And You Thought The
Government Was Really Doing Something About Enron!
DAMAGE CONTROL BY DYNCORP
- HARM ASSISTED AT HARVARD
Catherine Austin Fitts
[пїЅ Copyright 2002, FTW Publications.
All Rights Reserved. May be copied, reprinted or distributed
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[ED. NOTE: On February
1, 2002 the New York Times reported that HarvardWatch,
an association of Harvard
and Alumni had called for an investigation of one of their
own in the Enron case. They did so with good and obvious
One man, Herbert
S. "Pug" Winokur, who is a director of the Harvard
Corporation and Harvard Management Company, seems to be
at the center of everything. He was Chairman of EnronпїЅs
finance committee. His investment firm, Capricorn Holdings,
is a lead investor in DynCorp which manages, under contract,
much of the financial data and other electronic records
for the Securities and Exchange Commission (SEC), the Department
of Defense (DoD), the Department of Justice (including the
FBI), the Department of Housing and Urban Development (HUD),
and other US government agencies. The SEC, the Justice Department,
and the FBI are the agencies charged with investigating
Enron. Both DoD and HUD had contracts with Enron. WhatпїЅs
more, Highfields Capital, an investment firm which manages
large portions of the Harvard endowmentпїЅs $19 billion portfolio,
"profited by acquiring options last year betting that
EnronпїЅs stock would fall," said the Times. As we have
noted in at least six FTW stories since 9/11/01,
the purchase of these "put" options is a surefire
indicator of insider trading.
The obvious implication,
noted by HarvardWatch, is that someone, knowing that Enron
was going to crash, tipped off Highfields, which then made
$50-120 million in quick profits.
Wondering who DynCorpпїЅs
auditor is? -- ItпїЅs Arthur Andersen, the document-shredding
company. And, a DynCorp operation in Bosnia and Kosovo has
recently been exposed as being directly involved in a child
sex ring that was trading girls as young as eight as sex
Still worse yet,
while most activists are trumpeting the dog and pony show
being given by Congress, the SEC, and the General Accounting
Office (GAO), full of blustery rhetoric and convenient outrage,
what the government and Congress are really doing is giving
the bad guys all the time they need to destroy evidence,
transfer assets, and hide the money.
One final point:
Just two federal agencies -- whose information systems are
managed, in part, by DynCorp and who have sensitive audit
contracts with Arthur Andersen, the Pentagon, and HUD --
have "lost" more than $3 trillion of your money
since the fall of 1997. This, while anti-war activists are
rightly concerned about a "mere" $48 billion proposed
increase in the PentagonпїЅs next budget. Forty-eight billion
is only 1.6% of the $3 trillion that is missing! That money,
once stolen from the government, had to be laundered someplace.
Could it have moved through Enron Online, the largest money
laundry in the history of man? Could it have moved through
any of the 300-plus subsidiaries that Enron operated in
the Cayman Islands? Is that why the
Cayman Islands expressed willingness to cooperate with any
request for cooperation from the US authorities at the same
time that it stated that no one from the US, either from
Congress or a regulatory agency, had bothered to even ask?
We may never know.
Thanks to a Congress asleep at the wheel, all the records
have been destroyed or transferred -- along with the key
employees whose brains contain the essential knowledge --
to the Union Bank of Switzerland (UBS), which successfully
purchased the remnants of Enron at a bankruptcy sale. If
thereпїЅs one thing we know for certain, itпїЅs that Swiss bankers
never kiss and tell.
Secretary of Housing and Wall Street Banker Catherine Austin
Fitts has moved into the street for a showdown. SheпїЅs not
fooled for a second and sheпїЅs calling the real culprits
out in the street for a fight. -- Mike Ruppert]
is not dying. It is being killed, and the people killing
it have names and addresses." -- Utah
In congressional testimony on February 7, 2002, Herbert S. "Pug" Winokur, Chairman
of the Enron Finance Committee, gave an opening statement
that he had been "misled" by Enron management,
Enron's auditor, Arthur Andersen, and Enron's counsel, Vinson
Every trucker and teacher in my West
Tennessee home of Hickory
that Mr. Winokur's whining is yah-yah.
We are paying $150,000 a year to our Congressman
and two Senators to help Winokur and his pals steal from
us. Congress is stalling for time. While Winokur and his
pals dish out "yah-yah," their colleagues shred
documents, transfer assets, and stolen cash gets tucked
As the Assistant Secretary of Housing in
the first Bush Administration, I cleaned up the Iran-Contra
financial fraud known as the S&L crisis and the HUD
scandal. That was another very expensive stink engineered
between Houston and Wall Street banks, just like Enron.
Later as the head of my own private investment bank, I helped
clean up the major thefts perpetrated by the Bank of Credit
and Commerce International, or BCCI. With many years experience
dealing with high-stakes-stealing, rest assured you can
trust your intuition -- Congress and the Department of Justice
have taken the art of cover up and providing "air cover"
for white collar criminals to new heights of mendacity.
Did your congressional representatives and attorney general
press for seizures of records and cash for the last few
months while the Enron money was getting away? No siree!
While Mr. Winokur was spinning his yah-yah,
the Wall Street law firms of Sullivan & Cromwell and
Covington & Burling were quietly closing the transfer
of the Enron Online trading operation to UBS, one of the
largest Swiss banks. And as Winokur's whining distracted
us on C-SPAN, Wall Street got safely away with the family
jewels and dirty laundry.
Not a word did we hear on Thursday about
getting back cash or holding up any transfers to the secrecy
of a Swiss bank until we are sure we have the investigatory
control necessary to protect our interests. Everyone here
knows the statement, "Possession is 99% of the law."
The real deal is that the Swiss now have possession. That
this happened without a whimper from Congress begs the question:
Us folks here in West Tennessee
are busy. As I drive all over the country, folks say the
same thing wherever I go -- "We are pressed for time."
Somebody has to do the real work while our leaders are preoccupied
with stealing our money and keeping us in the dark. We have
more important things to do than to spend hours listening
to yah-yah constructed by a team of fancy lawyers whose
core competency is lying for money. To buy groceries and
health care insurance, we need cash. That takes a lot of
time if you do it with honest work.
To help my fellow citizens hold Mr. Winokur
and our representatives accountable, I drafted a list of
follow up questions for Mr. Winokur. I have sent them to
him at his last posted e-mail address.
As I finished the questions, an e-mail
came in from Michael Bartell, Chief Information Officer
of the SEC. He was responding to an inquiry I made regarding
DynCorp's management of the SECпїЅs sensitive information
systems. Winokur's firm, Capricorn Investments, is the lead
investor in DynCorp, and he is on the DynCorp board. Winokur's
involvement in DynCorp, as well as his leadership of the
largest private endowment investor in the country, the Harvard
Endowment, is integral to his role in the Enron affair and
his ability to ensure that no Congressman dare cross him
and his pals.
Below are copies of the SEC's letter to
me, my response to the SEC, and my questions for Winokur.
My prayer is that these materials will
be useful to you in exercising your responsibility as a
citizen, or as a shareholder or constituent in any of the
organizations and companies in which Winokur has power and
influence to manage resources on your behalf. The students
at Harvard already have.
Now itпїЅs your turn. Do your duty.
--Catherine Austin Fitts
Hickory Valley, Tennessee
February 9, 2002
HERBERT S. (PUG) WINOKUR, CHAIRMAN OF ENRON
FINANCE and DYNCORP COMPENSATION COMMITTEES, and MEMBER,
HARVARD CORPORATION AND HARVARD MANAGEMENT
30 East Elm Street
Greenwich, Connecticut 06830
CORRESPONDENCE WITH THE SECURITIES AND
EXCHANGE COMMISSION RE: DYNCORP AND THEIR AUDITOR, ARTHUR
Ms. Catherine Austin Fitts
Dear Ms. Fitts,
Thank you for your electronic mail message
on January 14, 2001 to our Office of the Inspector General.
The message was forwarded to me for response. I appreciate
your bringing the DynCorp Inc. article in Insight magazine
to our attention.
We have had discussions with senior DynCorp
officials and understand that the alleged activities noted
in the Insight article were thoroughly investigated by both
DynCorp and the Department of the Army, and appropriate
action has been taken. In addition, the DynCorp organization
that provides the SEC with IT infrastructure support is
a completely separate organization (Information & Enterprise
Technology subsidiary) from the organization referenced
in the article, and none of the personnel assigned to the
SEC have had any involvement with the referenced contract.
Again, I appreciate your concern and bringing
the article to our attention.
Securities and Exchange Commission
February 8, 2002
Thank you very much for your response.
DynCorp's lead investor is Herbert S. Winokur's
company, Capricorn Holdings. Mr. Winokur is the former Chairman
of DynCorp and currently sits on their board as does his
partner, Dudley Mecum. He is currently the chair of DynCorp's
compensation committee. That is the person who leads the
process to determine how much all the senior management
gets paid -- both salary and stock options. DynCorp's most
recent proxy lists their auditor as Arthur Andersen.
Mr. Winokur is also the chair of the Finance
Committee of Enron. This is the person on the board who
is most responsible for the board in ensuring that the company's
finances are managed on a sound and prudent basis commensurate
with optimizing shareholder's value. Mr. Winokur testified
before Congress today on behalf of a special committee of
the Enron board. He indicated that he and his fellow board
members had been misled by Enron's management, Enron's auditor,
Arthur Andersen, and their outside general counsel, Vinson
Under these circumstances, I would like
your official position on the internal control issues related
1. DynCorp's management of SEC and Department
of Justice computer systems used by the enforcement teams
currently investigating criminal and civil allegations regarding
fraud and obstruction of justice by Enron, Enron's board
(including Mr. Winokur) and Arthur Andersen, including their
admission of document shredding.
2. Use by the SEC of any information systems
contractors that have Arthur Andersen as an auditor or critical
joint venture partner or subcontractor and the internal
control implications to the SEC of doing so.
3. Accessibility through your website of
the SEC contract budget so that investors can understand
the potential for conflicts of interest created by government
outsourcing critical information systems (and access to
internal knowledge) to companies whose investors benefit
from changes in SEC policies.
I would also like to know what contracts
Arthur Andersen has with the SEC and whether or not -- given
their admission of document destruction and Mr. Winokur's
testimony regarding their lying to board members -- you
plan to continue to use such a company? My understanding
is that most government contracts permit an immediate cancellation
Thank you very much for your response and
attention to this matter. I believe it goes to the heart
of the SEC mission of ensuring the transparency of financial
information that is an essential prerequisite for free markets.
For the SEC to do that it must have the ability to protect
its own privacy and the integrity of its information and
information systems and its own financial reporting and
Good housekeeping starts at home.
Very Truly Yours,
Catherine Austin Fitts
Former Assistant Secretary of Housing, First Bush Administration.
REPORT TO SOLARI ACTION NETWORK
February 8, 2002
Mr. Herbert S. "Pug" Winokur
Chairman, Finance Committee, Enron in response
to his Congressional testimony today:
Today in testimony you said that the Enron
bankruptcy was a result of Enron management, their auditor
Arthur Andersen and outside general counsel Vinson Elkins
misleading you and the other directors and not doing their
Can you explain:
1. Why your company DynCorp uses Arthur
Andersen as it auditor? I am assuming that you as a lead
investor and member of the DynCorp board would not jeopardize
your investment and shareholder's investment by retaining
an auditor who had misled you and a board in a manner that
would lead to such a collapse?
2. Why as a member of Harvard Corporation's
board would you have less foresight than your largest money
manager Highfields Capital as well as your fellow board
members who had the foresight to make substantial profits
from selling or shorting Enron stock while you and your
board members were in this state of "unaware"
you so well described? How is it that Highfields had access
to this information and you did not?
3. As a member of Harvard Corporation's
board and a GP of Capricorn Holding's partnerships, are
you taking the appropriate action to have Vinson & Elkins
and Arthur Andersen removed from any relationship or work
for any of the investments of these entities? Under the
laws governing your responsibilities, what is the liability
to you and your fellow fiduciaries of permitting these firms
to continue if -- as you say -- they are responsible for
causing the biggest bankruptcy in history and doing so by
helping management mislead their own board?
4. Is the timing of the Powers report of
the Enron board special committee and your testimony --
after Arthur Andersen and Enron documents have been shredded
and Enron Online (with all the large mysterious trading
with Citigroup, JP Morgan-Chase, UBS, Deutschebank and the
other large banks active with Enron in the offshore derivative
and gold markets) already transferred -- more than coincidental?
5. Given the performance of Enron's auditor
Arthur Andersen, do you believe that the federal government
should continue to outsource large amounts of its most sensitive
information systems, procurement and accounting and payments
systems and/or advisory work (related to same) to Arthur
Andersen? What about other auditors who have participated
in significant restatements of earnings and who have significant
relationships with companies that can benefit from access
to sensitive government information or trading on inside
6. Do you believe that it is a conflict
of interest for your company, DynCorp, to manage many of
the information systems for the people working on criminal
and civil investigations (Department of Justice, SEC and
FBI) of you and your colleague's role in Enron fraud and
shredding of documents/obstruction of justice as well as
fraud and obstruction of justice by Enron's auditor Arthur
Andersen and attorneys Vinson & Elkins?
7. Would you care to comment on why the
Department of Housing and Urban Development (HUD) and Department
of Defense (DOD) and some of the other federal agencies
for which your company DynCorp manages highly sensitive
information systems are reported to be missing so much money;
over $3 trillion since fall of 1997? Do you have any idea
where that money is or if it was laundered out of the country
into offshore accounts? As a highly experienced financial
fiduciary with intimate knowledge of the federal information
systems as the former Chairman and current board member
of DynCorp, perhaps you could illuminate for us some of
the ways that this much money could be fraudulently moved
out of the bank accounts held by the NY Fed and its members
as depository and trustee for the US Treasury and federal
agencies and moved off shore through thousands of off shore
subsidiaries and special purpose entities?
8. In light of the fact that the federal
government is paying millions to have private contractors
manage their accounting and information systems, yet those
systems never seem to work, would you care to comment as
to whether outsourcing our governmentпїЅs financial systems
to private contractors whose investors profit from the same
or other companies selling goods and services to these same
agencies makes sense?
9. As chairman of the Enron finance committee
and a member of the executive committee are you responsible
to ensure that the board hires and retains management, auditors
and attorneys who do not mislead the board or others? If
that is not your responsibility, whose responsibility is
10. Under the standards of sound fiduciary
management, you, as board member and chair of the Enron
Finance Committee, are responsible to ensure that the company's
finances are properly managed. If you are someone who is
so easily misled by management, attorneys and auditors do
you consider yourself competent to serve on any boards of
directors of organizations with large financial and resource
responsibilities? Based on the results to shareholders,
creditors and taxpayers, do you draw any connection between
the performance of Enron or government agencies such as
DoD and HUD losing billions of other people's money and
your performance as board member or contractor?
10. Do you believe that Enron should continue
to serve as a government contractor when its management,
auditors and lawyers are people who you believe would mislead
their own board?
E-MAIL TO MR. WINOKUR
On: February 8, 2002 8:08pm EST
I have posted the following questions to
the Solari Action Network as a suggested follow up to your
I would welcome the opportunity to circulate
Catherine Austin Fitts
Attached: Report to Solari Action Network
of February 8 Questions for Winokur)
THE HARVARD MILITIA TO THE RESCUE
To read Harvard Watch's excellent report,
"Trading Truth at Harvard: A Report on Harvard's Enron
Entanglements, " covering (i) Enron and Mr. Winokur's
use of Harvard's Kennedy and Business Schools to influence
government policy on outsourcing of defense functions to
private contractors and energy deregulation, (ii) Highfields
Capital's profits on Enron short selling and (iii) various
relations between Harvard and Enron, see:
To support their excellent recommendations,
call or write
-- Mr. Summers is also named in the GATA
lawsuit alleging illegal manipulation of gold prices in
his capacity as Secretary of the Treasury during the Clinton
-- From 1992 through 2000, the Harvard
Endowment rose from approximately $4 billion to $19 billion.
DynCorp Disgrace, by Kelly O'Meara
Cover Story, Insight Magazine, February
Employees of the corporation have been
buying and selling women and young girls for sex while working
under contract for the United States.
-- Catherine Austin Fitts is a former managing
director and member of the board of directors of Dillon
Read & Co, Inc, a former Assistant Secretary of Housing-Federal
Housing Commissioner in the first Bush Administration, and
President of The Hamilton Securities Group, Inc. She is
the President of Solari, Inc, an investment advisory firm.
Solari provides risk management services to investors through
Sanders Research Associates in London.