White House-Enron Ties Detailed
Papers Show Aides Seeking to Limit Bankruptcy's Damage
By Mike Allen and Dan Morgan
Washington Post Staff Writers
Friday, May 24, 2002; Page A01
As Enron Corp. slid toward a bankruptcy filing, the White House's top economic, policy and communications officials mobilized to minimize the damage to financial markets and to the Bush administration, according to new disclosures to Congress.
In the days before Enron filed the largest bankruptcy case in history, Karen P. Hughes, Bush's counselor, talked to press secretaries throughout the executive branch about how to handle news media calls about the company. Weeks before that, Deputy Chief of Staff Joshua B. Bolten had spoken to an assistant treasury secretary about how Enron's failure could affect the energy and financial markets, according to a chronology the White House provided to Sen. Joseph I. Lieberman (D-Conn.) on Wednesday evening after he subpoenaed the White House for a broader array of Enron-related documents.
Portions of the chronology document the deep ties between the Bush administration and Enron, including three phone conversations between former Enron chairman Kenneth L. Lay and Bush's senior adviser, Karl Rove. Yesterday, congressional investigators seized on sections showing that the administration was clearly worried about the potential impact of Enron's collapse on the fragile post-Sept. 11 economy.
Officials launched a series of previously undisclosed e-mail and conference call consultations that included the Council of Economic Advisers, the Federal Energy Regulatory Commission and the Commodity Futures Trading Commission.
Until now, administration officials had portrayed Enron's financial troubles as a distant and even technical matter that was not their immediate concern. When White House press secretary Ari Fleischer was asked about Enron on Nov. 28, four days before the bankruptcy filing, he brushed off the question by saying that the Treasury Department was "keeping an eye on that" and referring further questions there.
In fact, eyes throughout the White House had focused on Enron since President Bush's inauguration. The chronology shows that the Houston energy trading company, whose top executives were some of Bush's earliest and most generous supporters, pursued a broad agenda with the administration that ended only after its huge losses and accounting irregularities became public.
The White House report suggests that Bush administration officials then became deeply concerned about the public relations and financial fallout of the Enron debacle. Lawrence B. Lindsey, Bush's chief economic adviser, said in a February note to Congress, included in the chronology, that he and his staff "increased the intensity of our monitoring of the energy and financial markets in an effort to assess the potential systemic impacts, if any, of Enron's failure."
Nothing in the report refutes the White House's contention that no official did anything or suggested doing anything to bail out Enron. White House Counsel Alberto R. Gonzales says in a letter accompanying the chronology that he has identified no case in which Enron approached anyone in the White House "seeking help in connection with its financial difficulties prior to bankruptcy." He says the communications in the chronology "reflect only appropriate and responsible actions by government officials."
However, the revelations have given new hope to Democrats that Bush's ties to Enron will prove politically damaging. House Minority Leader Richard A. Gephardt (D-Mo.), who had previously scheduled a "town hall meeting" with former Enron employees in Houston next Tuesday, said yesterday that Bush officials "really have a hang-up, it would appear, on the question of sending information from the White House to the Congress and to the American people."
Much more may be coming. A federal judge in Washington ruled yesterday that Judicial Watch, a government watchdog group, and the Sierra Club, an environmental group, may proceed with discovery proceedings in their effort to obtain records from Vice President Cheney's energy task force, which granted five meetings to Lay and other representatives of the company. U.S. District Judge Emmet G. Sullivan rejected the administration's argument that the court had no such authority.
Sharon Buccino, senior attorney for the Natural Resources Defense Council, which is also seeking records from Cheney's task force, said yesterday's decision could mean that the administration will have to produce minutes and rosters.
A senior administration official said the discovery might be conducted privately by the judge.
Lieberman, chairman of the Senate Governmental Affairs Committee, said he also plans to push for more material. "In many cases, they've left out details the committee asked for, such as who attended meetings or took part in communications and when all of the communications occurred," he said in a statement.
Anne Womack, a White House spokeswoman, said: "We're trying to be helpful to the committee. We're continuing to review documents and e-mail and visitors' records, and we want to continue to cooperate with the committee."
The White House chronology shows that before Enron began disclosing massive losses, the company repeatedly turned to the administration on matters as broad as the national energy policy being drafted under Cheney's direction, and as specific as problems that a subsidiary was having with the German government over perceptions of unfair competition in the German electricity market.
During Bush's first nine months in office, Robert McNally, a special assistant to Bush on energy policy, met with Enron representatives seven times and received at least one e-mail from Enron's chief Washington lobbyist, Linda Robertson, according to the White House chronology.
On April 6, McNally met with Lay and Robertson to discuss electricity issues and changes underway in the wholesale power markets in which Enron was a dominant player. At that meeting, there was a discussion of power "bundling," a topic before the courts and the Federal Energy Regulatory Commission. Enron was pressing both FERC and the courts to assert jurisdiction over retail sales by utility companies to promote a more seamless national wholesale electricity market.
The chronology says the main topics of McNally's conversations with Enron were electricity policy and "multi-pollutant" legislation to control harmful emissions from power plants. Enron, with major investments in relatively clean natural gas pipelines, favored legislation limiting carbon emissions from the coal-burning plants of electric utilities.
On Oct. 10, Enron officials briefed McNally and Andrew Lundquist, the executive director of Cheney's energy task force, about a liquefied natural gas project in Venezuela. The chronology does not say why the company felt it necessary to inform the White House about the project.
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Staff writer Ellen Nakashima contributed to this report.
© 2002 The Washington Post Company
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