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While nursing a bad cold, I have been writing up notes on Enron. Here is the
portion related to Pug and Harvard...draft form. Dates and spellings have
yet to be checked.
My sense is that there may be an opportunity to get somewhere if there is a
mutually beneficial opportunity for those harmed to connect with some of the
other constituencies that these folks are harming in other areas, including
the War on Drugs.
I will keep you posted.
Catherine Austin Fitts
Solari
Linda Minor reminds me that when Pug was at David Murdock's Pacific
Holdings, Pacific was an investor in Zapata.
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In the movie Caddyshack, Chevy Chase keeps chasing this gopher around the
golf course who keeps popping up in hole after hole.
Over the last six years, every time I start to look into a significant
financial fraud or money laundering situation, one of two names pop up: Pug
Winokur or Jerry Hawke. I have come to think of them as the gophers of
financial fraud and money laundering.
One of the things that make Enron intriguing is that both Pug and Jerry are
present and accounted for.
First, let me describe Pug.
Four weeks ago, I had no interest in Enron. And then one morning I had
coffee with a colleague and he said, “Highfield’s Capital was one of the
visible short sellers in Enron in April and August. Why would Harvard’s
largest hedge fund be short selling Enron? Do you know if Highfield’s is
still close to Harvard?”
I responded that according to Harvard’s more recent tax return filed for
tax-exempt organizations, Highfield’s was listed as Harvard’s #1 vendor
relationship, having received over $29 million in payments from Harvard.
That was the last year in the miraculous Clinton Administration run where
the Harvard Endowment increased from $4 billion to $19 billion. In my world,
a $29 million client is someone that a money manager stays intimately close
to.
Highfield's was formed in 1998, when Harvard Management stock manager Jon
Jacobsen (?) left Harvard to form Highfield’s with a commitment from Harvard
Management of $500 million.
Harvard Management is the organization that manages the Harvard endowment.
It is governed by a board within the governance of the governance of the
Harvard Corporation, if I understand Harvard’s website correctly. The tax
returns appear to show a somewhat different organization, so I am not sure
that I am totally clear on how these guys are doing it. It seems a bit
vague.
If Highfields was short selling all the way from $90 to less than $1,
Harvard could have made a real bundle helping to tank Enron.
Now this was an interesting piece of information. Especially since the Enron
CEO who built the on line trading operation, Jeff Skilling, was a partner at
McKinsey working on the Enron account for McKinsey before joining Enron in
1990 (Check date). At McKinsey he would have worked for D. Ronald Daniel,
Harvard's treasurer and the chairman of Harvard Management's board of
directors, whose Harvard resume lists him as having served as managing
partner of McKinsey & Company from 1976 to 1988. In addition, there is a
center at Harvard named after Robert Belfer, the largest Enron shareholder
and a member of the board.
The Harvard connections to Enron’s political horses are also significant.
President Bush, the largest leading beneficiary of Enron’s substantial
political largess, is a graduate of Harvard Business School and his choice
for White House Attorney, Al Gonzales, is a graduate of Harvard Law School.
It was Harvard’s private equity portfolio that financed Harken Energy and,
according to the Center for Public Integrity, is likely the investor who
facilitated the inside trade that seeded the President’s personal fortune.
But the one that caught my eye, was the fact that Herbert S. Winokur, aka
Pug Winokur, a member of the Harvard Corporation and a private investor
along side with Harvard’s private equity portfolio in HUD related and other
private equity investments, has served as a member of the board of Enron,
joining in the late ‘80’s around the time that Skilling did and ---for quite
some time---serving as the Chairman of the Enron Finance Committee.
In layman’s terms what that means is that it was Pug’s job to make sure that
Enron’s management was running Enron’s finances on a prudent and sound
basis. When it comes to making sure the companies financial arrangements
were sound, the companies management reported to Pug. As Harry Truman said,
“the buck stopped here.” Pug was the highest governance authority of outside
board members overseeing the company’s finances.
Who is Pug Winokur?
Pug, like Skilling, is a systems man. He graduated from Harvard with a major
in applied mathematics in 1964, got his masters at Harvard in the same
subject in 1965 and then got his PhD from Harvard in applied mathematics,
specifically decision and control theory, in 1967. From there he went to
work as an army officer for the Office of the Secretary of Defense working
on systems analysis. This was a similar stop as Kenneth L. Lay, the Chairman
of Enron, whose career started as an accountant designing accounting systems
for the Pentagon.
Leaving government in 1969, Pug then started his own government contracting
firm with a series of high-level sole source contracts from the federal
government. From 1974 to 1983 he held a series of positions at Pacific
Holding Corp., Victor Palmeri and Co., and Pennsylvania Co., Penn Central's
principal operating subsidiary. Then in 1983, Pug became a senior executive
vice president of the Penn Central Corp. In 1987, Pug started his investment
firm, Capricorn Holdings, Inc. with his partner Dudley Mecum, a board member
of one of Enron’s lead bankers, Citigroup. Pug is the managing general
partner of three affiliated limited partnerships, Capricorn Investors, L.P.,
I (organized 1987), II (organized 1994), and III.
In 1988, Pug became Chairman of the Board of DynCorp after Capricorn bought
approximately 35-40% of the stock. In 1997, Capricorn reduced its stock down
to approximately 5% and Pug resigned as Chairman, remaining on the board and
becoming Chairman of the Compensation Committee.
During the same period, Pug became an investor and board member in NHP with
approximately 12% of the stock, one of the leading property managers and
owners of HUD subsidized housing. Harvard Endowment’s private equity
portfolio was lead investor with approximately 50% of the stock. The Harvard
representative on the board was Mike Eisenson, who was the Harvard
representative on Harken Energy’s board. My understanding from NHP’s
Chairman Rod Heller was that Pug and Harvard had purchased their stock from
Warren Buffet. Pug and Harvard sold their NHP positions to AIMCO in Denver
in 1997 for cash and AIMCO stock, keeping WMF, the mortgage banking
subsidiary which they sold to Prudential in 2000 after riding the flood of
HUD credit during the Clinton era.
Pug is also a board member or investor in numerous other companies,
including reinsurance, auto information systems, and food companies. His
most interesting investment is Whitestone Acquisition Corporation.
Whitestone is a manufacturer of adult incontinence products for the
institutional market. That means it makes diapers for adults, which makes
you wonder what insider information Pug has about the War on Terrorism and
low grade biological warfare.
Pug serves as the Chairman and lead investor in Mr. Field’s Cookies. Mrs.
Field’s Cookies, I’m told, is a company that grew out of the Stanford
decision sciences department, where Debbie Field’s husband was studying the
same decision systems as Pug, and built Mr. Field’s Cookies based on some of
the finest neural networks and artificial intelligence around that support
sophisticated retail food operations.
The recurring themes of systems thinker and toolmaker in Pug’s life now
brings us to PROMIS and Pug’s role in the War on Drugs.
Pug’s Role on PROMIS and the War on Drugs
Pug’s arrival at DynCorp was sometime after DynCorp picked up responsibility
for helping to manage the PROMIS software system at the Department of
Justice. If you do not know anything about PROMIS, read what is said to be
the fictionalized account by Michael Thomas, Black Money, or Kelly O’Meara’s
series in Insight Magazine, available at www.insightmag.com.
There are many rumors about Pug’s leadership role with PROMIS that are worth
considering in the context of investigating the cash flows that may have
flowed through or been laundered by Enron’s on line trading system.
According to reports by Bill Tyree published by Mike Ruppert in From the
Wilderness, Pug’s recent charge at DynCorp was to use PROMIS to compromise
government information systems the way that PROMIS had been used to
compromise banking systems. This including allegations of compromising HUD
accounting and transaction systems, managed by Lockheed, DynCorp, AMS and
others, as a prototype.
Pug’s role at DynCorp and DynCorp’s responsibilities at the Department of
Justice, the State Department and HUD, make him one of the leading business
leaders behind the War on Drugs, including asset forfeiture for the
Department of Justice, Operation Safe Home at HUD and the US operations in
Bolivia, Colombia and Peru.
Pug’s role as an investor in War on Drugs enforcement infrastructure is very
important to judging Pug’s role in the Enron fraud. One reasons is because
Pug is profiting and helping to aggressively implement a standard of
punishment for negligence to the average American that we would be well to
use in holding Pug and his fellow board members accountable for their role
governing Enron.
For example, in HUD’s Operation Safe Home, a mother can be evicted from
Public Housing if her child is using drugs even though she did not know
about it and did not condone it. In the DOJ asset forfeiture fund, a
businessman or property owner can lose their business or property if there
is drug use or certain kinds of wrongdoing on their property even though
they had no knowledge of it. The standards is often “probable fraud” rather
than indictment or conviction. That is, DynCorp and Pug as DynCorp’s lead
investor, make money from helping the Department of Justice seize people’s
private property when they think there is fraud. No proof.
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