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By Linda Minor © February 5, 2002 The Enron investigation should be viewed as an opportunity to—once and for all—learn how “the money” works. By “the money” I am referring to good ol’ American capitalism. What the term “capital” implies is surplus money not needed for use in day-to-day survival. It can be in the form of savings, trust funds, charitable or educational endowment, or profits desired to be invested. Capital has to have a source. Think in terms of your own money. Most of us live from paycheck to paycheck. We may make enough money to treat ourselves to nice vacations or luxury automobiles from time to time, but many of us never have any excess capital for investment other than what is invested for us in pension funds. So where does capital which is loaned out (debt) or invested in (equity) new development of industry or real estate construction originate? In American history we were taught about the Boston tea party which led to the American revolution. That was the beginning of American capitalism. The tea that was dumped in Boston Harbor belonged to the East India Company, which was a monopoly favored by the British Crown. The company had been chartered by the Crown—Queen Elizabeth I at that time—to engage in trade in the East Indies, the sole source of spices such as nutmeg, cloves, cinnamon, and pepper. Because of the great demand, particularly for nutmeg—which was touted as a medicinal panacea including a cure for the plague—the profits to be made were gargantuan. However, the risks were also very great for those who invested in the shipping enterprise. So who did have money to invest at that time, in mid-17th century England? The same people who ran the ships that engaged in the slave trade. The same men who owned the ships that took colonists to America. The same shipping merchants who contracted with the Crown to deliver convicts from English debtors’ prisons to Australia. They had risen from feudalism in the City of London and become freemen, forming themselves into guilds, which obtained monopolies from the Crown to engage in their respective trade or craft. By the mid-18th century these merchants and tradesmen would organize the Freemasons, centered around the occult lore derived from many centuries of trade with Levant merchants. It was these chartered companies that created English capitalism, though the English found they were not as successful at it as were the German merchant princes who elected their own monarch and created the Hapsburg Empire. Their capital had been acquired through the mining of salt as well as base minerals which could be used in industry. But they also took advantage of their human resources, and learned to conscript young men whose services could be sold as mercenary soldiers to be used outside their own region. The German princes, notably the Fuggers, lent the excess profits from such enterprises to the Queen of England who was then engaged in rivalry with the Dutch and Portuguese over control of the East Indies. During this colonial period, Adam Smith made his study of capitalism called “The Wealth of Nations” while employed by the East India Company. Somewhat earlier, Thomas Gresham had been engaged in a study of currency exchanges and devised a system that England could use to “get out from under” the massive debts owed to the Fuggers and other German princes.
This was also the area descended upon by the Lombards from Italy. It was also within this area that the palatial East India Building was constructed. This is where we have been taught about the fight between the federalists and anti-federalists in our American schools. Thus. or laws with similar import. But our textbooks have not clearly instructed us about all aspects of the problem. in the case of the Dartmouth charter. the site of which would later become Lloyd’s Shipping Registry. came to my boss in order to disclose personal information he had on crimes he may have been involved with or witnessed in addition to defrauding banks by rigging appraisals of real property to be used in . who centuries before had brought Venetian trade and banking concepts to London. The war had been funded by borrowing from other countries. are written by state legislatures and not the federal government. the Crown still had the power to appoint successor trustees to the college board of trustees. were able to collect those debts in American courts.” By 1776 there had been 5 or 6 generations of native-born Americans who were ready to compete with foreign capital. there was still the problem of financing the new government. still had to turn to persons with a surplus of funds to invest in them and their ideas for creating profit. Board of Dartmouth. we may have studied the Supreme Court case cited as Woodward v. however. The Crown itself did receive a share of any profits made by the companies it chartered since the price of granting the charter was a percentage of revenue given back to the government. many states at the time passed laws making it illegal for foreigners to own real property within the state. Was this a mere coincidence? So this type of trade and industry was at the outset of the American colonial existence the source of “venture capital. in which the Supreme Court held that even though the treaty which ended the war between the American colonies and the British government left the British with no political power within the United States. who was about to plead guilty of bank fraud arising out of transactions in the mid-1980s when he was employed by Robert Corson. none of whose profits were distributed back to the Americans. and that debt had to be repaid. any contracts which existed prior to the treaty were to be fully enforceable. reflected in undisclosed nominee agreements for purposes of British ownership of land. Since real property laws. *** My own interest in Enron stems from some of the research I did several years ago when I lived in Houston. This legal impediment gave rise to the practice of secret cooperation between British and American businessmen. Additionally. What that case meant was that the British merchants who had financed the colonists up until the war. an office building that in the 1980s would lease six floors to the Saudi-Pakastani bankers called BCCI. entrepreneurs willing to risk their labor. I worked in the real property division of the county attorney's office and was assigned in about 1993 to help investigate allegations made against county judge Jon Lindsay. A man named Bill Chester. But they were forbidden at the time to engage in any industry or trade without permission from the Crown or without paying a tax that supported the chartered companies. primarily France. if the country were to be successful.Gresham is given credit for designing the Royal Exchange created to stop the drain of English gold to Germany. The Royal Exchange was of course based within the City of London—an area previously owned by Roman Empire. Once the American revolution had been successfully waged. For example.
the county judge had the responsibility of planning the construction of a toll road extending north from Houston to the northern edge of Harris County. together known as Central Square (located at 2100 Main just south of the Pierce Elevated) and a newer office building 9 blocks north at 1200 Main in downtown Houston. I also had copies of disclosures Lindsay had made about his assets. Then I researched the corporate history of General Homes in old SEC files. In order to build this road. While researching this company. He told our office that he had been involved with cash payments to Lindsay and was privy to meetings held between Lindsay. My assignment was to search through deed records. he was required to have the road and drainage work constructed within a year after buying the property. the CIA and George Bush. This land was outside the municipal limits of the City of Houston. Bronfman Family Ties to Houston through Gulf Interstate Exploration (GIX) So I started to learn all I could about the Bronfmans. all at the expense of the toll-road budget or county flood control funds. but was not a desirable location for a county road supervised by the commissioner for that precinct. Under the terms of Corson's contract with General Homes. controlled at the time by Kenneth Schnitzer. In looking at the transaction. It was hoped that Corson could then resell the land at a higher price. were built and owned by a company called Century Properties. It was decided that bribing the county official with $100. significant drainage work had to be done. a subsidiary of Gulf Interstate." I pulled up the name of an entity called Gulf Interstate Exploration. The Mafia. The only information she could give me was that the Bronfman family had been involved in General Homes. and I checked for the possibility he may have acquired the securities as payment for other favors. I also checked individual names in the "assumed name" records of the county." Commissioner Lyons was not interested in talking to the land developers about a road in this area. Corson and others to discuss the need to build a road through a tract of land Corson had contracted to buy from General Homes. a land development corporation based in Houston. it was my feeling that General Homes was deeply involved in the fraud and bribery. who had discussed Corson and Lindsay in his book. etc. Although the land was some distance from the toll road route. The building where this bank had its offices. He referred me to an accountant--who had worked for Corson--who had helped him with research. General Homes retained a lien to secure payment of a promissory note given back to the seller for the purchase price. "Squatty Lyons. etc. Gulf Interstate Exploration (GIX) Ties to Houston Natural Gas . I searched these names in the real property records and found that the attorneys who represented Robert Corson (Lackshin & Nathan) also had for some years represented a bank called Central National Bank. the developers convinced Lindsay that an access road could be diverted through this property.loans. as well as an adjacent office building. the majority stock of which was owned by Gulf Interstate. When I checked the name "Bronfman. However. I talked to Pete Brewton. who at the time was a Democrat. to find anything I could to support claims of the judge being involved in illegalities in land transactions.000 was cheaper than actually paying for the construction of the required road and drainage.
whose parent corporation bought the leasehold estate in the Americana Building in 1961. or to play the money markets.. the importance of physical location and real estate ownership often gets ignored. which owned the Foley's store across the street from the Americana Building. They don’t make their money by selling goods. Belzberg's daughter Lisa is married to Matthew Bronfman.H. Federated also owned R. Rothschild. for that matter. Because most people don’t understand complicated real estate title transactions. which was reputed by EIR in its book Dope. and for another tenant--Capital National Bank--located across the street.” said one of their managers. The Continental building also leased space to Florida Gas Transmission. The land was owned by First City Bank.. HNG. As stated therein: Macy’s is a strange company. Canadian "businessman" who was one of Michael Milken's big junk bond customers. a subsidiary of Enron. “Strictly speaking. called the Houston Natural Gas (HNG) Building. and ANR Pipeline. HNG merged with the InterNorth corporation (formerly Northern Pipeline Co.000 square feet in the Continental Resources Building at 3040 Post Oak Blvd. brother of Edgar Bronfman. The Americana Building was constructed pursuant to a lease in 1956. Other principals of GIX included related families of Loeb.H.600 square feet) and 80.. But it is one type of record that cannot be hidden. a bank resulting from a merger between the First National Bank and the City National Bank founded by James A. HNG also had leased space in the Americana Building (23. “Macy’s is not a retail store. They use retail sales as an excuse to make short-term loans. There must have been a securitization of the landlord's interest in the leases sold to the British investors. which also had a big interest in Federated Department Stores. one of the principals in Gulf Interstate Exploration (GIX). Elkins of the law firm Vinson & Elkins. Inc. adjacent to the Galleria shopping center.Gulf Interstate bought 40% interest in Central Square around 1968. Lehman and Gimbels. as well as being the son of Ann Loeb Bronfman. to be a massive money laundry for dirty cash. although the entities holding title can be very difficult to trace. Hypothetically speaking.) in 1985. . British Petroleum was privatized during Margaret Thatcher’s years as prime minister—in approximately 1986—about the same time Enron was created from Houston Natural Gas and InterNorth of Omaha. What follows is an attempt to connect events that happened in the 1960s and 1970s in Houston to the Enron corporation that exists today. Macy bank—to manage all of its money-market operations. Macy’s is the ideal entity through which to conduct really gigantic dirty-money transfers. was built for its core tenant. a company based in Detroit which is now a subsidiary of the Coastal Corporation (formerly owned by Oscar Wyatt and now a subsidiary of El Paso Corporation). Macy’s owned its own bank—the R. The newer building. overnight or one week loans. Macy’s.M. The original leasehold provided for a simultaneous sublease to Foley's for parking in the basement and on the first five floors. changing the name to Enron. At some point Elkins sold the bank to Samuel Belzberg.. Incidentally. whose accounts were handled by the British bank of N. In a newspaper article in 1985 the Houston Natural Gas Building was said to be owned by Prudential Insurance and BP Pension Fund although the real property records did not reflect that ownership. Jr.
then Hambro’s in 1969 before serving as a director of [drugsmuggling airline] Airborne Freight. and Josephine Abercrombie. Kerr. McCollum—a close business associate of the Farish family.” Neuhaus died in 1987. He was the stepfather of William Stamps Farish III. Barnett serves on the board in 2002. Farish III. Charles W. Hugo’s mother.S. William S. Jr. Fayez Sarofim). The “Barnett” in the Barnett-Winston trust refers to E. which did business with Max Fisher. Baine P. Lummis. Frederick R. WILLIAM BARNETT.’s first wife) was named to the board of governors of Rice Institute in December 1959 by then-chairman George R. and Louisa Stude Sarofim (the adopted daughter of Herman Brown and was formerly the wife of wealthy investment banker.-a relative of W. Jr. Jr. and. making her related to the wives of both W. The “Winston” in Barnett-Winston was James O. Mecom was appointed to the board. In Houston. Inc. Winston. The family connections between Neuhaus and Farish are shown in the following excerpt from the Handbook of Texas website: “Hugo Victor Neuhaus. Jr. along with a number of prominent corporate sponsors.. Lynch of Goldman Sachs. . Baker III. According to Dope. Hines.S. Macy’s was involved in a joint venture with the English merchant bank Hambro’s—the First Empire Bank--in Buffalo. and with Trustee Advisors. Jr. the CEO of First Empire (which had two directors from Macy’s on its board) had worked first for Chase Manhattan Bank. Jr. first to Mary Wood Farish. Trustees Emeriti include Jack T. Kentucky neighbor of W. New York. Farish. an unincorporated business trust created in Jacksonville. Carey. as well as being a partner in the Baker & Botts law firm. reveals that James H. as well as Versailles. and Michael R.. Hugh Liedtke. First Empire was banker for “most of the Buffalo dry-goods trade. Jr. James A. at p. daughter of Houston oilman James Abercrombie. Inc.H. including two other Houston companies.” Dope. Farish III. of Berne. along with James A. Ltd. whose mother married architect Hugo V. and his brother Stephen P. who was married to Ella Botts Rice (Howard Hughes.. Sr. Kate Neuhaus. Allen. Elkins III. Duncan.. Florida. Farish. His second wife. was the daughter of Leonard F. Winston. having worked first for Humble Oil. Switzerland. (Jimmy Carter’s cabinet member who was also mentioned in Brewton’s book). Judy Ley Allen (married to Robert H.R. at the same time John W. mentioned in the Unauthorized Biography of George Bush). First Empire Bank also purchased a one-half participating interest in certain mortgage loans held by Barnett-Winston Investment Trust. Dr. was married twice.S. Trotter (who was made notorious by Pete Brewton’s disclosures). the widow of his cousin William Stamps Farish. in 1947. whose Humble Oil became Exxon. to Olive McCollum in 1985. Hobby. 175. 1969 edition of the Houston Post contained the following item in the business section: Capital National Forms Bank A new Swiss bank has been formed by Capital National Corporation of Houston and the Paravicini Bank. J. whose family owned an interest in the Houston investment bank Underwood Neuhaus. According to the Rice website. then becoming chairman of Continental Oil before founding the Capital Bank in 1965. William P. Neuhaus. Olive McCollum. The April 25. Gerald D. Farish III. Brown. following her death in 1979. who sold his oil company (Navarro) to Continental Oil. who is currently the chairman of the Rice board of trustees. was a daughter of Jonas Shearn Rice.
and other banking services. an affiliate of the Coca-Cola Company. and had accounts in the Castle Bank & .. given immunity for his testimony in the 1973 trial of LSD merchants. he said. which is affiliated with Brown & Root. open an offshore account at Fiduciary Trust by sending his courier to pick up the cash from Owsley's deposit box in New York to deposit in Nassau. Lovett Baker. McCollum. the successor to Mary Carter Paint. Other prominent corporate investors in the new bank include the Boeing Company. and J. Inc.000 cash on him in 1968. Hitchcock put him in touch with a "reputable English source. is also chairman of the Continental Oil Co. of London. Baker III. and the Schlesinger Organization of London and Johannesburg. p. Houston heavy construction and engineering concern. Montreal. Acid Dreams. He said the primary purpose of the new bank will be “to provide financial services required by corporations with multi-national operations. received only a slap on the wrist for falsifying dates of brokerage records and lying about money found on his courier who was arrested with $100. and Gray Tool Company. Clearly the reason Capital National Bank chose the Paravicini Bank as its partner was its knowledge that Paravicini had no reluctance to launder drug profits. Inc. as became obvious in 1973 when the Paravicini Bank was indicted by a Federal grand jury of conspiring with a Lehman Brothers broker and with Billy Mellon Hitchcock between 1965 and 1971 to buy $67 million worth of stock entirely on credit. president of the Capital National Bank said the move by Capital National Corporation will give Capital National direct access to a European partner. foreign exchange. Seattle. Lee and Schlain. both owned shares in Resorts International.. Ltd. New York.P. Ltd. Nicholas Sand and Robert Timothy Scully. Consolidation Coal Co. Ltd. to be called the Bank for Investment and Credit Berne. Ltd. Browne Baker.. W. Lovett Baker.. Minute Maid. J.. Zurich." Charles Druce. Morgan & Co. Utilities & Industries Management Corporation.. and holds board memberships with Morgan Guaranty Trust Co.A. Edgar Odell Lovett) married James Baker’s brother. […] J. Paravicini of Berne will be chairman of the new bank. and Lincoln Consolidated. affiliated with Gray Tool in Houston. 489: Hitchcock and his friend and attorney. Inc. London. Sand was an associate of Owsley's who needed a source of supply for chemicals in order to manufacture STP ("angel dust"). Hitchcock. was the nephew of James A. Wash. Lovett’s mother Adelaide Lovett (daughter of Rice University’s first president.The other two Houston firms investing in the new bank are Brown & Root Overseas. South Africa. LSD kingpin. Distillers Corporation-Seagrams.F. of New York. Seymour Lazar. chairman of the Capital National Corporation.. S. McCollum [sic] of Houston is to be vice chairman. His association with Sand and Scully dated back to April 1967 when Hitchcock helped Augustus "Owsley" Stanley III.F. Both the investors and the bank’s corporate and individual customers will benefit greatly from the new bank’s handling of Eurodollar financing.
Winston. Hughes' first wife who was W. Farish's wife Libbie's cousin) and Ella Rice Winston. along with Rice University. 1973 New York Times. owner of IOS mutual funds. whose records were subpoenaed and ordered by the judge to be turned over to the U. William Lummis (Hughes' first cousin as well as W. Seymour Lazar also paid the legal fees of Harry Rhoden. Lazar also knew Bernie Cornfeld. Farish’s sister-in-law. After Ella divorced Howard Hughes she married James O. According to an article in June 8.. Vesco.Trust.S. ." which named Melvin Dummar as a beneficiary. a Swiss holding company based in Geneva. 151). Attorney. is said to have created Global Holdings and Global Natural Resources (a shell corporation set up in British tax haven Isle of Jersey) in order to buy Resorts International stock. an investment banker who worked for Rowles Winston and Co. who took over IOS from Cornfeld. the Swiss Bank’s attorney was Arnold & Porter of Washington. The bank changed its name in 1971 to the Metopolitan Bank. p. which was taken over by the Securities Management Company. the attorney who attempted to probate Howard Hughes' "Mormon will. 25% of which was held by First National City Bank through a European subsidiary. and was a director of Freeport Sulphur Co.S. Jr.S. Robert Vesco. (See Arthur Herzog.
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