Enron's Influence Reached Deep Into Administration
Ties Touched Personnel and Policies
By Dana Milbank and Glenn Kessler
Washington Post Staff Writers
Friday, January 18, 2002; Page A01
As presidential candidate George W. Bush's top economic adviser in 2000, Lawrence B. Lindsey
was also a paid consultant to Enron Corp. At one point, those two roles merged.
For $50,000 a year, Lindsey attended meetings in 1999 and 2000 of the energy
company's economic "advisory board." In those sessions, Enron Chairman Kenneth
L. Lay convinced Lindsey of the wisdom behind one of Enron's businesses, a
consulting operation that advised companies on energy efficiency.
"It stuck with me," Lindsey said in an interview yesterday.
In fact, Lindsey incorporated Lay's ideas into the Bush campaign's energy policy.
During the campaign, Lindsey described Lay's contribution as key.
The cozy relationship -- in which a Bush campaign adviser, being paid by Enron,
placed an Enron idea on the candidate's agenda -- served as one more reminder of the
political influence and reach of the once-giant energy company.
Its ties extend deep into President Bush's staff, appointments, Cabinet members,
friends, family -- and his own past.
According to financial records, 35 administration officials have held Enron stock.
A few, such as top Bush political adviser Karl Rove, had six-figure holdings.
Several others -- Lindsey, U.S. Trade Representative Robert B. Zoellick, Commerce
Department general counsel Theodore W. Kassinger, Maritime Administrator William
G. Schubert -- served as paid Enron consultants.
Bush's secretary of the Army, Thomas E. White, was vice chairman of the Enron business
that Lay had described to Lindsey during the campaign. White had held between
$25 million and $50 million in Enron stock in addition to options
and other forms of remuneration.
Newly appointed Republican National Committee Chairman Marc F. Racicot was
an Enron lobbyist. Bush campaign adviser Ed Gillespie, sent in when Bush took
office to get the Commerce Department up and running, was an Enron lobbyist.
Still others, such as Attorney General John D. Ashcroft and Energy
Secretary Spencer Abraham, received campaign
contributions from Enron, while many more -- including
Securities and Exchange Commission Chairman Harvey L. Pitt,
Federal Energy Regulatory Commission Chairman Patrick H. Wood III
and Deputy Attorney General Larry D. Thompson --
have indirect ties to Enron or auditor Arthur Andersen.
And Enron consulted on policy with top administration officials
such as Commerce Secretary Donald L. Evans, Treasury Secretary
Paul H. O'Neill and Vice President Cheney.
There has been no indication that the administration's ties to Enron are illegal,
and the giant company had similar connections to several Democrats and Republicans
in Congress. But the sheer volume of Enron connections to the
executive branch offers a study in the long reach of a powerful campaign
contributor and aggressive corporation. Though
the administration says it made no effort to keep Enron afloat,
the extensive ties between the two may present Bush with a
political difficulty if Democrats can create a perception of guilt by association.
Enron began in 1985 as a traditional gas pipeline company, but transformed itself
into an innovative trader of gas, electricity and other commodities. Its stock became
a Wall Street favorite as it tried to enter markets for fiber-optics, movie
rentals, paper, even advertising. Many of its businesses were regulated or otherwise
affected by federal decisions.
Enron and its executives poured millions of dollars into the political process -- $1.7 million
in the 2000 election alone,
according to the Center for Responsive Politics.
Over the years, a series of actions by Congress and the FERC, which
broke down the old monopoly of utility companies
over power plants and transmission lines, benefited Enron.
The company successfully lobbied for a regulatory exemption
for futures trading in energy "derivatives," complex financial instruments
that became its most lucrative business and
contributed to its downfall. The Bush administration sometimes rebuffed Enron,
however, such as when it refused to
embrace an Enron-backed position on combating global warming.
Bush last week played down his ties to Lay. He said he "first got to know Ken" in 1994,
when "he was a supporter of Ann Richards," the Democratic Texas governor whom
Bush ousted. In fact, Bush knew Lay from their work on the 1992
Republican National Convention and the Bush presidential library.
The current president received $47,500 from Lay and
his wife in 1994 -- many times what Richards received.
Lay has said he supported Bush, not Richards, in 1994.
Over the years, Lay and Enron interests have contributed more than a half million dollars
to Bush campaign funds, according to the Center for Public Integrity, making him Bush's
greatest patron. The Bush presidential campaign reimbursed Enron for use of its corporate jets.
Lay, who got the nickname "Kenny Boy" from Bush, served on Bush's
presidential transition advisory team for the Energy Department.
Enron employee Cynthia Sandherr served on the
transition team for the Commerce Department.
In the White House, four senior officials were listed as Enron shareholders.
Three of them -- Cheney chief of staff I. Lewis
"Scooter" Libby, congressional liaison Nicholas E. Calio and
former communications adviser Margaret Tutwiler -- likely sold
their interests or were not required to under ethics rules; full details will not be
made public until May.
The fourth, Rove, whose Enron holdings were valued between $100,000 and $250,000,
sold his shares last year after the value had fallen to $68,000; the Enron shares,
which the White House said Rove purchased on his own, were part of a
portfolio worth more than $2.3 million.
White House counsel Alberto R. Gonzales acknowledged last June that Rove took
part in meetings that helped shape the administration's energy policy while he
still owned stock in Enron and other energy companies. Gonzales, however, said
the meetings were general in nature and not specific enough to be barred
by conflict-of-interest regulations.
Also tied to Enron is Lindsey. His consulting firm, Economic Strategies Inc.,
counted an Enron unit among its many clients. Counting speaking fees
and his multi-client business, Lindsey earned more than $1.1 million in 2000.
White House press secretary Ari Fleischer said that Lindsey, before Enron's Dec. 2 bankruptcy filing,
led a White House "review" that monitored the impact of Enron's woes on energy markets.
Lindsey said it was merely part of an ongoing monitoring of the energy markets by
one or two aides. Democrats in Congress yesterday said Lindsey's actions may have
violated federal conflict-of-interest regulations. Lindsey said his work was not "Enron-specific."
Cheney, himself a former Texas energy executive, was on a first-name basis with Lay,
who met with the vice president to discuss development of the administration's national energy
policy. In all, the vice president's office disclosed, the energy task force met six times with
Enron representatives. Rep. Henry A. Waxman (D-Calif.), a critic of the task force, said "it
seems clear that there is no company in the country that stood to gain as much from the
White House plan as Enron."
A number of senior Bush aides have had routine or incidental contact with Enron.
White House Chief of Staff Andrew H.Card Jr. was alerted by Commerce's Evans about a call
from Lay expressing a desire for government help in the weeks
before its bankruptcy. Bush budget director Mitchell E. Daniels Jr. received a call
from Lay in October about prospects for the economic stimulus package.
That package, as passed by the House, included a tax provision that would have provided
Enron with a $254 million rebate, according to the Congressional Research Service.
Even Bush's homeland security director, Tom Ridge, had Enron ties.
At Lay's urging, Bush called Ridge in 1997 when he
was Pennsylvania governor to help with Enron's bid -- eventually
successful -- to enter the Pennsylvania market.
At the Justice Department, Ashcroft and staff chief David Ayres -- Ashcroft's former
campaign manager -- recused themselves from the Enron probe because of Enron
contributions to Ashcroft's campaign funds.
The Justice Department decided that deputy staff chief David Israelite and
communications director Barbara Comstock
need not recuse themselves; both had worked for the Republican National Committee,
which received hundreds of thousands of dollars from Enron. Thompson, Ashcroft's deputy,
was a partner in a law firm, King & Spalding, that represented Enron, but he disagreed with
a Democratic lawmaker who said Thompson should disqualify himself.
After Commerce's Evans received a call from Lay in which the Enron chief said he
would value government calls to a private credit rating agency, Evans called into his
office his counsel, Kassinger. Kassinger had earlier said he had provided "legal
services" to Enron while a trade lawyer at the firm Vinson & Elkins LLP in Houston,
Enron's hometown. Ultimately, Evans
said, he decided not to intervene.
Treasury's O'Neill, who also got a call from Lay concerning Enron's dire finances,
handed the matter over to Peter R. Fisher, the undersecretary for domestic finance.
Fisher had holdings in Enron valued between $1,000 and $15,000 when
he joined the administration, as did Mark A. Weinberger, the assistant treasury secretary
for tax policy. Treasury's spokeswoman said Fisher's modest holdings were part of a trust
that he does not control. O'Neill said the department
provided no help to Enron, although it consulted with lenders.
Elsewhere in the administration, Trade Representative Zoellick received $50,000 in advisory
fees from Enron and listed stock holdings between $15,000 and $50,000 -- relatively small
percentages of his overall earnings and holdings (Zoellick
sold his shares after joining the administration).
A score of other administration officials had Enron holdings, ranging from relatively
small stakes held by Defense Secretary Donald H. Rumsfeld and Export Import
Bank Chairman John E. Robson to holdings exceeding $100,000 by Charlotte L.
Beers, the undersecretary of state for public diplomacy.
At the SEC, Pitt faced requests this week from congressional Democrats and
the watchdog group Common Cause that he remove himself from his agency's Enron investigation because he had been a securities lawyer who represented Andersen, Enron's auditor. FERC Chairman Wood,
a friend of Lay's, replaced Curtis Hebert Jr. Hebert told the New York Times last
year that Lay had said he wouldn't back his reappointment unless Hebert changed his views on electricity deregulation.
Even since its bankruptcy filing, the vestiges of Enron continue to touch
those around the president. Bush's brother, Florida Gov. Jeb Bush, flew to Houston yesterday for a $500-per-person fundraiser at the home of a former Enron
president.
Staff writers George Lardner and Paul Blustein contributed to this report.
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