Life with the Lay people
guardian.co.uk
Friday February 14, 2003
The Guardian
Ken Lay developed connections among business and political leaders.
He chaired the 1992 Republican national convention in Houston and sat with George H
W Bush in the presidential box. After Bush lost the 1992 election,
Lay maintained strong ties to the Bush family.
Bush's sons lobbied on behalf of Enron: Neil and Marvin in Kuwait and George W in Argentina.
Lay also rewarded Wendy Gramm, Bush's chair of the commodity futures trading
commission, with a directorship, soon after she had pushed through the regulatory
exemption for over-the-counter derivatives, an important part of Enron's business.
As Enron's board became more international, to reflect the company's new global businesses,
it became less effective in monitoring Enron's management. Lord Wakeham, the former
leader of the Commons and energy minister, had permitted Enron to build England's largest
power plant, at Teesside, and now received even more money as a consultant to
Enron than as a board member - both at the same time.
Enron's five-member audit committee was hardly full of watchdogs,
either. Ronnie C Chan, chairman of the Hang Lung Group in Hong Kong,
and Paulo V Ferraz Pereira, a senior officer of Group Bozano in Brazil,
had little experience with US accounting. Wendy Gramm's free-market
policy group in Washington received $50,000 from Enron and another
$10,000 from a foundation set up by Lay. Her husband, Texas senator
Phil Gramm, received $97,350 of donations from Enron, plus funds raised
by Mark Brickell, the JP Morgan lobbyist, one of Mrs Gramm's comrades.
That left the chair of the audit committee, Robert K Jaedicke, emeritus
professor of accounting at Stanford. He did not grasp the complex disclosure
issues presented by the managers he was supposed to oversee and control.
He made nearly $1m from Enron stock. |
