Bush accused of revising history over Enron links
From Conor O'Clery, International Business Editor, in Houston
The Irish Times
US President George W Bush asserted last week that he had
"inherited" Enron chief executive Mr Kenneth Lay as a supporter
from Democratic Governor Ann Richards when he defeated Ms
Richards in the gubernatorial election of 1994.
That's not how they see it in Houston, Texas, where Enron is
headquartered.
Mr Bush "revised history", said Texans for Public Justice, a
campaign finance reform organisation which produced evidence to
show that Mr Lay in fact strongly favoured Mr Bush in 1994.
The President is clearly anxious to distance himself from Mr Lay
as the scandal grows over the bankruptcy last autumn of the giant
energy trading company, which cost thousands of jobs and wiped
out the retirement savings of many employees.
In the latest revelation, Time magazine disclosed that on October
12th, just four days before Enron reported a stunning $618 million
(€694 million) loss for the third quarter, the auditor, Arthur
Andersen, received an extraordinary instruction from an Enron
lawyer to destroy all audit material, except for the most basic
"work papers", and that the process of shredding went on for
weeks.
Mr Lay and his wife Linda personally gave Mr Bush $47,500 and
Enron executives gave the Bush campaign another $146,500 in
the closely-fought 1994 campaign for governor of Texas, which Mr
Bush won, while Ms Richards received only $12,500 in Enron
money, according to Texans for Public Justice.
Mr Lay "was a supporter of Ann Richards in my run of 1994", Mr
Bush said last week. "And she did name him head of the
Governor's Business Council, and I decided to leave him in place
just for the sake of continuity. And that's when I first got to know
Ken . . ." Mr Lay confirmed his support for Mr Bush in 1994 in a
television interview last year, when he said he supported him in
that campaign because by then "I was very close to George W".
Mr Bush received a total of $220,700 from top Enron executives
for his 2000 presidential campaign, of which Mr Lay contributed
$44,000, according to another watchdog group, the Centre for
Public Integrity. During his political career, Mr Bush has received
$550,000 altogether from Enron, its employees and relatives,
according to the Washington Post, which discounted earlier
reports that he got up to $1 million.
Enron's total contributions to Republicans over the years
amounted to $1,766,244 and to Democrats $680,654, according
to the Houston Chronicle.
Court filings based on public records have meanwhile exposed
how much Enron executives made by selling their shares while
the company was riding high on the back of financial reports that
hid losses going back to 1997.
A group of 29 Enron executives made $1.1 billion by selling
shares from 1999 until six months ago, according to court papers
filed by Amalgamated Bank of New York. Of these, at least 12
received $30 million or more through their share sales. Mr Lay got
$101.3 million by selling 1.8 million shares, trading almost every
day between 1999 and mid-2001.
Mr Lou Pai, former chairman of an Enron subsidiary, received
$353.7 million, according to the filings. Mr Jeffrey Skilling, who left
Enron last year, received $66.9 million.
The law suit accuses the 29 executives of "unlawful insider
trading", saying they employed "devices, schemes and artifices to
defraud". "This is the most massive insider bailout that we have
ever seen," said Mr William Lerach, a bank lawyer. An Enron
spokesman said the suit was "completely without merit".
Mr Lay has been asked by the ranking Democrat on the House
Commerce Committee, Mr Henry Waxman, to explain an e-mail
message to employees last August stating Enron remained
strong. Severely wounded by its role in the Enron scandal, Arthur
Andersen may be forced to seek a merger with one of the other
Big Five accounting firms in the US, according to industry
analysts.
However, the other members of the Big Five - Ernst & Young,
KPMG Peat Marwick, Deloitte Touche Tohmatsu and
PricewaterhouseCoopers - may not be willing to adopt Andersen's
problems. Last year, the Securities and Exchange Commission
fined Andersen $7 billion for not disclosing fraud at Waste
Management.
They are also facing scrutiny over too-cosy relationships with
firms they audit, as most of their profits now come from consulting
services. Last week, Andersen admitted that it had destroyed the
documents relating to its Enron audit. The company faces a
Justice Department criminal investigation, a Congressional inquiry
and billion-dollar law suits from shareholders.
Supervisors at Andersen repeatedly reminded employees of the
document-destruction memo in the weeks leading up to the first
SEC subpoenas that were issued on November 8th, according to
Time. The firm did not rule out the possibility that some
destruction continued even after that date.
The federal investigation in Washington will be overseen by Mr
Josh Hochberg, head of the fraud section who was involved in the
case of the FBI tape of Linda Tripp and Monica Lewinsky, which
lead to the case against former president Mr Bill Clinton.
The probe will try to determine whether Enron's partnerships with
shell corporations were designed to hide its liabilities and mislead
investors, if evidence was intentionally destroyed and whether
Enron received special favours for its political contributions.
ireland.com
©The Irish Times |
