For a Generous Donor and Bush, the Support Is a Two-Way Street
The New York Times
June 30, 2000
nytimes.com
By RICHARD A. OPPEL Jr.
D ALLAS, June 29 -- In October 1997, George W. Bush
placed a call to his friend Tom Ridge, the Republican
governor of Pennsylvania, to vouch for the Enron Corporation,
the giant Houston energy and trading company that, at the
time, was battling to sell electricity in Pennsylvania.
Mr. Bush made the call at the request of Kenneth L. Lay, the
chairman and chief executive of Enron.
"I called George W. to kind of tell him what was going on,"
Mr. Lay said. "And I said that it would be very helpful to
Enron, which is obviously a large company in the state of
Texas, if he could just call the governor and tell him this is a
serious company, this is a professional company, a good
company."
After a nasty regulatory fight, Enron cracked into
Pennsylvania's market. And in the ensuing years, the Texas
energy company has seen its influence widen nationally and
internationally. Along the way, Enron and its executives
have been Mr. Bush's most generous contributors, giving
more to his various campaigns -- over $550,000 -- than any
other source.
The relationship between Mr. Bush and Mr. Lay is close, and
old: the two men got to know each other in the 1980's, when
Mr. Lay was a big political supporter of Governor Bush's
father, former President George Bush. It is the sort of
friendship where the governor takes the time to write a
joshing birthday note to Mr. Lay: "One of the sad things
about old friends is that they seem to be getting older -- just
like you! 55 years old. Wow! That is really old."
Mr. Bush, 53, listens closely to what Mr. Lay, now 58, and
others at Enron have to say about important policy matters.
As governor, Mr. Bush has been a supporter of the legislative
initiatives that have been most important to Enron, including
deregulating electric utilities, easing the tax burden on
capital-intensive companies, and passing laws meant to curb
large jury awards in civil cases. On all of them, Mr. Bush
received advice from top Enron executives, sometimes
soliciting it.
Many of the issues important to Enron, particularly tort
reform, were also important to other Texas businesses. And
Governor Bush, a spokesman said, has gone to bat for other
companies, too, never making unusual overtures for Enron or
pushing for legislation specifically tailored to benefit the
company.
In Washington, Enron lobbies on an even wider array of
issues, including federal regulation of the nation's
electric-power grid (Enron wants rules making it easier to
trade and transmit electricity); support for the Overseas
Private Investment Corporation, a federal agency that
finances and insures many of Enron's overseas projects; free
trade around the globe, which helps Enron's far-flung energy
businesses; and limiting the regulation of derivatives
transactions between private parties, a huge and growing
part of Enron's business. Enron lobbies on so many issues in
Congress that it takes 26 pages for it to list them all on
federal disclosure forms.
Tom Smith, director of the Texas office of Public Citizen, the
group founded by Ralph Nader, who is himself a presidential
candidate, said: "Enron's investment in the Bush
gubernatorial campaigns have paid off in policies beneficial to
them. And that's why they're investing so heavily in the
presidential campaign."
Aides say it is not unusual for Governor Bush to lend his
name to a Texas company's efforts outside the state, as he
did for Enron in Pennsylvania. In the past, for example, he
has contacted foreign leaders considering whether to buy
military aircraft from Texas companies.
Enron officials reject the notion that their donations are
meant to influence legislation, and they note that, in
aggregate, their most significant legislative opponents,
electric utilities, give far more money to federal candidates.
"When I make contributions to a candidate, it is not for some
special favor, it's not even for access -- although I'll be the
first to admit it probably helps access," Mr. Lay said in an
interview at Enron's 50-story headquarters in downtown
Houston. "It is because I'm supporting candidates I strongly
believe in personally."
Mr. Lay added, "I'm not doing this now because I want to be
an ambassador or cabinet officer or want any specific thing
done if he gets elected."
He also said Enron does not seek legislation that benefits
only the company. "When we go in and lobby for things like
Nafta, or like W.T.O. status for China," he said, referring to
the World Trade Organization, "or electric deregulation,
we're basically doing it because we think it's right."
In the presidential race alone, Enron and its executives have
given Mr. Bush about $105,000, making Enron the ninth
largest donor to the Bush campaign so far, according to the
Center for Responsive Politics. And that does not include the
unlimited donations to the Republican Party, known as soft
money.
Mr. Lay has donated $326,000 to Republican Party
committees over the past three years - including $250,000 in
April. (Enron has also contributed soft money to Democrats,
and Mr. Lay has golfed with President Clinton). Enron's
president, Jeffrey K. Skilling, has donated an additional
$50,000 to the Republicans, according to Federal Election
Commission records.
Mr. Lay is also one of the "Pioneers," Bush supporters who
pledge to collect at least $100,000 in direct contributions. As
part of that role, he sent a letter last year to several
hundred people, many of them Enron executives, urging
them to make the maximum contribution to Mr. Bush's
campaign. "In no way is this a condition of employment or
continued employment at Enron," the letter said.
In the following three months, Enron executives kicked in
more than $50,000.
Mr. Bush declined to comment for this article. A campaign
spokesman, Dan Bartlett, said Mr. Bush and Mr. Lay have
been close friends for many years.
"The fact that he heads this company is secondary to their
personal relationship," Mr. Bartlett said. "One issue that you
could say that Enron has played a key role in shaping the
debate is deregulation. Governor Bush does share in their
philosophy of competition in the marketplace."
Under the direction of Mr. Lay, the son of a preacher and
farm-machinery salesman from Missouri, Enron is now
widely regarded as one of the toughest and most innovative
companies in the nation. It is a fearsome competitor in the
huge market for the trading of electricity, energy
commodities and derivatives contracts linked to energy
prices -- a business that it helped create.
In addition, Enron, with $40.1 billion in sales last year,
builds and operates power plants around the world, including
in Poland and Turkey. A huge project in the Indian state of
Maharashtra a few years ago became one of the most
controversial issues for the Indian government.
Enron still runs the second-largest natural gas pipeline
network in the United States. And it dazzled Wall Street in
January when it unveiled its latest venture, the trading of
bandwidth needed for high-speed data communications.
Enron officials say some of the company's foreign projects
may not be insurable without the backing of the Overseas
Private Investment Corporation, which limits risk to United
States companies investing abroad. O.P.I.C. provided
financing or insurance coverage worth almost $300 million
for Enron's foreign projects just last year, according to
government records.
Enron officials have in the past asked Mr. Bush to help lobby
lawmakers to appropriate funds for O.P.I.C., as well as for
the Export-Import Bank, another federal agency that aids
American companies abroad.
In one such letter, obtained by The New York Times under
Texas open records laws, Mr. Lay asked Mr. Bush in March
1997 to contact every member of the Texas delegation to
explain how "these export credit agencies of the United
States are critical to U. S. developers like Enron, who are
pursuing international projects in developing countries."
Mr. Lay's request was to be "handled" by the state-federal
relations office, a lobbying office the state of Texas maintains
in Washington, according to a note written on the letter by a
Bush staffer. But according to Mr. Bartlett, the Bush
spokesman, Bush officials have not lobbied on behalf of
either agency.
In Washington, the most important issue to Enron is
legislation that would require the nation's electric grid to
transmit power in a more uniform and free-flowing manner.
In Texas, Mr. Bush has always been an advocate of electric
utility deregulation, but his support did not always fall
Enron's way. Late in the 1997 legislative session, after Mr.
Bush's attempts at sweeping tax reform failed, he tried to
push through a last-minute deregulation bill. To succeed,
the bill needed support from the state's big utilities, but
Enron officials felt the bill was weighted so far in favor of the
utilities that they could not endorse it. The bill ultimately
failed. In 1999, Texas lawmakers passed a deregulation bill
that Mr. Lay said is probably the best in the nation.
As part of a group of large energy and manufacturing
companies, Enron lobbied during the 1997 Texas legislative
session for lower property taxes. Before the session began,
Mr. Bush appointed a 17-member committee to study the
issue, including Richard Kinder, who was then Enron's
president, on the panel. The proposal Mr. Bush introduced
would have resulted in $9 million in annual tax savings to
Enron. But the Bush plan had little legislative support, and it
soon died.
Enron has also sought Mr. Bush's help on narrower issues.
In November 1998, the chairman of Enron Oil & Gas, which
at the time was majority-owned by Enron but is now a
separate public company called EOG Resources, complained
to Mr. Bush that the state comptroller was improperly
assessing the company about $415,000 in crude-oil
production taxes. The chairman, Forrest E. Hoglund, who
has also been a Bush donor and who has since retired, wrote
to Mr. Bush: "We need to have this handled before there is a
big industry backlash. Sorry to bother you with it."
The case is still pending, according to officials at the
Comptroller's Office. Mr. Bartlett, the Bush spokesman, said
the Enron Oil and Gas complaint, and similar letters from
four other companies, had been routed to Albert Hawkins,
Mr. Bush's budget director. One of Mr. Hawkins' staffers
called the Comptroller's Office to inquire about its
methodology, but did not suggest rescinding or easing the
action against Enron Oil and Gas, Mr. Bartlett said.
Long before Mr. Bush's inauguration in 1995, Enron had built
relationships with both the Bush family and officials from
the Bush administration. In addition to Mr. Lay being a big
fund-raiser and supporter of the former president, Enron and
its affiliates later hired a number of high-level Bush officials,
including former Secretary of State James Baker 3d and
former Commerce Secretary Robert Mosbacher.
Governor Bush has even been accused of working on Enron's
behalf. Rodolfo Terragno, a senior Argentine official, has told
several publications that in 1988, he received a call from Mr.
Bush asking him to award a pipeline contract to Enron.
Mr. Terragno, who is currently the Argentine cabinet chief,
declined requests for an interview. But in a statement sent
by e-mail, he said he now is not sure if the call came from
Governor Bush or from one of his brothers, Neil Bush. Bush
officials say no one from the family ever lobbied for Enron or
spoke to Mr. Terragno about the project.
Says Mr. Lay, "No member of the Bush family has ever been
on the Enron payroll."
nytimes.com |
