Enron: The Bush Administration's First Scandal

[97silverlsc]

Enron: The Bush Administration's First Scandal
By Jason Leopold
t r u t h o u t | Report
http://www.truthout.org/docs_2006/013006Z.shtml
Monday 30 January 2006

Jury selection in the long-awaited criminal trial of former Enron chairman Kenneth Lay and company president Jeffrey Skilling is expected to start Monday morning in a Houston courtroom.

For many people familiar with the high-flying energy company's meteoric rise and sudden downfall four years ago, Enron and the company's crooked "E" logo have come to represent corporate greed, corruption and excess.

But more important, Enron should be symbolic for something else: it was the first in a long list of corporate scandals involving the Bush administration and numerous members of Congress.

Back in August 2001, just two months before Enron imploded in a wave of accounting scandals in which thousands of employees lost their jobs and their pensions, and which wiped out $60 billion in shareholder value, an Enron lobbyist tipped off the Bush administration about the company's impending financial problems.

A former Enron executive who was then under congressional investigation in relation to the company's collapse explained at the time how Skilling's abrupt resignation from the company raised red flags within Enron and worried insiders.

Enron's ties to Washington lawmakers were stronger than disgraced lobbyist Jack Abramoff's. There was a time when Ken Lay, known as "Kenny Boy" to Bush, could pick up the phone and speak with the president, Vice President Dick Cheney or any number of senior administration officials.

The two months prior to Enron's downfall was one of those times.

On August 15, 2001, one day after Skilling resigned from the company, Lay sent Enron lobbyist Pat Shortridge to meet with White House economic advisor Robert McNally. Shortridge warned McNally that Skilling's resignation could lead to a fiscal crisis that could possibly cripple the country's energy markets, a former Enron executive told this reporter three years ago.

"It was very well known that Enron faced a financial meltdown," the former executive said at the time, and when interviewed again for this story last week the executive repeated those remarks. "The day that Jeff resigned, our stock plummeted. We knew it wouldn't rally. What we didn't know was how the financial problems at Enron would impact the energy markets in the US. That's why Pat met with Mr. McNally."

The White House acknowledged that the meeting between Shortridge and McNally took place in documents released to reporters and Sen. Joe Lieberman, D-Conn., chair of the Senate Governmental Affairs Committee, which in 2002 investigated the fall of Enron. The documents noted that "Mr. McNally met with Mr. Shortridge and another individual who was not from Enron."

When asked whether Enron's future had been discussed, White House spokeswoman Anne Womack said at the time that "if the meeting was about that, I would assume there wouldn't be anyone else there besides Mr. McNally and Mr. Shortridge."

What's troubling about the meeting between Shortridge and McNally is the fact that the White House was tipped off to Enron's financial troubles months before it had previously acknowledged them and well in advance of the warning letter former Enron executive Sherron Watkins delivered to Lay, in which she said that the firm's Byzantine partnerships could destroy the company.

As with the 9/11 attacks, one question that is still left unanswered in the Enron debacle is: What did President Bush know, and when did he know it?

In May 2002, the White House complied with a subpoena and turned over more than 2,000 pages of documents pertaining to Bush administration contacts with Enron to various Senate and Congressional committees investigating Enron's demise.

What the documents revealed was the close relationship that Enron enjoyed with the White House and how the company was able to influence President Bush's political agenda by recommending people to various posts within the administration.

Buried deep within the pages of those documents was a letter Lay sent January 8, 2001, to Bush's personnel director, Clay Johnson, recommending seven candidates to the Federal Energy Regulatory Commission. Two of the candidates Lay recommended, Pat Wood and Nora Brownell, were appointed to FERC by Bush; Wood was appointed chairman. Another document revealed Lay calling the White House incessantly for help.

Lay called Treasury Secretary Paul O'Neill on October 28, 2001, to advise him that Enron was heading toward bankruptcy. The next day, Lay asked Commerce Secretary Don Evans for help in keeping a major Wall Street ratings agency from downgrading Enron's credit rating, which would push the company into bankruptcy. A week later, Enron president Greg Whalley called Treasury Under Secretary Peter Fisher six to eight times, seeking help in getting banks to lend more money to Enron.

Following these revelations, the White House was forced to admit in January 2002 that it had asked Lawrence B. Lindsey, former head of Bush's National Economic Council, to conduct a review in October 2001 - before Lay called O'Neill and Evans -- to see whether an Enron collapse could have a strong impact on the American economy. Critics were in an uproar following the admission, because President Bush and his senior aides had vehemently denied having any prior knowledge of Enron's financial status or impending troubles.

As Jennifer Palmieri, a spokeswoman for the Democratic National Committee said at the time, "it shows once again that the administration did a lot of thinking about the fact that the company was going to collapse, but they did absolutely nothing to make sure that 50,000 Enron employees would not lose their life savings."

The intimate relationship between Enron and the Bush administration is also clearly shown by these documents. Lindsey had been a paid consultant for Enron, receiving $50,000 in 2000. And he is just one of the top White House and Republican Party officials with close Enron ties, including Robert Zoellick, the United States trade representative who sat on an Enron advisory board in 2000; Karl Rove, senior White House political strategist, who held more than 1,000 Enron shares before selling them in June 2001; and Marc Racicot, chairman of the Republican National Committee, who worked as an Enron lobbyist last year.

Then there are Enron's close financial ties to the Bush campaign. Enron and its employees gave more than $1 million to Bush's 2000 election campaign, the Republican Party, and the Bush Inaugural, and Bush aides used the Enron corporate jet during the post-election fracas in Florida.

But perhaps the most egregious crime is how President Bush and Vice President Cheney sat by and allowed Enron to rip off California.

On May 29, 2001, when the California energy crisis reached its peak, resulting in nearly a week of rolling blackouts, bankruptcies, and several deaths, Gov. Gray Davis met with Bush at the Century Plaza Hotel in West Los Angeles, and pleaded with him to enact much-needed price controls on electricity sold in the state, which had skyrocketed to more than $200 per megawatt-hour.

Davis asked Bush for federal assistance, such as imposing federally mandated price caps, to rein in soaring energy prices. But Bush refused, saying California legislators had designed an electricity market that left too many regulatory restrictions in place and that it was that which had caused electricity prices in the state to skyrocket.

It was up to the governor to fix the problem, Bush said, adding that the crisis had nothing to do with energy companies manipulating the market.

But Bush's response, in hindsight, appeared to be part of a coordinated effort launched by Lay to have Davis shoulder the blame for the crisis, which ultimately led to an unprecedented recall of the governor and Republican-funded attack ads on Davis' handling of the energy crisis.

A couple of weeks before the Davis and Bush meeting, the PBS news program Frontline interviewed Cheney. Cheney was asked by a correspondent from Frontline whether energy companies were acting like a cartel and using manipulative tactics to cause electricity prices to spike in California.

"No," Cheney said. "The problem you had in California was caused by a combination of things - an unwise regulatory scheme, because they didn't really deregulate. Now they're trapped from unwise regulatory schemes, plus not having addressed the supply side of the issue. They've obviously created major problems for themselves and bankrupted PG&E in the process."

In April 2001, a month before the Frontline interview and Bush's meeting with Davis, Cheney, who chaired Bush's energy task force, met with Lay to discuss Bush's National Energy Policy.

Lay recommended some energy policy initiatives that would financially benefit his company, and gave Cheney a memo that included eight recommendations for the energy policy. Of the eight, seven were included in the energy policy's final draft. The energy policy was released in late May 2001, after the meeting between Bush and Davis, and after Cheney's Frontline interview.

What many people have failed to realize is that Davis was right in his assessment that energy companies, including Enron, were manipulating the state's wholesale power market. To this day, neither Cheney nor Bush has acknowledged that they got it wrong and that their inaction helped fuel the California energy crisis.

It appears that neither Lay nor Skilling will be held responsible for the scams Enron's traders pulled on California either. The federal court judge presiding over the criminal case against Lay and Skilling ruled earlier this month that the smoking gun transcripts and audiotapes showing how Enron traders caused shortages and blackouts in California could not be introduced by the prosecution as evidence during the trial because it would prejudice the jury.

One of the more infamous audio tapes captured an Enron trader admitting that his manipulative trading tactics in California helped him rip off "Grandma Millie" to the tune of $1 million a day.

Jason Leopold spent two years covering California's electricity crisis as Los Angeles bureau chief of Dow Jones Newswires. Jason has spent the last year cultivating sources close to the CIA leak investigation, and is a regular contributer to t r u t h o u t.


I would recommend everyone rent the dvd Enron: The smartest guys in the room.
I found it very informative.

 

[MonsterMark]

Enron incorporation date: July 19, 1996.

Guess that would make it a Clinton born scandal.:shifty:

 

[Calabrio]

Looks to me like they played fast and lose under Clinton and were prosecuted by the Bush administration.

 

[barry2952]

More like "aided and abetted" by the BuSh administration.

 

[JohnnyBz00LS]

Enron incorporation date: July 19, 1996.

Guess that would make it a Clinton born scandal.:shifty:

Looks to me like they played fast and lose under Clinton and were prosecuted by the Bush administration.

:bsflag: Did you guys even read the article?

1) There was no opportunity for Enron employees to manipulate Clinton via campaign funding.

2) All the maneuvering that took place was after BuSh took office, and both BuSh and Cheney were involved.

Go ahead, keep you head buried in the sand where you feel safe.

 

[MonsterMark]

The two months prior to Enron's downfall was one of those times.

As with the 9/11 attacks, one question that is still left unanswered in the Enron debacle is: What did President Bush know, and when did he know it?

Another attempt to pin the tail on the donkey will wind up making the DemocRats look like jackasses, as they have time and time again.

You guys need to go find comfort in the Huffington Post. Your hating pals are over there. But even they have grown weary of stubbing their toes and have lost confidence in the Democratic Party to put together any kind of winnable strategy. Like the saying goes, 'misery loves company', so you should find much happiness over there.

Over here we'll stick to reality.

Can't wait the SOTU tonight.:Beer

 

[97silverlsc]

Looks to me like they played fast and lose under Clinton and were prosecuted by the Bush administration.

Looks to me like once again, you don't know WTF your talking about.
Enron started energy trading on legislation pushed through or assisted by GW41. Ken Lay has close ties with the Bush family going way back. Enron was the largest or one of the largest corporate donors to Shrubs 2000 campaign.
Nice try but it ain't gonna fly!

 

[pbslmo]

Looks to me like once again, you don't know WTF your talking about.
Enron started energy trading on legislation pushed through or assisted by GW41. Ken Lay has close ties with the Bush family going way back. Enron was the largest or one of the largest corporate donors to Shrubs 2000 campaign.
Nice try but it ain't gonna fly!

So was the Bin Laden Family. Close Ties

 

[RB3]

Looks to me like they played fast and lose under Clinton and were prosecuted by the Bush administration.

Absolutely right.

And Phil...here's some reading for you.....

THE CLINTON-GORE ADMINISTRATION HELPED ENRON WITH NUMEROUS BUSINESS DEALS
President Clinton Took A Personal Interest In An Enron Energy Deal. "On Nov. 22, 1995 . . . Clinton scrawled an FYI note to [Chief of Staff Mack] McLarty, enclosing a newspaper article on Enron Corp. and the vicissitudes of its $3 billion power-plant project in India. McLarty then reached out to Enron's chairman, Ken Lay, and over the next nine months closely monitored the project with the U.S. ambassador to New Delhi, keeping Lay informed of the Administration's efforts, according to White House documents reviewed by Time. In June 1996, four days before India granted final approval to Enron's project, Lay's company gave $100,000 to the President's party." (Michael Weisskopf, "The White House: That Invisible Mack Sure Can Leave His Mark," Time, September 1, 1997)


The Clinton-Gore National Security Council And Vice President Gore Interceded On Enron's Behalf. "Gas giant Enron Corp.'s plan to develop Mozambique's Pande natural gas field appears to have been saved from cancellation last month by a blunt threat from the U.S. National Security Council to cut off future U.S. aid to the country. . . . U.S. sources said [Mozambican Energy Ministry John] Kachamila then entered into negotiations on [an] alternative proposal . . . [and] began to portray the Enron deal as bad financially . . . . Given the hurdles, Enron is pinning its hopes on a visit to South Africa on Dec. 6 by Vice President Al Gore, who will take in talks with President Nelson Mandela." (Jonathan Bearman, "White House Rescued Enron's Deal To Develop Mozambique's Pande Field," The Oil Daily, December 1, 1995)


Enron Received Over $4 Billion In Federal Assistance During The Clinton-Gore Administration. "'All told, Enron received over $4 billion from the federal Overseas Private Investment Corp. and the Export-Import Bank for projects in Turkey, Bolivia, China, the Philippines, and elsewhere' during the Clinton administration." (Greg Pierce, "Inside Politics," The Washington Times, January 14, 2002)


The Clinton-Gore Commerce Department Had An "Economic War Room" To Aid Enron And Other Corporations. "From . . . [the] Washington war room, the negotiators for the Enron Corporation, the lead bidder in the American consortium, have been shadowed and assisted by a startling array of Government agencies. In a carefully-planned assault, the State and Energy Departments pressed the firms' case." (David E. Sanger, "How Washington Inc. Makes A Sale," The New York Times, February 19, 1995)


Clinton-Gore Administration Officials Were "Unabashed Cheerleaders" For The Enron Power Contract In India. "Many Clinton Administration officials had been unabashed cheerleaders for the deal, with Energy Secretary Hazel O'Leary warning in June that canceling the Dabhol contract would endanger other private power projects being financed from outside India." (John-Thor Dahlburg, "India Orders Plug Pulled On U.S.-Run Power Project," Los Angeles Times, August 4, 1995)

The Clinton-Gore Energy Department Awarded A Contract To Enron For The Construction Of The Largest On-Grid Photovoltaic System In The United States. "Amoco/Enron Solar will develop the country's largest on-grid photovoltaic farm--a 10 MW facility on Department of Energy land at the Nevada Test Site-- under a power purchase agreement with the Corporation for Solar Technology and Renewable Resources, a DOE-funded nonprofit organization. Although the 10 MW purchase commitment from the Nevada Test Site is a mere 10 percent of the hoped-for 100 MW solar goal, CSTRR president Rose McKinney-James said she was 'pleased and encouraged' by CSTRR's accomplishments to date." (Libby Brydolf, "Largest PV Farm Set For Nevada Test Site," The Electricity Daily, November 6, 1996)


The Clinton-Gore Administration Helped Enron Salvage An Energy Contract In The Philippines. "President Clinton today salvaged a U.S. proposal to ease trade barriers on computer technology by the year 2000 as the Asia-Pacific Economic Cooperation forum wrapped up its work. . . . Key investors in Subic Bay include Houston-based Enron Corp., which has a subsidiary developing the area's power source, and Coastal Corp., which has taken over the huge tanker storage area. Enron and Coastal were among the first 94 investors in Subic Bay, which now serves as the Asia hub for Federal Express. Those firms, along with Dallas-based EDS, serve on the APEC Business Advisory Council that met with Clinton Sunday night."
(Nancy Mathis, "Clinton Salvages Motion On Computer Technology," The Houston Chronicle, November 25, 1996)


The Clinton-Gore Administration Helped Enron Secure Over $400 Million In Loans For A Joint Venture. "The U.S. will provide up to $400-mil in government-backed loans to support a possible joint venture between Enron and Uzbekistan to develop gas reserves, the U.S.' Overseas Private Investment Corp (OPIC) said June 24. OPIC's announcement coincided with a state visit by Uzbekistan President Islam Karimov, who meets with President Clinton June 25." ("Support For Possible Enron-Uzbek Link," Platt's Oilgram News, June 25, 1996)

The Clinton-Gore Administration And The OPIC Helped Enron Finance A Gas Pipeline Through Eastern Bolivia And Brazil. "Environmentalists say U.S. government financing is being misused to finance a gas pipeline through a rare forest ecosystem in violation of the Clinton administration's own policies. American energy giants Enron and Shell, along with the Bolivian consortium Transredes, are hurrying to complete the 243-mile pipeline, which will extend from an existing gas pipeline near the city of Santa Cruz in eastern Bolivia to Cuiaba, Brazil. . . . The $570 million Cuiaba Integrated Energy Project is set to be completed by March, financed in part with a $200 million loan delivered to the companies on June 15 from the Overseas Private Investment [Corporation]." (James Langman, "Clinton Regime Ripped For Supporting Pipeline," The Washington Times, January 11, 2000)

The Clinton-Gore OPIC Issued A $200-Million Loan That Helped Enron Construct A South American Gas Pipeline. "The Overseas Private Investment Corporation approved a $200 million loan Tuesday for a gas pipeline in Bolivia, a project opposed by environmental groups and some U.S. lawmakers. . . . In addition, Enron and Shell committed themselves to spending more than $20 million to develop and implement a regional conservation plan for eastern Bolivia over the next five years."
(Harry Dunphy, "OPIC Approves $200 Million Loan For Bolivia Pipeline," The Associated Press, June 15, 1999)


ENRON OFFICIALS HAD REGULAR SEATS ON CLINTON OVERSEAS TRADE MISSIONS

Enron Executives Traveled So Often On Trade Missions That The Company Was "Compelled" To Let The World Know That No Employees Were On Ron Brown's Plane When It Crashed. "Enron officials were so often part of Clinton's international trade missions that the company felt compelled to issue a news release saying no one from Enron was involved when a plane crashed in Croatia in 1996, killing all aboard, including [then] Commerce Secretary Ron Brown." (Jack Douglas Jr. and Jennifer Autrey, "Enron Spread Its Political Donations," Fort Worth Star-Telegram, January 27, 2002)

A Sample Of Clinton-Era Trade Missions That Included Enron Executives:


Russia In March And April 1994. "Rodney L. Gray, chairman and chief executive officer of Enron International accompanied Brown on [a] . . . trade mission to Russia in March and April of 1994. In Russia, Enron signed a deal to develop a market for Russia[n] gas in Europe." (Center For Public Integrity Website, www.publicintegrity.org, accessed August 20, 2002


India In January 1995. "Kenneth Lay, chairman and chief executive officer of the Enron Corporation, accompanied Secretary of Commerce Ronald Brown on the trade mission to India in January, 1995. In India, Enron signed a contract for a 2,000 megawatt power plant in Dahbol worth an estimated $400 million. Enron also won a contract to build a $920 million power plant on the West coast of India and a $1.1 billion contract for offshore gas and oil production." (Center For Public Integrity Website, www.publicintegrity.org, accessed August 20, 2002)


Bosnia And Croatia In July 1996. "The Enron Development Corp. had good reason to be thankful when its president accompanied Commerce Secretary Mickey Kantor on a trade mission to Bosnia and Croatia last July. With Kantor's help in Croatia, Enron signed a memorandum of understanding to construct a 150-megawatt power plant that will cost $100 million or more to build." (Walter V. Robinson, "Donations Are Linked To Kantor Trade Missions," The Boston Globe, February 12, 1997)


South Africa In December 1998. "[F]or every South African and American who cares about jobs, and about making our economies work for all people, this is a very important trade mission. . . . These companies see a new Africa. They want to trade and invest more with countries that are moving from the margins to the mainstream of the global economy. . . . Another company is Enron [represented by Terrence Thorn]. They want to develop a $2,500 million gas pipeline and iron and steel facility in Mozambique that will mean thousands of jobs." (Then-Commerce Secretary Daley As Quoted In "United States And Africa," Africa News, December 2, 1998)


China In April 1999. "U.S. Commerce Secretary William Daley's infrastructure trade delegation to China this week produced several business deals. Some were part of the trade mission and others were timed to coincide with it. . . . Enron International China Pipeline, a wholly-owned subsidiary of Enron Corp. of Houston Texas, signed a memorandum of understanding with China National Petroleum Corporation on Wednesday to jointly develop a natural gas pipeline. The 765 kilometer pipeline, the first onshore pipeline to be built in cooperation with a foreign company, will transport natural gas from Sichuan Province to markets in Hubei Province." ("Daley's China Visit Nets Trade Deals For U.S. Companies," ChinaOnline, April 2, 1999)


Egypt In October 1999. "A group of U.S. corporate executives headed by Commerce Secretary William Daley arrived here Wednesday hoping to exploit fresh trade opportunities with Egypt after a change of government. The delegation is looking forward 'to exploring commercial opportunities resulting from Egypt's economic reforms and ongoing privati[z]ation reforms,' Daley said on his arrival here at the head of a delegation of 12 business leaders. Among the U.S. companies represented were Nortel Networks, Enron Corporation [represented by Richard Bergsieker, Senior Vice President], ProNetLink.com and New York Life International." ("US Trade Mission To Explore New Privati[z]ation Opportunities In Egypt," Agence France Presse, October 13, 1999)


Latin America In February 2000. "Commerce Secretary William Daley left Friday evening for Latin America with 19 U.S. corporate executives on a U.S. business-development mission focusing on information and communications technology, environment, and energy. Among the 19 executives are . . . Terrence Thorn, executive vice president of Enron. The mission will travel for eight days to the Southern Cone countries of Uruguay, Brazil, Argentina, and Chile. The key issue in that region is the privatization of power companies, not just at the federal level, as in the past, but now at the state and local levels, according to a Commerce Department official. In addition, the mission will look at ongoing and new opportunities in cross-border oil and gas pipelines."
("Daley Visits Latin America," The Oil Daily, February 14, 2000)

Like Infamous DNC Fundraiser Johnny Chung, Enron Also Donated To A Charity For Clinton Energy Secretary O'Leary. Chung said that a Department of Energy official offered to arrange a meeting with Secretary O'Leary for a Chinese businessman "in exchange for a $25,000 donation to Africare, a charity support by O'Leary." Similarly, after O'Leary included Enron officials on her trips, "Enron showed its gratitude. At Christmas 1995, documents show, it donated an unknown sum of cash in O'Leary's name to a charity called 'I Have a Dream.'" ("O'Leary To Testify Before House Panel On Contribution To Charity," Inside Energy/With Federal Lands, December 8, 1997; Michael Weisskopf, "Enron's Democrat Pals," Time, August 17, 2002)


Enron "Seemed To Purchase" Seats On A Clinton-Era Overseas Trade Mission. "In 1995, a $100,000 check from Enron to the Democratic National Committee (DNC) seemed to purchase some highly coveted seats for Enron executives on an overseas trade mission led by then-Commerce Secretary Mickey Kantor. Earlier, Enron Chairman Ken Lay accompanied the previous commerce secretary, Ron Brown, to India. Mr. Clinton instructed his chief of staff, Mack McLarty, to help Enron obtain a contract to build a power plant in India, for which the firm received $398 million in U.S. taxpayer assistance. In 1996, Federal Energy Regulatory Commission rulings favorable to Enron coincided with another $100,000 contribution from Enron to the DNC." (Editorial, "Enron And The Clinton Administration," The Washington Times, January 18, 2002)


ENRON AND THE CLINTON-GORE ADMINISTRATION: A SHARED VISION ON GLOBAL WARMING

The Clinton-Gore Administration's Global Warming Agreement Would Have Helped Enron. "The Clinton administration's interest in an international agreement to combat global warming also dovetailed with Enron's business plans. Enron officials envisioned the company at the center of a new trading system, in which industries worldwide could buy and sell credits to emit carbon dioxide as part of a strategy to reduce greenhouse gases. Such a system would curtail the use of inefficient coal-fired power plants that emitted large amounts of carbon dioxide, while encouraging new investments in gas-fired plants and pipelines -- precisely Enron's line of business." (Dan Morgan, "Enron Also Courted Democrats," The Washington Post, January 13, 2002)


Enron Shaped The Clinton-Gore Global Warming Policy. At a July 1997 meeting, Enron was part of a select group that shaped the administration's case for policy action on the theory of man-made climate change. (Christopher C. Horner, "Controlling Hypocritical Authority," National Review, April 23, 2002)


Ken Lay Urged Clinton And Vice President Gore "To Back A 'Market-Based' Approach To The Problem Of Global Warming," Which Would Be "Good For Enron Stock." In a White House meeting in August 1997, "Lay urged President Clinton and Vice President Gore to back a 'market-based' approach to the problem of global warming -- a strategy that a later Enron memo makes clear would be 'good for Enron stock.'"
(Dan Morgan, "Enron Also Courted Democrats," The Washington Post, January 13, 2002)


Ken Lay Said The Kyoto Global Warming Accord Would Dramatically Help Enron. Following the White House meeting, Ken Lay said there was broad consensus in favor of an emissions-trading system. An internal Enron memo noted that "the Kyoto agreement, if implemented, would 'do more to promote Enron's business than almost any other regulatory initiative outside of restructuring the energy and natural gas industries in Europe and the United States.'" (Dan Morgan, "Enron Also Courted Democrats," The Washington Post, January 13, 2002)

Ken Lay Bragged That Gore Had "Solicited" His Views On Global Warming. "In an August 1997 memo by Mr. Lay to all Enron employees, the chairman said Mr. Clinton and Mr. Gore had 'solicited' his view on how to address the issue of global warning 'in advance of a climate treaty to be negotiated at an international conference.' That memo said Mr. Clinton agreed a market-based solution, such as emissions trading, was the answer to reducing carbon dioxide in the atmosphere." (Jerry Seper, "Enron Gave Cash To Democrats, Sought Pact Help," The Washington Times, January 16, 2002)

Enron Officials Pressured The Clinton-Gore Administration To Restructure Legislation Relating To Global Climate Change. "Despite the Senate decision, Enron continued to push the Clinton administration well into 1998 for what the company called a 'restructuring' of legislation that would have been a 'first step to solving the problems of global climate change.' The firm, according to the records, sought laws that would have favored Enron's natural gas inventory and reduced competition from coal." (Jerry Seper, "Enron Gave Cash To Democrats, Sought Pact Help," The Washington Times, January 16, 2002)


The Clinton-Gore Energy Department "Rework[ed]" Its Proposal So That It Was To Enron's Liking. "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." (Michael Weisskopf, "Enron's Democrat Pals," Time, August 17, 2002)


Enron Said The Final Gore Global Warming Treaty Was "Another Victory For Us." An internal Enron memo about the Kyoto Protocol said, '"f implemented, this agreement will do more to promote Enron's business than will almost any other regulatory initiative outside of restructuring the energy and natural gas industries in Europe and the United States. . . This agreement will be good for Enron stock!!' Drafted by Enron's Kyoto emissary immediately upon his return from Japan, it praises individual Kyoto features with 'we won,' 'another victory for us,' and 'exactly what I have been lobbying for.'" (Christopher Horner, "Outside View: Caught En Flagrente Kyoto," United Press International, January 31, 2002)


THE CLINTON-GORE ADMINISTRATION WAS A KEY SUPPORTER OF ENRON'S ELECTRIC DEREGULATION PLAN

Ken Lay Was A Clinton Golfing Partner And Energy Advisor. Lay played golf with President Clinton and "[advised] the Democratic administration on energy." (David Ivanovich, "Power Play," The Houston Chronicle, November 10, 2001)

The Clinton-Gore Administration Supported Enron's Agenda To Deregulate Electricity. "Closer to home, deregulation of the electric-power industry tops the company's domestic political agenda. To date, electricity deregulation has progressed piecemeal, state by state. Bills in Congress [to] deregulate the industry nationwide have gone nowhere. Enron officials were able to enlist the support of the Clinton administration, but the legislation failed to move on Capitol Hill, largely because of personalities and turf issues."
(David Ivanovich, "The New Power," The Houston Chronicle, April 15, 2001)

A Regulatory Change By The Clinton-Gore Administration Transformed Enron. "Key orders by FERC in 1996 also supported Enron's transformation into a freewheeling trader of gas, electricity and more exotic products, such as telecommunications services and sulfur-dioxide emissions credits. The new rules ensured that Enron and other merchant companies could buy electricity from independent power plants and sell it to distant customers, using transmission lines borrowed from utility companies."
(Dan Morgan and Juliet Eilperin, "Campaign Gifts, Lobbying Built Enron's Power In Washington," The Washington Post, December 25, 2001)

Enron Lobbied Clinton To Act On FERC Order 888 And "Allow Wholesale Open Access To The Nation's Electricity Transmission Grid." "Gas companies, trade groups and utilities are barraging the White House with support for the Federal Energy Regulatory Commission's (FERC) Order 888, telling President Clinton that the administration should not delay implementation because of unfounded environmental concerns. . . . Order 888 will allow wholesale open access to the nation's electricity transmission grid. Also writing to Clinton was a group of 26 trade groups and energy companies that urged that EPA not turn the rule over to the Council on Environmental Quality (CEQ) for review. The group includes . . . Enron Corp. . . ."
(Paul Connolly, "Gas Firms Ask White House To Move On FERC's Electric Rule," The Oil Daily, May 14, 1996)

Clinton-Gore Energy Secretary Federico Pena Urged The White House To Take Action On Energy Legislation Favored By Enron. "Lay met with Energy Secretary Federico Pena to urge White House action on electricity legislation favored by Enron. Pena 'suggested that President Clinton might be motivated [to act] by some key contacts from important constituents,' according to another Enron memo. Taking the cue, Lay, one of 25 business executives on Clinton's Council on Sustainable Development, wrote to the president the same day." (Dan Morgan, "Enron Also Courted Democrats," The Washington Post, January 13, 2002)


In 1992, Clinton Signed A Major Energy Bill (H.R. 776) That "Set The Stage For A New Wholesale Electricity Marketplace" And The Growth Of Enron. The law "set the stage for a new wholesale electricity marketplace. Trading companies such as Enron could use the transmission lines of regulated utility companies to sell [blocks] of electricity to private customers." (Dan Morgan, "Enron Also Courted Democrats," The Washington Post, January 13, 2002)


Energy Secretary Pena Solicited Comments From Enron On The Clinton-Gore "Comprehensive National Energy Strategy." "Pena asked Enron officials to keep Energy Department staffers posted on developments in Congress, and solicited comments on the administration's draft of its Comprehensive National Energy Strategy, an Enron document said. Lay felt the draft was 'headed in the right direction' except for a few points, the document said." (Dan Morgan, "Enron Also Courted Democrats," The Washington Post, January 13, 2002)

An Enron Spokesman Said That The Company Was Encouraged By The Final Clinton-Gore Plan. "Houston-based Enron Corp., a gas and electricity utility that has been aggressively pushing into newly deregulated state markets and is increasingly competing with Southern Co., said it was encouraged by the plan. 'We like that there's an absolute deadline for competition,' said Enron Senior Vice President Steven Kean." (Matthew C. Quinn, "Plan For Deregulating Nation's Electric Utilities Finally Sent To Congress," The Atlanta Journal And Constitution, March 26, 1998)

Provisions In The Clinton-Gore Energy Plan Were "Much To The Liking" Of Enron. "Under the Clinton plan, states would not be compelled to open up their markets to competition. States could retain the status quo if they decided their consumers would be better off with a regulated, monopoly system, although they would be forced to hold public hearings to explain why competition would not work. That provision is much to the liking of officials at Houston-based Enron Corp., the natural gas and power giant that has led the electricity deregulation push." (David Ivanovich, "Clinton Power Deregulation Plan Detailed," The Houston Chronicle, March 26, 1998)



DONATIONS AND ACCESS

Former Enron Chairman Ken Lay And His Company Contributed Hundreds Of Thousands Of Dollars To Assist President Clinton And Vice President Al Gore. "[Ken] 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." (Stephen J. Hedges, et al., "Enron 'Players' Worked D.C. Ties," Chicago Tribune, January 13, 2002)

Enron Donated To The DNC Shortly Before Company Executives Met With Gore. Over a 17-month period between May 1997 and October 1998, Enron donated $55,000 to the Democratic National Committee. "The cash came as Enron reportedly scored meetings with high-level Democrats - including then-President Bill Clinton and then-Vice President Al Gore."
(David R. Guarino, "'Outsider' Grossman Got Enron Cash For DNC," The Boston Herald, February 20, 2002)

Enron's Large Donations To Democrats Preceded Its Intensive Lobbying Efforts With Gore. "Enron Corp. donated $420,000 to Democrats over a three-year period while heavily lobbying the Clinton administration to expedite passage of a 1997 global warming treaty that would have dramatically increased the firm's sales of natural gas. Federal and confidential corporate records show that after donating thousands of dollars in soft money and PAC donations beginning in 1995, Enron received easy access to President Clinton and Vice President Al Gore." (Jerry Seper, "Enron Gave Cash To Democrats, Sought Pact Help," The Washington Times, January 16, 2002

The Ties Between The Democrat Party And Enron Are Deep And Friendly. "Relations with the Clinton White House included Enron chairman Kenneth Lay's golf outings with the president and Lay's face-to-face lobbying session with Clinton and Vice President Al Gore. . . . Former Clinton officials working for Enron, [included] a former chief of staff and a former White House counsel." (Robert Schlesinger, "Enron Ties May Also Tar Democrats," The Boston Globe, January 24, 2002)



In April 1995, Ken Lay And His Wife Linda Attended A Clinton White House State Dinner In Honor Of Fernando Henrique Cardoso, President Of Brazil. (Roxanne Roberts, "Dark Night At The White House," The Washington Post, April 21, 1995)


President Clinton Selected Enron's Ken Lay As A "Corporate Citizen" Who Is "Doing Well By Doing Good." "President Clinton, seeking to ease fears over job security, hosted a conference Thursday to highlight 'corporate citizens' who are doing well by doing good. . . . 'I think it's good to have an open dialogue,' said Kenneth Lay, chairman and CEO of Houston-based Enron Corp., a $13 billion natural-gas production and distribution firm. 'I appreciate the tone that the president has set, trying to address things in a nonemotional way.'" (George Rodrigue, "President Salutes Firms That Do Right By Workers," The Dallas Morning News, May 17, 1996)


The Clinton-Gore Administration Considered Appointing Enron's Terrence Thorn To Be Deputy Secretary Of Energy. "Bill White, the campaign chairman for Texas Sen. Bob Krueger's election campaign, and Terence Thorn, president of Houston-based Transwestern Pipeline Co., are under consideration at the White House for deputy secretary at DOE, several sources said last week. . . . Thorn, described by the source as Enron Corp.'s 'token Democrat,' has been president of the corporation's Transwestern Pipeline subsidiary since 1985. Thorn began his involvement with the gas industry in 1975 as a lobbyist for the American Gas Assn., where he was director of congressional relations from 1977-79. He joined Enron's predecessor, Houston Natural Gas Corp., as the firm's Washington representative in 1981." ("Texans Among Candidates For Deputy," Inside Energy, March 29, 1993)


ENRON'S PLAN FOR THE GORE 2000 CAMPAIGN:
CULTIVATE CLOSE TIES, DONATE, AND HIRE GORE AIDES


During The 2000 Presidential Campaign, Enron Tried To Cultivate Close Ties To Gore. "The Enron Corporation quietly drew up a plan to cultivate close political ties to Vice President Al Gore during the 2000 presidential race and tried to build relationships with his inner circle . . . . In May 2000, shortly after Mr. Gore was assured of the Democratic nomination, Enron hired Sally A. Painter, a public relations executive, who drafted a 'six-month action plan for Enron' for 'Democratic political outreach in the 2000 presidential election,' the documents show." (Richard L. Berke, "Enron Pursued Plan To Forge Close Ties To Gore Campaign," The New York Times, February 18, 2002)

The Recommended Enron Strategy: Get Involved In The DNC Convention, Help Gore In Swing States And With Inaugural Planning. "Ms. Painter identified influential advisers at the Gore headquarters in Nashville and in Washington whom she said Enron officials should get to know. Her plan called for writing briefs for Mr. Gore's staff on issues important to Enron and for Enron to play an 'active and visible role' at the Democratic National Convention. She also suggested that Enron 'actively participate in campaign activities on the ground in a key swing state.' If Mr. Gore was elected, she said, Enron should 'participate in senior team for inaugural planning.'"
(Richard L. Berke, "Enron Pursued Plan To Forge Close Ties To Gore Campaign," The New York Times, February 18, 2002)

Enron Hired A Close Gore Adviser As A Lobbyist During The 2000 Presidential Campaign. "In the summer of 2000, Enron hired one of Mr. Gore's old friends and a longtime financial supporter, Charles W. Bone. Mr. Bone, with contacts in Washington and at the Tennessee Valley Authority, helped Enron settle a bitter contractual dispute with the T.V.A. The suit was settled in January 2001 for more than $200 million. The authority, not Enron, disclosed the settlement." (Richard L. Berke, "Enron Pursued Plan To Forge Close Ties To Gore Campaign," The New York Times, February 18, 2002)

Enron Donated To The Democrats In An Attempt To Curry Favor With Gore. "Former Enron officials said an important part of their strategy to win favor with the Gore campaign was a significant increase in the company's donations to Democrats." In 1999 and 2000, the company gave $362,000 in soft-money donations to Democrats. (Richard L. Berke, "Enron Pursued Plan To Forge Close Ties To Gore Campaign," The New York Times, February 18, 2002)

Enron Sponsored A Private Meeting With Senior Gore Aides During The 2000 Campaign. "In what one Enron official recalled as a desire to 'have Enron's message become part of the energy and telecom policy of the Gore campaign,' Enron organized a dinner in the private Nest Lounge of the Willard Hotel, two blocks from the White House, that included top Gore and Enron officials as well as executives in the high-tech industry." (Richard L. Berke, "Enron Pursued Plan To Forge Close Ties To Gore Campaign," The New York Times, February 18, 2002)


Enron Scripted The Meeting With Gore Aides. "Enron painstakingly prepared for the dinner. Ms. Painter wrote a document of 'potential questions to consider for the dinner discussion' for the Gore officials, including 'How can the vice president and the Democratic Party strengthen its business message?' and 'What has been your reaction to the vice president's leadership strategies?' People at the dinner said the discussion roughly followed the questions outlined." (Richard L. Berke, "Enron Pursued Plan To Forge Close Ties To Gore Campaign," The New York Times, February 18, 2002)

Enron Drafted Policy Briefing Papers For Gore. "Christopher M. Long, who was a lobbyist for Enron, suggested in an internal memorandum that the company draft issue briefs for Mr. Gore on 'four policy areas on which Enron has unique experience: electricity deregulation, e-commerce (trading), energy services and broadband.'" (Richard L. Berke, "Enron Pursued Plan To Forge Close Ties To Gore Campaign," The New York Times, February 18, 2002)

Enron Worked To Hire Gore Aides. "As Ms. Painter was planning more public interaction between Enron and Gore officials, Enron officials said, Mr. Shapiro worked behind the scenes to hire people close to Mr. Gore. In the summer of 2000, they said, Mr. Shapiro wanted to hire Johnny Hayes, one of Mr. Gore's closest friends and top fund-raisers in Nashville. But Mr. Shapiro could not hire Mr. Hayes because he was already on the Gore campaign's payroll. After the campaign, Enron hired Mr. Hayes as a lobbyist."
(Richard L. Berke, "Enron Pursued Plan To Forge Close Ties To Gore Campaign," The New York Times, February 18, 2002)

Enron "Paid Large Sums" To Gore Friends And Aides. "Records show Enron paid large sums to enlist the lobbying aid of former Tennessee Valley Authority Director Johnny Hayes and another Tennessee friend of former Vice President Al Gore. Enron paid $200,000 to Sideview Partners Inc., a company headed by Mr. Hayes, for lobby work involving TVA earlier this year, according to Mr. Hayes' midyear 2001 lobby activities report." Enron also paid $500,000 to the Nashville law firm of Charles Bone, another longtime Gore friend and fund-raiser. "Also registered to lobby on behalf of Enron this year was former Vice President Gore's former chief of staff, Jack Quinn. Disclosure reports for the first half of 2001 indicate Mr. Quinn's lobbying firm, Quinn, Gillespie $10,000." (Andy Sher, "Ex-TVA Director, Gore Friend Got Large Sums To Aid Enron," Chattanooga Times/Chattanooga Free Press, December 7, 2001)


Several Senior Enron Officials "Spent Election Night At Vice President Gore's Headquarters In Nashville." "Several senior Enron officials spent election night at Vice President Gore's headquarters in Nashville." (Dan Morgan, "Enron Also Courted Democrats," The Washington Post, January 13, 2002)

 

[97silverlsc]

As do you, RB3.
http://www.americanprogress.org/site/pp.asp?c=biJRJ8OVF&b=109694
Kenny Boy Surrenders

Former Enron-CEO Ken Lay surrendered to the FBI this morning after being indicted on criminal charges expected to include fraud, conspiracy and insider trading. The indictment focuses on "a series of optimistic statements Lay made to analysts and employees in the months before Enron's fall, which cost thousands of workers their jobs and retirement savings." If convicted, Lay "could face many years in prison and multimillion-dollar penalties." Eleven former Enron officials have already pled guilty or been found guilty at trial. But Lay's indictment has much broader significance. Lay is a close personal friend of the President, who calls him "Kenny Boy," and was the first person the administration turned to on important issues of energy policy. Even as Lay finds himself in federal custody, his influence continues to guide the administration's energy policy.

THE KEN LAY PLAN NOW OFFICIAL ADMINISTRATION POLICY: According to Vice President Dick Cheney, Lay met privately with him in April 2001 "to talk about energy." Lay was "the only chief executive of a major player in the electric power industry to confer privately with Cheney as he formulated his national energy strategy." Lay said that he was "flattered that [Cheney] decided to meet with me, and at least hear me out as to some of the things I thought were pretty important that should be considered for his report." At the meeting, Lay handed Cheney a memo outlining "eight points spelling out Enron's case for why federal authorities should refrain from imposing price caps or other measures sought by California officials to stabilize runaway electricity prices." At the time, Enron was manipulating the market to bilk hundreds of millions of dollars from West Coast ratepayers, with company traders caught on tape "gloating over the crisis they helped create." Nonetheless, "seven out of eight recommendations were adopted in the administration's final energy plan." And the president is still pushing the Ken Layplan as the solution to the nation's energy woes.

BUSH APPOINTED LAY'S RECOMMENDATIONS TO FERC: According to Lay, shortly after Bush became president, he "had two or three meetings with various people in the White House on the whole issue of energy policy." On one of those visits Lay says he "presented a list...which, in fact, had some recommendations as to people that we thought would be good commissioners [on the Federal Energy Regulatory Commission (FERC)]." The commission is an extraordinarily powerful agency that controls regulation of the nation's energy industry. Subsequently, Lay was called upon to conduct phone interviews with potential nominees to FERC. The White House has confirmed that "two people on Ken Lay's list – Pat Wood and Nora Brown – were in fact picked by President Bush for seats on the [five member] FERC."

FERC COMMISSIONER CLASHES WITH LAY, IS REPLACED BY BUSH: In the first months of Bush's presidency, Lay called then-Chairman of FERC Curt Hebert and asked him to force companies to grant Enron access to the electrical grid. According to Hebert, he was not "willing to do what [Lay] wanted me to do." PBS was told Lay threatened to withdraw political support from Hebert if he didn't comply with Lay's request. By May, Vice President Cheney was already referring to Pat Wood – one of the commissioners recommended by Lay who supported opening up the electrical grid – as the new Chairman of FERC. In August, President Bush replaced Hebert with Wood. Wood subsequently approved Lay's request that Hebert had rejected as bad policy.

LAY AND ENRON WERE BUSH'S #1 CONTRIBUTORS: All the access Lay had to the White House didn't come cheap. Enron was the #1 all-time contributor to George W. Bush – contributing $550,025 to his campaigns by mid-1999. Lay himself donated $250,000 in soft money to Bush's political campaigns. He also was a Bush Pioneer in 2000, meaning he personally raised over $100,000 for the president. Lay and other Enron executives pitched in another $300,000 to pay for Bush's inauguration festivities.
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Bush and Ken Lay: Slip Slidin' Away
http://www.consortiumnews.com/2002/020602a1.html
By Sam Parry
February 6, 2002

George W. Bush is trying to rewrite the history of his and his family’s relationship with Enron Corp.’s disgraced former Chairman Kenneth Lay. So far, Bush has enjoyed fairly good success as the U.S. news media has largely accepted the White House spin.

But the reality, as established by a wealth of historical record and recent disclosures, is that Lay and Enron were instrumental in Bush’s rise to power – and Bush played an important behind-the-scenes role in advancing Enron’s aggressive deregulation agenda, which helped the energy trader ascend to its lofty perch as the seventh-biggest U.S. company.

The Bush-Lay coziness earned the Enron chief a nickname from Bush as "Kenny Boy." But more importantly for Enron, Bush pitched in as governor and president whenever the energy trader wanted easier regulations within the U.S. or to have U.S. taxpayers foot the bill for loan guarantees or risk insurance for Enron's overseas ventures.

The Bush-Lay relationship helped Enron extend its reach across the globe, with the appearance of a successful company, as it pulled in billions of dollars in investment money from tens of thousands of unwary investors.

Now, in trying to insulate Bush from the spreading Enron scandal, White House aides have emphasized that administration officials rebuffed Lay and other Enron executives who sought a federal bailout to save their corporate skin. But the documentary record paints a different picture, showing that the administration did what it could last year to help Enron, until the Houston energy trader's collapse was so far advanced that its deceptive bookkeeping could no longer be kept out of public view.

Last year, Vice President Dick Cheney and his energy task force held six secret meetings with Lay and other Enron officials while developing an administration program that contained special favors for Enron. Bush named Lay’s allies to key regulatory positions, such as the Federal Energy Regulatory Commission, which pushed for other pet Enron projects.

Under the direction of Bush’s National Security Council staff, the U.S. government also strong-armed India to acquiesce to Enron’s demands over its troubled Dabhol power plant, which Enron was hoping to sell for $2.3 billion. The NSC’s extraordinary pressure on India continued even after Sept. 11 when Washington needed New Delhi’s support in the war on terrorism and wanted the Indians to quiet their border dispute with neighboring Pakistan.

Internal administration documents suggest that Bush and his NSC staff put Enron's interests on par with or ahead of U.S. national security interests. The extraordinary NSC-led campaign around the Dabhol plant ended only on Nov. 8, the day the Securities and Exchange Commission delivered subpoenas to Enron about its questionable accounting. The same day, the company admitted that it had overstated its profits by $586 million since 1997, by improperly shifting debt into affiliated partnerships. [Washington Post, Jan. 19 & 25, 2002; Bloomberg News, Jan. 18, 2002]

Kenny Boy Who?

With Enron’s ignominious collapse over deceptive accounting, Bush began to act as if he barely knew Lay. On Jan. 11, Bush told reporters that Lay "was a supporter of Ann Richards in my run in 1994." Bush implied that he had gotten to know Lay as a Richards holdover appointee to a Texas business council. The impression Bush sought to create was untrue.

The Bush-Lay relationship can be traced back at least a half decade before the 1994 race. It grew out of the Houston social circle where oil tycoons have long rubbed shoulders with political players – and where Ken and Linda Lay had grown close to George H.W. and Barbara Bush in the 1980s. Since 1988, when Lay backed the elder George Bush in his run for the White House, Enron and its executives have written big checks for one Bush initiative after another.

Besides the political financing, Lay has supported private and charitable activities of the Bush family. Lay joined one of Barbara Bush's charities to promote literacy as he served as the honorary chairman of the Celebration of Reading at Houston Wortham Theatre Center. [The Guardian, Jan. 30, 2002]

A trustee of the George Bush Presidential Library Foundation, Lay has donated $50,000 as a patron as well, the New York Daily News reported. In 1999, the Lays chipped in $100,000 for the Andersen Cancer Center at Texas A&M University in a fundraising drive led by then-Gov. George W. Bush and his wife, Laura.

During the Republican presidential primaries in 2000, Enron corporate jets were made available eight times to Bush's campaign staff and his parents, with the future president sometimes personally arranging the flights. [New York Daily News, Feb. 3, 2002]

Yet, when Enron collapsed, George W. Bush distanced himself from Lay. As Enron slid toward bankruptcy, its stock lost $26 billion in market value, devastating retirement plans for Enron employees and other Americans. About 5,000 people lost their jobs, including about 4,000 at Enron's Houston headquarters.

The once-high-flying Enron became synonymous with corporate corruption.

Oil-Field Alliance

The origins of the Bush-Lay relationship can be found in the intertwining connections among oil companies, Texas politicians and international commerce. [More on the Bush family 'Oiligarchy']

In 1985, Lay created Enron by merging his company, Houston Natural Gas, with one of the largest pipeline companies in the world, Nebraska-based InterNorth. Lay named the new company, Enron, and set its sights high. Political allies would be critical to Enron’s growth.

In his first major venture into politics, Lay went to work raising money and organizing support for then-Vice President George H.W. Bush’s campaign for the Presidency. Bush, who built his own fortune in the Texas oil fields, was appreciative as he battled through a tough Republican primary and then defeated Democratic nominee Michael Dukakis.

In the weeks after the 1988 election, Lay may have gotten his first dividend on his investment in the Bush family. Enron had joined the bidding for a contract to build a $300 million pipeline in Argentina. The government appeared close to choosing between two other companies -- one from Italy, Ente Nazionale Idrocarburi, and the other a partnership between Argentine firm Pérez and America’s Dow Chemical.

Argentina’s Minister of Public Works, Rodolfo Terragno, later told Mother Jones that he considered Enron’s one-page project outline "laughable." He also noted that Enron "wasn't well established in Argentina." [Mother Jones, March/April 2000]

But Enron apparently was getting well established in the power corridors of the U.S. A few weeks after the 1988 elections, Terragno said the president-elect’s eldest son, George W. Bush, called to check up on "the slow pace of the Enron project."

Terragno recalled that the younger George Bush said that giving Enron the project "would be very favorable for Argentina and its relations with the United States." Terragno didn’t know whether this message was from the White House or whether Bush was working a business deal on his own.

But the public works minister, who was forced to flee Argentina after the 1976 military coup, didn’t succumb to what he viewed as political pressure. He said he told Bush that the deal would be awarded based on Argentine law.

Terragno, however, would not have the chance to make the decision. National elections in Argentina tossed his left-of-center party out of office and ushered in the administration of right-wing Peronist Carlos Menem.

Bush has denied the conversation took place. While Terragno says he still believes it was the younger George Bush who called, he has acknowledged the possibility that the call could have come from another Bush brother. Still, other news accounts have traced Lay's ties to George W. Bush back to about that time. An investigation by the New York Daily News concluded that "Lay began to cultivate their friendship in 1989." [Feb. 3, 2002]

Presidential Help

Falling gas prices caused Enron to back away from the pipeline contract in Argentina. But in 1990, President George H.W. Bush traveled to the South American country to plant seeds for U.S. business interests. One of those seeds was for Enron.

According to Mother Jones, several days after Bush’s visit, the U.S. Ambassador to Argentina, Terence Todman, wrote Menem a letter saying Enron and seven other U.S. companies were prepared to pull the plug on investments in Argentina if the Menem administration didn’t stop favoring Argentine businesses in awarding contracts.

Todman’s letter said Enron was "poised to invest $250 million" if Argentina would lower tariffs and value-added taxes that punished U.S. businesses. Menem accepted the Bush administration’s entreaties and signed a presidential decree that waived these duties on Enron investments. [Mother Jones, March/April 2000]

Menem’s decision caused a political furor in Argentina, but the deal was done. In the years since, Enron has emerged as a fixture in the Argentine business landscape.

Back in the United States, Lay was one of 273 people invited by Bush to spend a night at the White House during his four-year term. [Houston Chronicle, Feb. 27, 1997]

In 1990, Bush picked Lay to co-chair the Houston Economic Summit of the G-8 Industrial Nations, a prestigious forum that gave the Enron chairman access to the leaders of the world’s wealthiest countries. Lay also enjoyed Bush’s backing to deregulate the nation’s energy market to open public utilities to private competition, Enron’s core business.

In 1992, Lay served as chairman of the host committee for the Republican National Convention in Houston. That year, however, Bush lost the White House to Bill Clinton. Cushioning the fall for some of Bush's top aides, Enron hired as consultants Bush's Secretary of State James Baker and Commerce Secretary Robert Mosbacher. [Business Week, Feb. 12, 2001]

The Governor's Race

In 1994, the Bush-Lay relationship entered a new phase when the younger George Bush entered the race for the Texas governor's mansion. Bush faced an uphill battle against then-Gov. Ann Richards. A popular incumbent, Richards had earned national attention for her sharp wit and irreverent style, which suited her Texas constituents. Early polls gave Richards 65 to 75 percent approval ratings.

Bush was little more than the oldest son of a former president. Despite helpful family connections in both business and political circles, Bush had flopped in the oil business, though he was able to land a position as part owner of the Texas Rangers. Still, in early 1994, national political observers gave his younger brother Jeb Bush, who was challenging another popular incumbent, Lawton Chiles in Florida, a better chance for victory. (Jeb would lose in 1994 only to come back and win in 1998).

George Bush ran a hard-hitting campaign, suggesting that Richards was soft on crime. Critical to the campaign was getting his message out, and critical to that effort was money. Bush turned to his father’s old political benefactor, Ken Lay. Enron and Lay contributed $146,500 to the Bush campaign, seven and a half times more than they contributed to the Richards campaign. Lay also publicly endorsed Bush. [Texans for Public Justice]

On Election Day, Bush won the governor’s mansion by a margin of 53.5 percent to 46 percent. Bush didn't forget his debt to Ken Lay.

Bush appointed Patrick Wood III, a supporter of energy deregulation, to be chairman of the Texas Public Utility Commission in February 1995. Wood's bio included a stint as an engineer for Arco Indonesia and a position as an attorney with the Baker & Botts law firm, run by former Secretary of State James Baker. Lay endorsed Wood and his appointment was a major boost to Enron's efforts to deregulate the Texas energy market. (http://www.puc.state.tx.us/about/pastcomm.cfm)

By September 1995, the Texas Senate passed SB 373, which called for the restructuring of the state’s wholesale electricity market. Throughout the political battle, Bush was deregulation’s top cheerleader in Texas, putting the state ahead of others in the region. "Texas is the only southern state to adopt retail deregulation," the Washington Post reported. [Aug. 21, 2001]

Bush’s support of Enron was not limited to deregulation. He also served as an advocate for Enron’s interest in getting the U.S. taxpayer to back its overseas investments.

In March 1997, Lay wrote Bush a letter asking that the governor contact every member of the Texas congressional delegation and urge support for federal agencies that gave export credits and loan guarantees to U.S. companies operating abroad. "Export credit agencies of the United States are critical to U.S. developers like Enron, who are pursuing international projects in developing countries," Bush's letter said. [NYT, June 30, 2000]

Congress voted a four-year reauthorization to fund the work of the Export-Import Bank through 2001. Though these federal programs are unpopular with many free-market advocates, only two out of 32 members of the conservative Texas congressional delegation voted against reauthorization.

Over the years, Enron has emerged as a leading beneficiary of these federal programs, receiving a total of $1.6 billion in loans and other backing from the Export-Import Bank and the taxpayer-funded Overseas Private Investment Corp.

Energy Markets

In 1997, Bush also intervened on Enron's behalf with a call to Gov. Tom Ridge of Pennsylvania. At the time, Enron was vying to sell electricity in Pennsylvania, which was deregulating its energy market.

Bush placed the call at the personal request of Lay, who later told the New York Times, "I called George W. to kind of tell him what was going on. And I said that it would be very helpful to Enron … if he could just call the governor and tell him this is a serious company, this is a professional company, a good company."

During the bidding process, Enron’s main rival, PECO Energy Co., accused Enron of attempting to rig Pennsylvania’s energy market. PECO’s vice president, Thomas P. Hill, described Enron’s scheme as a way to "simply take the money from the pockets of Pennsylvanians and drop it" into the coffers of Texans. [Foster Electric Report, Oct. 15, 1997]

Bush aides deny that Bush called Ridge as a favor to Lay. They portray the intervention as a governor lending his name to benefit a Texas company. During the 2000 presidential campaign, however, Bush spokesman Dan Bartlett acknowledged the importance of the friendship between Bush and Lay in Bush’s decision to call Ridge. "The fact that [Lay] heads this company is secondary to their personal relationship," Bartlett said. [NYT, June 30, 2000]

Whatever the motivation, Bush’s phone call appears to have worked. Enron cracked into the Pennsylvania energy market and used it as a regional foothold. In the late 1990s, Enron competed for contracts throughout the Northeast and rode the wave of deregulation to win contracts from Maine to California.

Environmental Loopholes

Back home in Texas, Enron also was enjoying favorable treatment on environmental policy. Enron, along with other companies, benefited from a loophole in the state’s 1971 Clean Air Act, which exempted 828 older facilities from cleaning up their emissions. At stake were hundreds of thousands of tons of toxic emissions per year – and company profits.

Public pressure was mounting in Texas to do something about its status as a top polluting state, and the clean air loophole was becoming a major issue. Instead of endorsing a plan to close the loophole and require facilities to clean up their emissions, Bush created a panel of big polluters to devise a solution to the problem. The plan that the polluters designed averted mandatory actions, in favor of voluntary compliance.

Enron was one of the beneficiaries. In 1997, the grandfather loophole allowed Enron to release 3,299 tons of air pollution, most of it emitted from the Enron Methanol facility near Houston, according to information from the Texas Natural Resource Conservation Commission.

Two years later, in late September and early October of 1999, the Enron plant was partly responsible for air pollution that reached 251 parts of ozone (smog) per billion, twice the national standard. In 1999, the five highest recorded levels of smog in the U.S. were all measured in and around Houston. Residents, including school children, have reported severe breathing problems. [http://www.pirg.org/reports/enviro/smog and The Progressive, 9/1/00]

The Bush plan to close the grandfather loophole became nationally recognized for its shortcomings. "Only one permit has been issued resulting in 74 tons of pollution reduction," according to the Texas Campaign for the Environment. "This constitutes less than .01% of the 597,749 tons of grandfathered emissions." [Texas Campaign for the Environment]

Partly because of the plan’s futility, Texas became the nation’s most polluted state as measured by data collected by the Environmental Protection Agency.

Despite the failure of the voluntary strategy, the Bush campaign in 2000 touted it as Bush's greatest environmental achievement.

Taking the White House

In the 2000 campaign, Lay was a Pioneer for Bush, raising $100,000. Enron also gave the Republicans $250,000 for the convention in Philadelphia and contributed $1.1 million in soft money to the Republican Party, more than twice what it contributed to Democrats. [www.opensecrets.org]

Lay and his wife then donated $10,000 to Bush’s Florida recount fund that paid for Republican lawyers and operatives to ensure that a full recount of Florida’s ballots never occurred. To this day, Bush has refused to release an accounting of how that recount fund money was spent.

After Bush took the White House in January 2001, Enron Corp., Enron’s President and Chief Operating Officer Jeffrey Skilling, and Ken Lay contributed $100,000 each for a total of $300,000 to the Bush-Cheney Inaugural Fund.

These contributions cemented Lay’s standing with the White House. From the beginning of the administration, Lay advised on policy and personnel. The Enron chief was on the short list for two Cabinet posts, Energy and Treasury, though he ultimately stayed in the private sector.

Starting in late February 2001, Lay and other Enron officials took part in at least a half dozen secret meetings to develop the Bush's energy plan. After one of the Enron meetings, Vice President Cheney's energy task force changed a draft energy proposal to include a provision to boost oil and natural gas production in India. The amendment was so narrow that it apparently was targeted only to help Enron's troubled Dabhol power plant in India. [Washington Post, Jan. 26, 2002]

Other parts of the Bush energy plan tracked closely to recommendations from Enron officials. Seventeen of the energy plan’s proposals were sought by and benefited Enron, according to Rep. Henry Waxman, D-Calif., ranking minority member on the House Government Reform Committee. One proposal called for repeal of the Public Utility Holding Company Act of 1935, which limits the activities of utilities and hindered Enron’s potential for acquisitions.

Besides listening to Lay's advice, Bush put the corporation's allies inside the federal government. Two top administration officials, Lawrence Lindsey, the White House’s chief economic adviser, and Robert Zoellick, the U.S. Trade Representative, both worked for Enron, Lindsey as a consultant and Zoellick as a paid member of Enron's advisory board. [http://www.public-i.org/story_01_011102.htm]

Bush also named Thomas E. White Jr., an 11-year veteran of Enron's corporate suites, secretary of the Army. White had run a key subsidiary, Enron Energy Services, which is now the focus of allegations about accounting irregularities. After taking office in May, White vowed to apply his Enron experience to privatizing utility services at military bases. White's subsidiary had been responsible for selling energy services and Enron was eager for contracts with the U.S. military.

Public Citizen, a liberal watchdog group, has demanded that White fully explain 29 meetings and phone calls with senior Enron officials after White became Army secretary. White says the conversations were with "personal friends" about "Enron's deteriorating financial conditions." [Washington Post, Jan. 27, 2002]

At least 14 administration officials owned stock in Enron, with Undersecretary of State Charlotte Beers and chief political adviser Karl Rove each reporting up to $250,000 worth of Enron stock when they joined the administration.

FERC Appointees

Lay exerted his influence, too, over government regulators already in place. Curtis Hebert Jr., a conservative Republican and a close political ally of Sen. Trent Lott of Mississippi, had been appointed to the Federal Energy Regulatory Commission during the Clinton administration. Like Bush and Lay, Hebert was a believer in free markets. Bush elevated Hebert to FERC chairman in January 2001.

While a strong believer in deregulation, Hebert broke ranks with Lay on two key points. Hebert was an advocate of state rights, an obstacle to Enron's desire for FERC to mandate consolidation of state utilities into four giant regional transmission organizations, or RTOs. By quickly pushing the states into RTOs, Enron and other big energy traders would have much larger markets for their energy sales.

Hebert also was worried about the complex derivative financing instruments that he saw among the leading energy traders, including Enron. After he became chairman, he started an investigation.

"One of our problems is that we do not have the expertise to truly unravel the complex arbitrage activities of a company like Enron," Hebert said. "We're trying to do it now, and we may have some results soon." [NYT, May 25, 2001]

By early 2001, Enron executives knew how complicated and how questionable their financial schemes had become. For several years, with greater and greater audacity, they had been creating affiliated partnerships where Enron hid debt and poor-performing assets outside the view of investors and government regulators.

The schemes enabled Enron to report robust earnings and keep its stock price high, as senior executives sold off more than $1 billion in stock and made millions of dollars from self-interested deals with the partnerships. Lay personally collected more than $112 million in cash from salary, bonuses and sale of Enron stock in the past three years. He owned three houses in Aspen, Colo., valued at more than $15 million. [Washington Post, Feb. 3, 2002]

Hebert said he got a call from Lay with a proposed deal. Lay wanted Hebert to support a faster transition to a national retailing structure for electricity. If he did, Enron would back him, so he could keep his job.

The FERC chairman later told the New York Times that he was "offended" by the veiled threat. He understood that Lay's political influence could put his job in jeopardy, since Bush held the power to appoint FERC chairmen and Lay had demonstrated sway over selection of administration appointees. Besides supplying Bush aides with a list of preferred candidates, Lay had personally interviewed one possible FERC nominee.

Lay offered a different account of the phone call. He said Hebert was the one "requesting" Enron's support at the White House, though Lay acknowledged that the pair "very possibly" discussed issues involving FERC's authority over the nation's electricity grids. [NYT, May 25, 2001]

California Crisis

While Cheney was hammering out his energy plan and Lay was discussing energy options with FERC, a full-scale energy crisis was sweeping California. In a partially deregulated market served by Enron and other energy traders, electricity prices soared 800 percent in one year. Rolling blackouts crisscrossed the state.

A recently released memo from Lay to Cheney advised the administration last April not to use price caps to spare Californians from soaring energy costs, according to the San Francisco Chronicle. "The administration should reject any attempt to re-regulate wholesale power markets by adopting price caps or returning to archaic methods of determining the cost-base of wholesale power," the memo said. [San Francisco Chronicle, 01/30/02]

The Bush administration adopted Enron’s position in its political battle with California Gov. Gray Davis, a Democrat. Many California politicians and consumers came to suspect that the energy traders were manipulating the shortages to inflate prices and boost profits. Davis has suggested that Enron "gamed" the system.

Early last summer, the political showdown ended in a draw when the FERC accepted limited price caps. Aggressive conservation by consumers and a cool summer also brought the crisis under control.

In August, with three years left on his term, FERC Chairman Hebert abruptly resigned. He offered as a lame explanation a desire "to seek other opportunities." While it appears that Bush engineered Hebert's resignation, it remains unclear how much progress Hebert's inquiry made in penetrating the secrets of Enron's complex financial instruments.

With Hebert gone, Bush filled the commission with pro-Enron allies who pushed an agenda favoring faster deregulation of the nation's energy grids. Bush promoted former Texas Public Utilities commissioner Pat Wood III, whom Bush named to the FERC in March 2001, to be FERC chairman. With Wood in charge and another new Republican appointee, Nora Mead Brownell, on the commission, the consolidation of the nation's energy markets moved to the front burner.

Lay had included Wood and Brownell, a controversial member of the Pennsylvania Public Utility Commission, on his list of preferred FERC candidates. His support appears to have been critical to their selections. [AP, Jan. 31, 2002]

On Brownell's appointment, Lay called Rove to say that Brownell "was a strong force in getting the right outcome" in Pennsylvania’s deregulation plan, according to a July, 17, 2001, letter that Waxman referred to the White House counsel, citing a Wall Street Journal report. [http://truthout.com/0452.Waxman.Rove.htm]

Kyoto 'Differences'

Since Enron's collapse, Lay has become a potential political liability for Bush, who has responded by putting as much space as possible between himself and the now-ousted Enron chairman. White House aides cited, for instance, the fact that Enron favored U.S. ratification of the Kyoto Treaty to reduce global-warming emissions, while Bush has repudiated the agreement in favor of so-called "market-based" solutions.

But the global warming difference may be less than meets the eye. Enron supported the Kyoto Treaty in hopes that it would create a market in pollution credits that could be traded through Enron and thus boost its business. The plan would allow polluting companies to keep polluting if they buy credits from cleaner companies.

While the Bush administration has yet to lay out a comprehensive global warming policy, the pollution credit scheme is a market-based approach that fits well within Bush's ideology of letting corporations decide how they choose to address social and environmental problems. Pollution credits similar to those favored by Enron would likely be a centerpiece of a Bush global warming plan. It is therefore unclear what specific policy differences exist between Bush and Lay on global warming.

The other talking point from the administration intended to put distance between the White House and Enron is the claim that administration officials did nothing to help save Enron from collapse. While acknowledging that Lay called both the Treasury Secretary Paul O’Neill and the Secretary of Commerce Donald Evans in late October, the White House has drawn a clear line that no actions were taken by either official on Enron’s behalf.

However, the New York Times reports in a chronology of Enron’s downfall that Secretary O’Neill did instruct Under Secretary for Domestic Finance Peter Fisher to "look into the condition of Enron." Fisher reportedly talked with Enron President Greg Whalley "six to eight times" over a few day period in late October and early November. The full substance of those conversations have not been made public, though Fisher claims Whalley sought help with Enron’s creditors, help that Fisher says he did not grant. [NYT, 1/13/02]

Striking a more personal note in his attempt to demonstrate his disapproval of Enron, Bush told reporters that his sympathies really rested with laid-off Enron employees and small Enron investors who saw their life savings wiped out. Bush said his own mother-in-law lost $8,000 when Enron collapsed.

Bush's comments sounded like a pitch to the average American, who was supposed to believe that the Bush family felt the pain of the little guys who took a beating while the corporate bigwigs made off with fortunes.

The reality is starkly different. Based on the wealth of recent and historical news accounts, Bush has long worked hand-in-glove with Enron's fundamental business interests. On policy important to Enron's corporate strategies – energy trading, deregulation, tort reform, tax rates for corporations, support for government agencies that promote overseas investments for U.S. companies – there is no daylight between Bush and Lay.

The truth is that the Bush-Lay relationship is as close a public-private relationship as there has been in modern American history. It conjures images from the Frank Capra classic describing another political era, Mr. Smith Goes to Washington, in which the strings are pulled by a political machine run by party boss Jim Taylor.

The political plot of the Bush-Lay connection is unique in its own time, but critical to both men. It could even be said that Enron wouldn't have become the seventh-largest U.S. company – in a position for its executives to make off with hundreds of millions of dollars while leaving small investors and low-level employees to take the fall – without years of assistance from George W. Bush.

And Bush might not have succeeded in taking the White House without the help of Enron and Ken Lay.

 

[RB3]

Gee...what a surprise. My post is sourced from widely known and recognizable news sources, yours primarily from left-wing "Bush is the Devil" hate sites, liberally (pun intended) infused with conjecture and supposition as opposed to fact.

The primary fact your post cites is that Bush called Lay "Kenny Boy," which is a derisive nickname. Clinton, on the other hand, called him A "Corporate Citizen" Who Is "Doing Well By Doing Good." Even your own post details events happening primarily in the 1990s, yet somehow fails to mention that Clinton, not Bush, was President then.

In your desperate attempt to blame everything on Bush, you have ignored an entire page of FACTS I have shown you linking Clinton/Gore to Enron; even your beloved Kyoto agreement seems to have been created in collusion with Enron. Unlike you, I possess the ability to distinguish between actual facts and left-wing conspiracy fantasies.

The FACT remains that Enron flourished under the CLINTON administration, , and is being prosecuted by the BUSH Justice Dept.

You can post your drivel all day long; you'll never be able to explain that away.

 

[97silverlsc]

You RWW always respond with the attacks on the sources. I chose that one merely out of convenience as it came up first on a google search. Don't like that source? Do your own search with Shrub and Lay as the topic. I've read a couple different books that documented everything said by the site you question. Pull your head out of the sand and do your own research on the subject if you don't like that source, but don't dismiss what it says simply because you don't like the site. Shrub and GW41 and Lay have been buddies for a long time, and mutual hand washing has been going on just as long.
I would suggest you watch the DVD Enron: the smartest guys in the room.

 

[RB3]

You RWW always respond with the attacks on the sources. I chose that one merely out of convenience as it came up first on a google search. Don't like that source? Do your own search with Shrub and Lay as the topic. I've read a couple different books that documented everything said by the site you question. Pull your head out of the sand and do your own research on the subject if you don't like that source, but don't dismiss what it says simply because you don't like the site. Shrub and GW41 and Lay have been buddies for a long time, and mutual hand washing has been going on just as long.
I would suggest you watch the DVD Enron: the smartest guys in the room.

Phil:

Your post contends this is a Republican scandal. Yet I post that the Clinton/Gore administration did everything that you say Bush/Cheney did with Enron, and you simply ignore it.

You do this constantly, posting the same things over and over, long after they've been refuted. Learn a new song.

Ken Lay is a con man and a crook, and he's being prosecuted, by the Bush Justice Department. He cooked the books at Enron. Bush didn't know it, Cheney didn't know it, for that matter Clinton and Gore didn't know it. You have no evidence to the contrary. End of story. Yet you continue to claim that Bush and Cheney are just as guilty as Lay, simply for doing the same things Clinton and Gore did.

Take your partisan blinders off and set your wild "Bush and Cheney are the Devil incarnate" fantasies aside, and see the world as it is.

And no, I won't be doing a search on "Shrub." I don't know anyone by that name. I have a pretty good idea about the accuracy of the information such a search would produce, however. "Shrub" wasn't funny the first time you posted it, and now hundreds of repetitions later, it's just tedious.

 

[97silverlsc]

Phil:

Your post contends this is a Republican scandal. Yet I post that the Clinton/Gore administration did everything that you say Bush/Cheney did with Enron, and you simply ignore it.

You do this constantly, posting the same things over and over, long after they've been refuted. Learn a new song.

Ken Lay is a con man and a crook, and he's being prosecuted, by the Bush Justice Department. He cooked the books at Enron. Bush didn't know it, Cheney didn't know it, for that matter Clinton and Gore didn't know it. You have no evidence to the contrary. End of story. Yet you continue to claim that Bush and Cheney are just as guilty as Lay, simply for doing the same things Clinton and Gore did.

Take your partisan blinders off and set your wild "Bush and Cheney are the Devil incarnate" fantasies aside, and see the world as it is.

And no, I won't be doing a search on "Shrub." I don't know anyone by that name. I have a pretty good idea about the accuracy of the information such a search would produce, however. "Shrub" wasn't funny the first time you posted it, and now hundreds of repetitions later, it's just tedious.

You dispute the validity of the articles I posted, but yours are above reproach. If you bothered to read what I posted, you would see that most of what is there is put together from articles that appeared in the NYT, WAPO, WSJ, Sanfran chronicle, etc. but because of the link I posted where this compilation came from, It's all invalid LWW posting. The fact of the matter remains that GW41 and Shrub had business dealings with Lay dating back to the 1980's and were proud to call Lay a family friend up till the downfall of Enron. Prove me wrong, but I'd be willing to bet that the Bush family and repug party has benefited more from Lay/Enron donations than clinton or the dems have.
And the fact remains that Cheney consulted with Lay on energy policy numerous times as well as having appointed Lays recommendations to key positions within regulatory agencies. The only reason there isn't more info concerning Cheney/Lay's interaction on energy policy/california ripoff is Cheney's refusal to release the records concerning those energy policy meetings and other communications with Lay/Enron.

 

[RB3]

Prove me wrong,

I have proven you wrong. You just aren't listening.

 

[97silverlsc]

I have proven you wrong. You just aren't listening.

Maybe in your own little private Idaho, but not in the real world.

 

[RB3]

Maybe in your own little private Idaho, but not in the real world.

I live in reality, not Idaho.

 

[Filthy Sanchez]

Oh I see reps, and dems are different. One side is pure the other isn't, radicals to the left or right are better than the other side. Oh and we all haven't been sucking the same Suadi faucet under both sides. Yeah right.