Lay Offered Rubin Enron Board Seat
The Associated Press
Feb 21 2002 3:37AM
WASHINGTON (AP) - On one day in 1999, former Enron chairman Kenneth Lay sent notes signed ``Ken'' to Robert Rubin, who was stepping down as Treasury secretary, and to congratulate Rubin's successor, Lawrence Summers.
Lay lobbied Rubin, to whom he offered a seat on Enron's board, and Summers with the same easy cordiality on issues affecting Enron, documents obtained Wednesday show.
The notes and letters show that Lay pressed Enron's interests to Clinton administration officials. Last month, the Bush administration disclosed a series of telephone calls from Lay - one of President Bush's biggest campaign contributors - to members of the Bush Cabinet as the company slid toward bankruptcy last fall.
The new documents were provided by the Treasury Department under a Freedom of Information Act request by The Associated Press.
With Congress' investigation of Enron's collapse widening to Wall Street, the House Energy and Commerce Committee planned Thursday to send letters seeking information to about a dozen big investment firms.
Committee investigators are trying to determine whether Enron officials pressured the firms - including Merrill Lynch & Co., First Union Corp., Citigroup Inc., J.P. Morgan Chase & Co. and Credit Suisse First Boston - to invest in the partnerships or promised them special deals if they did so or raised money from other investors.
In addition to Congress, the Justice Department and the Securities and Exchange Commission are investigating Enron and the role of its longtime auditor, Arthur Andersen LLP.
Enron's current chief executive officer said Wednesday that someone could end up in jail on charges stemming from the government's investigation of the company and the complex web of partnerships - used to hide more than $1 billion in debt - that eventually brought it down.
``Given the enormity of the damage that's been created, I think it's going to be difficult to not hold one or more people accountable,'' said Stephen Cooper, who took the helm of Enron after Lay resigned last month as chairman.
Investors nationwide lost money, and thousands of Enron employees lost their retirement savings in accounts loaded with Enron stock as the energy-trading company collapsed.
Rubin, who left the government in mid-1999, is chairman of the executive committee of Citigroup, one of the banks that lent hundreds of millions of dollars to Enron. Rubin called Treasury's undersecretary for domestic finance, Peter Fisher, last Nov. 8 to seek his intervention on Enron's behalf. At the time, rating agencies were poised to downgrade their opinions on the financial status of Houston-based Enron.
On May 14, 1999, after Rubin announced he was leaving his post, Lay wrote him: ``If you are considering joining any corporate boards, I would like very much to talk to you. Given the way Enron has evolved, not only do we badly need a person with your experience and insights ... but also I think you would find serving on our board intellectually and otherwise interesting.''
Rubin did not join Enron's board of directors.
Leah Johnson, Rubin's spokeswoman at Citigroup's New York headquarters, noted that he received 30 to 40 offers to join corporate boards at that time. ``Rubin had no interest'' in the Enron board position, Johnson said. She did not comment further.
Also on May 14, Lay wrote a note to Summers, Rubin's successor, congratulating him on becoming Treasury chief and promising to be available ``if there is anything at all I or Enron could do for you or the department.''
Lay's spokeswoman, Kelly Kimberly, declined to comment on the documents.
In another letter, dated Dec. 3, 1998, Lay urged Rubin to approve Houston's application to be named an ``empowerment zone,'' a status that brings tax breaks and other incentives meant to promote economic revival.
Enron had some 20,000 employees when it filed for bankruptcy on Dec. 2. It has been one of the largest employers in Houston, which has not been designated as an empowerment zone.
Enron had lobbied throughout the government and Congress against regulation of electricity markets and the trading of financial products, known as derivatives, tied to energy commodities. In an Oct. 8, 1999, letter to Summers, Lay said Enron was ``troubled'' by the idea. He indicated he was prompted to write by a speech in which a Treasury assistant general counsel suggested federal regulators might be considering regulation of the huge global derivatives market that exists outside of commodities exchanges.
``Larry, hopefully the comments made by John Yetter were just a misunderstanding,'' Lay wrote. ``I would very much appreciate receiving a call or note from you if in fact there is any reason that we should be concerned about this occurring.''
Summers responded on Nov. 22, noting that Yetter and another Treasury official, Assistant Secretary Lee Sachs, had met with several Enron executives to discuss the company's concerns and that Sachs spoke on the phone with Lay about the issue. |
