lynch officials, etc – were “Bush buddies.” But I guess unsubstantiated mud-slinging is what trolls like you are all about.

    Care to contribute something meaningful to any of these threads? Otherwise, it would be best to sit there in a corner and let people think you’re an idiot rather than open your mouth and remove all doubt. Seriously, even the “respected researcher” you praised on one of these threads has complained about your presence. Shouldn’t that tell you something?

  72. Steve McIntyre
    Posted May 30, 2006 at 12:37 PM | Permalink | Reply

    If people are reflecting on Enron, an interesting question – as TCO pointed out – is why wasn’t this picked up earlier? For example, Bre-X. In pretty much every mining project in the world, exploration projects split drill core, keep one half in trays for inspection by geologists and send one half for assay.

    When the Bre-X fraud was discovered, it turned out that they didn’t have any core. They told analysts that they had some special assaying method which required all the core to give a big enough sample. In my opinion, that should have sent any analyst running for the exits. It would have alerted the public as well. But most of them got caught up in the hysteria and overlooked the fact that the audit trail (split core in this case) wasn’t there. Everyone assumed that there were too many people involved for there to be anything wrong.

  73. Steve Sadlov
    Posted May 30, 2006 at 1:18 PM | Permalink | Reply

    For the record, I am a punctuated equilibrium evolutionist / hopeful monster believing Burkian Kennedy Democrat with a dash of Trotskyite underpinnings. Educated in Geophysics and Electrical Engineering. A former hard core Gaia worshipper who saw that particular religious extremist position as being no different than Jihadi, McVeighist, or Communist beliefs. Of couse I am still a rationalist “environmentalist” based on an operational definition of “environmentalis” to mean one who believes in the scientific methods and demonstrated effective standards of stewardship. Some have labelled me a “Crunchy Con” so if we must have a stereotype, I won’t argue that particular one. But stereotypes are so limiting!

  74. Jim Erlandson
    Posted May 30, 2006 at 1:51 PM | Permalink | Reply

    One of the answers has to do with inherent limitations the press often is loath to admit. Today, there are an increasing number of stories of great consequence — like Enron — whose complexity too often simply outstrips the competency of many of the reporters assigned to cover them.”

    LA Times.

    Of course, the Wall Street analysts’ competency was outstripped as well.

  75. Michael Jankowski
    Posted May 30, 2006 at 1:54 PM | Permalink | Reply

    Re#73,
    When the well-respected auditor (Arthur Andersen) says the books are clean, and then an investment company (Merrill Lynch) with intimate dealings in some of Enron’s business says Enron is booming, I guess not many eyebrows are raised. Even if somoene thought Enron was a tad crooked, they would have to think both AA and ML were either incompetent or in kahootz, and that was a lot to swallow.

    There was a time when Dynegy was close to buying-out Enron, which was Enron’s last chance at avoiding bankruptcy. I believe one reason the deal fell through was that the accountign fraud was so tough to decipher than Dynegy couldn’t be reasonably assured at the time how much debt Enron actually had.

  76. Francois Ouellette
    Posted May 30, 2006 at 2:00 PM | Permalink | Reply

    #70 Carl, since you won’t go away, let’s discuss your point. You say: “Scratch a dimwitted climateidiot.org cheerleader and you get an anti-science Creationist religious zealot”.

    So what am I doing here? Disclosure: I’ve always been an environmentalist, I was even a member of the “Friends of the Earth” a long time ago (I left when I realized that we were claiming things that were scientifically untrue, so that makes me some kind of a Bjorn Lomborg, I presume), I’ve been biking to work for most of my life, I was recycling and doing compost when most people didn’t even know what the words meant. I’ve been involved in research on solar energy at some point. I’m an agnostic, and I despise creationists, actually I’m a strong proponent of evolutionary psychology (so I must be a racist then…). I was strongly against the Iraq war (or any war for that matter). I never did any military research. I recently was offered a job as scientific director of a wind energy research center (turned it down ’cause I would have had to move too far).

    I got interested in the issue of global warming when I got tired of being told over and over again that there was a consensus on global warming, and that the science was “settled”. As a scientist, that sounded just odd to me. To me, science is never “settled” (or it would be dead).

    I don’t deny climate change. Surely the Earth has been warming over the past 30 years. The green house effect does exist. There is some correlation between CO2 and temperature so there’s a good chance that the two are linked somewhat. etc. etc. you know all the arguments I guess…I have read a lot (including most of the IPCC TAR), and made my own critical scientific assessment, just like when I’m reviewing a paper or a grant proposal.

    You see, I don’t seem to fit your characterization. Maybe other posters here do, I don’t know. Yet, I much prefer this blog here to Realclimate.

    I’d like to know how you came to “believe” in global warming (because that’s what it is for most pepople apparently, a belief), and if you did your own scientific evaluation, or just decided to “trust the consensus”.

  77. Greg F
    Posted May 30, 2006 at 2:48 PM | Permalink | Reply

    Guess who Global Crossing and WorldCom had for accountants? There are other ways to buy influence as Global Crossing demonstrated.

    Winnick helped Democratic National Committee chairman Terry McAuliffe turn a $100,000 stock investment into $18,000,000. Winnick later gave a million dollars to President Clinton’s presidential library.

    .

    It is very naive to believe that any of these crooks had a ideological attachment to either party.

    Long before Cheney’s task force met with Enron officials and included their ideas in Bush’s energy plan, Clinton’s energy team was doing much the same thing. Drafting a 1995 plan to help facilitate cash flow and credit for energy producers, it asked for Enron’s input”¢’‚¬?and listened. The staff was directed to “rework the proposal to take into account the specific comments and suggestions you made,” Clinton Deputy Energy Secretary Bill White wrote an Enron official.

    So a bit of thought experiment. Enron was coming apart before Bush was even elected much less inaugurated. It was a good bet that the Republicans were going to still control congress but the Presidency was up for grabs. The crooks had to thinking ‘we had better buy some influence and we need to buy a lot of it’. They needed to get congress to pass some rent seeking legislation to inject some much needed cash. Now where do you think they are going to invest the money? The party that was going to be in the minority? I don’t think so.

    Mr. Christensen in his ignorance says:

    PS “¢’‚¬? look up Enron’s contributions, including their free & full use of their corporate jet to Bush & Cheney.

    Ummm … no … the corporate jet wasn’t free. Federal election rules forbid such an arrangement.

    Enron Corp, whose employees gave more than $118,000 to Bush, was reimbursed almost $60,000 for 14 flights during the campaign, including two flights reported after Election Day.

    That is a deal for a private jet but Al Gore also got a deal on air travel via the tax payers.

    Former Vice President Al Gore, in his bid for the White House, flew exclusively on Air Force Two, reimbursing the government only what it would have cost him to fly first class on a commercial airline.

    When you have a specially equipped government owned Boeing 747 to use you don’t need no stinking little corporate jet.

  78. TCO
    Posted May 30, 2006 at 3:33 PM | Permalink | Reply

    Steve, I had a bad feeling about Enron very similar (not quite as strong) as with the dotcoms. It was the feeling that “I can’t advocate it to clients, when I don’t understand it, know it, thought it through”. But I didn’t have the time/energy to research it given no incentive to do so (not a task assigned to me). Also, I’m wary of trying to think that I am smarter then the efficient capital market. Yes, I was right on one, but will I be right again?

  79. TCO
    Posted May 30, 2006 at 3:38 PM | Permalink | Reply

    One more point on Enron: Paul Simon (w’s treas secy) was lobbied by Rubin (previous treas secy of Clinton) to consider intervening to bouy Enron up as it was starting to slide. He point blank said no way. Simon took the high road (and the one that was not helpful to Enron but was to US taxpayers), while Rubin advocated the wrong one.

  80. Dave Dardinger
    Posted May 30, 2006 at 3:47 PM | Permalink | Reply

    While we’re all “outing” our positions, I’m probably closer to Carl’s stereotype in that I’m a conservative Christian and a staunch Republican, a Viet Nam vet and was at one time even a Randian Objectivist before coming back to the church. But at the same time I’m also a punk-ek Evolutionist (though I had some problems with Stephen Jay Gould’s Philosophy of Science). And I’ve certainly not been anti-black; ever! (I also recycle aluminum cans, like to bird-watch, don’t own a truck or SUV, and minimumize meat consumption if you want my crunch-con side.)

  81. Steve McIntyre
    Posted May 30, 2006 at 4:15 PM | Permalink | Reply

    One of the points that caught my eye in Eichenwald’s book was Andrew Fastow’s viciousness to anyone who opposed him. He got a Merrill Lynch analyst fired for reducing Enron from a Buy to a Hold. You see that kind of mentality from time to time. In my experience, people with nothing to fear don’t get nasty over criticism.

    So when a certain scientist wrote to journals claiming that I was “dishonest” and a tool of the oil industry, that encouraged me to continue probing into what was going on.

  82. Reid
    Posted May 30, 2006 at 4:16 PM | Permalink | Reply

    I for one believe that the consensus on AGW is exactly backward. More CO2 in the atmosphere is a boon for the overwhelming majority of lifeforms on the planet. Same thing goes for higher global average temperatures that alarmists claim will destroy civilization.

    The latest AGW alarmist news is that poison ivy is thriving due to global warming. It is the scare of the day carried by dozens of big media outlets. Here is a sample: http://msnbc.msn.com/id/13046200/

    This is typical reporting. While it is true it obscures the truth by omission. Virtually all plant life on planet earth is expanding rapidly. Due to increased CO2 plant biomass has surged 6% in the last 20 years as observed by satelites. AMAZING! But not something that feeds alarm so it is an arcane fact unknown to most. Including most scientists who opine on global warming. Pumping CO2 into the atmosphere is, in reality, the ultimate “Green” activity.

    And while I am talking about the media when was the last time you heard that the global average temperature has not risen in 8 years? In fact if you average the last 8 years the average global temperature has fallen. Indisputable fact confirmed by both the satelite and ground based data.

    I’m not a statistician but maybe Steve could do some stats on the last 8 years showing a decline in global average temperatures. Incidentally, not a single scenario presented by the IPCC predicted the last 8 years of average temperature decline.

  83. TCO
    Posted May 30, 2006 at 4:47 PM | Permalink | Reply

    One of the points that caught my eye in Eichenwald’s book was Andrew Fastow’s viciousness to anyone who opposed him. He got a Merrill Lynch analyst fired for reducing Enron from a Buy to a Hold. You see that kind of mentality from time to time. In my experience, people with nothing to fear don’t get nasty over criticism.

    I get that too. From the Climate Audit crowd! :) (Just kidding.)

    The same think happened with a Nobel Prize winner at LTCM slamming a MS student who questioned the ability of LTCM to continue “picking nickels off the street” because of efficient market theory. In the end, the MS student and efficient capital markets won over the blustering Nobel Prizer. As recounted in WHEN GENIUS FAILED.

    Jeff Skilling reacted the same way to some naysayers in meetings as well. Unfortunately, there are a lot of HBSers (don’t know if he went there) who put forward a surface story of rational analysis but if you start to really dig into it to determine the level of insight, consideration of alternative hypotheses, etc. they get upset. I think it’s a problem for business that we have this type of irrationality, but it’s not surprising given human nature. All that said, the more corporate cultures can move away from this silliness and to more dispassionate analysis, the better, for us as a society capitalizing on the results of their bets.

  84. Francois Ouellette
    Posted May 30, 2006 at 6:54 PM | Permalink | Reply

    #82: Steve,

    A scientist’s response to criticism can be very revealing. In one of my first talks at an international conference, I was presenting a paper where I was explaining some experimental observations I had made. A similar problem had been addressed in a book that had just been published by one of the big wigs in the field. When I showed the preprint to a colleague, he quicly faxed me the relevant pages of the book, pointing out that the equations were different than mine! The difference amounted to a factor of two that would cancel two effects if it was there. I checked an rechecked my equations, and was pretty sure I was right. When I presented my paper, that guy was in the audience! I was just a young researcher, and I was totally panicked at the prospect of him raising his hand at the question period, and demolishing my paper! But quite the opposite, he didn’t ask any questions, and we had a nice chat afterwards, and had a very nice relationship from that day on. By the way, I had the right equations…

    The interesting thing is that the mistake originated in a paper published a few years earlier by other authors, and was propagated in a number of subsequent papers. People just cut and pasted the equations, and nobody noticed the missing factor of two (whereas I derived the equations myself). Those erroneous equations were used to model experimental results. Needless to say the agreement wasn’t quite striking, but they all got away with handwaiving explanations about inaccurate data etc. Those were all peer reviewed papers in very good journals.

    About Enron, I was deeply involved in the fiber optics bubble of 1999-2000 (the company I founded was acquired by another one that went public in 2000). I can tell you there was a lot of corruption around. Suppliers were paid in pre-IPO stock, and I mean not the company itself, but the executives! There was just too much money flying around. Friends of mine who also had their own company realized what was going on: all their customers showed them the same sales forecast, as if they were all going to sell the same systems to the same customers. So that made the market look ten times bigger. That made no sense and it was obvious that it was going to crash soon. They sold the company for cash, at just the right time. Now you want me to believe that the head of Nortel (forgot his name) wasn’t aware of it when he sold $150M worth of stock at the end of 2000?

  85. TCO
    Posted May 30, 2006 at 10:24 PM | Permalink | Reply

    Dark fiber has been a story for many years. Are we getting to the end of it yet?

  86. ET SidViscous
    Posted May 31, 2006 at 12:01 AM | Permalink | Reply

    Ah Franocis. That pegged you timewise, I recall the time, if you recall I work for a company involved in that as well and I remember it well, of not fondly.

  87. Michael Jankowski
    Posted May 31, 2006 at 7:01 AM | Permalink | Reply

    Re#82,

    One of the points that caught my eye in Eichenwald’s book was Andrew Fastow’s viciousness to anyone who opposed him. He got a Merrill Lynch analyst fired for reducing Enron from a Buy to a Hold.

    FWIW, I’ve seen this attributed to Lay, not Fastow (analysts name is John Olson, I think). Other firms (UBS Warburg, for example) did fire analysts in similar fashion, but I’m not sure if/who at Enron got them fired.

    I plan to catch the movie version of “Enron – the Smartest Guys in the Room” ASAP.

  88. Steve Latham
    Posted May 31, 2006 at 6:22 PM | Permalink | Reply

    Aw, darn. I was hoping someone would listen to the democracy now thing I linked to in #64 and give me a critique. Two authors who’ve written books about Enron are questioned. The interviewees (at least one of them) seems to be an anticapitalist, but that shouldn’t negate all the points they make about Bush playing by their rules. They play clips from “smartest guys in the room”!

    Reid, thanks for the links (#68) — I’ll get to those straight away. Your later post (#83) regarding the benefits of CO2 for the biosphere and trends in global warming over the past 8 years wasn’t very good IMO. I’m surprised nobody here has challenged you on those points.

  89. Dave Dardinger
    Posted May 31, 2006 at 8:10 PM | Permalink | Reply

    Your later post (#83) regarding the benefits of CO2 for the biosphere and trends in global warming over the past 8 years wasn’t very good IMO. I’m surprised nobody here has challenged you on those points.

    That’s because he’s correct. Well, the declining temps over the past 8 years is a bit of a joke, but it’s still true.

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