When a newly minted President Bush strode into the White House nearly a year ago, the influence and interests of Kenneth Lay, and his massive Enron energy trading company, were only a few steps behind.
Lay, an old Bush family acquaintance and the chairman of Houston-based Enron, was already a member of the new president’s transition team on energy issues. Within a few months, he consulted with White House personnel director Clay Johnson on possible presidential appointees to the Federal Energy Regulatory Commission, which oversees some of Enron’s markets. Bush made an Enron vice chairman secretary of the Army. Vice President Dick Cheney’s energy task force turned to Lay for his expertise six times.
The repetitive presence of Lay and his energy monolith during the opening year of Bush’s presidency is extraordinary for its frequency and for its sorry conclusion.
When Enron’s wobbly house of trading cards began to tumble in late October, Lay and his assistants did not hesitate to make hot-line-style calls to Bush’s treasury and commerce secretaries to drop their bombshell about the company’s precarious state and to hint at a government-led bailout, which never happened.
Bush, former governor of Texas, has said he never discussed the company’s troubles with Lay, whom he has known for years. Other White House aides dismissed any suggestion that the administration took steps to save Enron from its impending collapse and the bankruptcy proceeding that followed.
But while Democrats were quick to point out the chummy Bush-Lay relationship of days gone by, they have lately taken a more cautious tone.
“There’s smoke here, but there’s no proof of fire,” said Sen. Joseph Lieberman (D-Conn.), chairman of the Senate Governmental Affairs Committee, which will examine Enron’s collapse at a Jan. 24 hearing.
Another Democratic lawmaker, Rep. Henry Waxman of California, on Saturday released copies of two e-mail messages Lay sent employees in August. In one, the Enron chairman said: “Our performance has never been stronger; our business model has never been more robust.” In the other, he detailed an employee stock option program that spoke of “a significantly higher price” for Enron stock in the future.
“It appears that you misled your employees into believing that Enron was prospering,” Waxman, the ranking Democrat on the House Government Reform Committee, said in a letter to Lay that the lawmaker also made public.
Mark Palmer, an Enron spokesman, said Saturday that “Ken Lay was telling the truth” in August. He added that only later did the company’s financial problems become clear.
As for Bush-Lay chumminess, Lieberman’s tone is as practical as it is diplomatic. The fact is, Lay and Enron were working Washington long before George W. Bush came to town, and there was plenty of money and influence being spread around both political parties.
“One mistake is to think that this all started with the Bush administration,” said Chuck Lewis, executive director of the Center for Public Integrity, a Washington watchdog group. “They extracted favors from the Clinton administration and from Congress prior to Bush arriving. These guys are players.”
Clinton connection
Lay was no stranger to the Clinton White House, playing golf with the president (this sentence as published has been corrected in this text). Enron hired away Linda Robertson, a senior Treasury official in the Clinton administration, to head the firm’s Washington office.
Enron made a $100,000 contribution in 1997 to the Democratic National Committee just days before its representatives accompanied Commerce Secretary Mickey Kantor on a trade mission to the former Yugoslavia, where Enron hoped to win a large contract.
Lay contributed $11,000 to former President Bill Clinton during his two campaigns; Vice President Al Gore got $13,750 from Enron in the 2000 election. During Clinton’s eight years in office, the company and Lay contributed about $900,000 to the Democratic Party.
That sort of generosity was well-known in fundraising circles in Washington and across the country. In the past 10 years, Enron contributed $5.8 million to political candidates of all stripes, from former New York Mayor Rudolph Giuliani to Clinton to House Speaker Dennis Hastert (R-Ill.).
“The name of the game for both Democrats and Republicans is raise as much damn money as possible with no holds barred,” said Leon Panetta, Clinton’s former chief of staff. “And so both sides are going after huge contributors that will give largely soft money contributions that are unlimited.
“That just means it’s an open invitation to companies that want to exert influence to play that game. And until there are some limits that are placed on soft money campaign contributions, what you see happening with Enron is going to continue to happen in the future.”
But no candidate benefited more from Enron than President Bush. First as a candidate for governor of Texas and later as a presidential contender, Bush has received $623,000 from Enron since launching his political career in 1993.
The Center for Responsive Politics, a non-partisan group that tracks money and politics, said 73 percent of Enron’s contributions in the last decade have gone to Republicans and 27 percent to Democrats.
“It definitely buys access,” said Larry Noble, executive director of the group and former counsel of the Federal Election Commission. “It gets their phone calls returned. When you make that many contributions and Kenneth Lay is a friend of President Bush’s, you have to ask very serious questions about what that access bought.”
Enron officials contributed $10,500 to the Bush campaign for legal expenses in the Florida recount. When Bush became president, they donated $300,000 for the inaugural celebration.
Contributions to lawmakers
Though in far smaller amounts, political contributions were given to the majority of congressional lawmakers.
Nearly half of the representatives in the House and three-fourths of the senators received money from Enron executives, according to campaign finance reports filed in Washington. Texas lawmakers received the most, with Republican Sen. Kay Bailey Hutchison topping the list with $99,000 in contributions since 1989.
Atty. Gen. John Ashcroft received about $25,000 in Enron contributions during his unsuccessful Senate re-election campaign in Missouri. Ashcroft last week recused himself from an Enron criminal investigation launched by a Justice Department task force. The department later disclosed that Ashcroft, while serving as attorney general, was invited by Lay to speak to a group of chief executive officers about law-enforcement issues.
Sen. Charles Schumer (D-N.Y.) received $21,933 in contributions during the same period. He sits on the Senate energy committee. Senate Majority Leader Tom Daschle (D-S.D.) received $6,000.
The Enron governmental affairs office in Washington has nearly a dozen employees, in addition to contract lobbyists. Telephone calls to that office were not returned late last week.
But money was only part of the game. Lay and Enron are clearly more comfortable with the Republicans who are now in office, and, until early December, those officials appeared content with Enron.
Wendy Gramm, who headed the Commodity Futures Trading Commission under former President George Bush, is a good example. Not only did she once head the agency that regulated some of Enron’s trading activities, but she was married to Sen. Phil Gramm (R-Texas), a member of the Senate Banking Committee.
While at the agency, Wendy Gramm shepherded a commission ruling that exempted a significant amount of Enron’s energy trading from federal oversight. Several weeks later, she left government and was elected to Enron’s board.
In December 2000, with his wife still on Enron’s board, Sen. Gramm sponsored the Commodity Futures Modernization Act, which made the exemption law. A Gramm spokesman said the senator did not work on that part of the legislation.
As an Enron board member, Wendy Gramm sold $277,000 worth of Enron stock in 1998, according to the Center for Public Integrity.
Senior Bush adviser Karl Rove also held Enron stock worth $100,000 to $250,000, but he was required to sell it under government ethics rules.
In at least one high-profile instance, an Enron official joined the federal government. Bush’s secretary of the Army, Thomas White, had been vice chairman of Enron Energy Services. Bush’s nomination of the former brigadier general had raised congressional concerns because White had headed Enron’s efforts to win federal contracts to run the utilities on military bases.
Sen. John McCain (R-Ariz.), among others, asked White to recuse himself from the contract-letting process, to which White agreed, though he still favors the trend toward privatizing such services. White sold about $50 million in Enron shares before the price of the company’s stock plummeted.
Slew of investigations
Three congressional panels, the Justice Department, the General Accounting Office, the Department of Labor, and the Securities and Exchange Commission have opened inquiries into Enron’s failure and the firm’s activities before its bankruptcy filing. Though the first Senate hearing is less than two weeks away, it will take months, if not several years, to sort through the web of commodities trading schemes and off-the-books deals that regulators and congressional leaders say brought on Enron’s collapse.
A thorough investigation of Enron’s market influence likely will reveal a good bit of the dealmaking that occurred not on trading floors, but in Washington offices.
“There are so many tentacles to Enron, and so many different elements that it could have impacted, that it may take some time to dig out and discover,” said Lewis of the Center for Public Integrity. “When they go back and look at . . . the actual influence over personalities and policies that played out over the last two months, that’s when we’re going to see exactly what Enron got, and what they didn’t get.”
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Enron’s connections to the Bush administration
GEORGE W. BUSH, President
Received about $114,000 in political action committee money and individual donations from Enron during the 2000 campaign.
DICK CHENEY, Vice president
Met with Enron CEO Kenneth Lay six times in 2001 before the release of the administration’s energy plan.
JOHN ASHCROFT, Attorney general
His 2000 Senate campaign received thousands of dollars in donations from Enron. Ashcroft has recused himself from the Justice Department inquiry.
DON EVANS, Commerce secretary
Lay called Evans last fall to alert him about the company’s problems.
PETER FISHER, Treasury Department, undersecretary for domestic finance
Enron President Lawrence “Greg” Whalley asked Fisher to call bankers with whom the company was negotiating for credit extensions. A Treasury Department spokeswoman said Fisher never made the calls.
PAUL O’NEILL, Treasury secretary
Lay also called O’Neill, as well as Federal Reserve Chairman Alan Greenspan, to discuss Enron’s problems.
KARL ROVE, Senior Bush adviser
Owned Enron stock at the beginning of Bush’s term but sold it because of federal ethics rules.
MARC RACICOT, Republican National Committee chairman appointee
Was a lobbyist for Enron last year but says he will do no more lobbying after he takes the RNC job.
Source: Associated Press
Chicago Tribune
Enron’s political contributions
Since 1990, Enron and its executives have made campaign contributions of $5.8 million.
Nearly three-quarters of that money went to Republicans.
TOTAL CONTRIBUTIONS BY CAMPAIGN YEAR
%%
CAMPAIGN TOTAL TO REPUBLICANS TO DEMOCRATS
1990 $163,250 58% 42%
1992 281,009 58 42%
1994 520,995 58 42%
1996 1,141,016 81 18%
1998 1,049,942 79 21%
2000 2,441,398 72 28%
2002 172,859 88 11%
PRESIDENTIAL CANDIDATES
TO REPUBLICANS TO DEMOCRATS
George W. Bush $113,800
Bob Dole 95,650
Al Gore 13,750
George H.W. Bush 13,000
Bill Clinton 11,000
CONTRIBUTIONS TO CURRENT MEMBERS OF CONGRESS
TOTAL TO REPUBLICANS TO DEMOCRATS
Senate $530,493 79% 21%
House 603,488 57% 43%
*Includes $2,500 to one Independent.
Note: Totals include contributions from Enron and its employees.
Sources: opensecrets.org, Federal Election Commission
Chicago Tribune
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