Here's a new piece from my Houston connection:
Ken who?
Bush team plays defense
By BENNETT ROTH
Copyright 2002 Houston Chronicle Washington Bureau
WASHINGTON -- Fearful of being tarred by Enron's collapse, President Bush has moved to distance himself from the energy company's chief, Kenneth Lay, whose longtime financial support of the president and his family has raised questions among some Democrats and others.
As Congress readies for Enron hearings that could potentially embarrass the administration, the president and his aides are already suggesting that Lay has links to Democrats such as former Texas Gov. Ann Richards.
New York Times
Ken Lay "was a supporter of Ann Richards ... in 1994," the president contended.
Although Lay has been Bush's largest campaign contributor and has received considerable access, the president now has refused to defend the Enron chief as his company is embroiled in controversy.
On Thursday Bush acted to show that he wants to right Enron's wrongs by announcing the creation of task forces to come up with ideas for pension reform and better corporate disclosure.
Many of the Houston-based company's employees lost substantial amounts of their retirement 401(k) accounts that were tied up in plummeting Enron stock.
Enron's dizzying downfall has also been blamed on misleading financial statements that did not reveal how the company used partnerships to hide huge debts. It has become a target for a criminal investigation looking into, among other things, whether insiders profited by inflating the value of the stock with inflated earnings.
Another political peril of this collapse are the thousands of Enron employees who have lost their jobs, and many of them saw their retirement savings evaporate when the stock plunged.
Bush also endorsed the decision by the Justice Department on Wednesday to open a criminal investigation into the company and its bankruptcy.
"The administration is deeply concerned about its effects on the economy. We are also deeply concerned about its effects on the lives of our citizenry," said Bush, raising the subject of Enron with reporters before a meeting with his economic advisers.
But even as the administration took a tough line against Enron, Bush acknowledged under intense questioning that he had met twice last year with Lay, including a literacy fund-rasing event hosted by Barbara Bush, the president's mother, in Houston last spring.
And some political observers say the president will have a hard time convincing the public that his administration did not provide special access to Lay, who met six times with Vice President Dick Cheney or his staff last year to discuss energy issues.
Shortly after Bush announced the task force to look into Enron problems, his spokesman also acknowledged that Lay spoke with two other top administration officials last fall about his company's financial predicament.
The officials whom Lay contacted, Treasury Secretary Paul O'Neill and Commerce Secretary Don Evans, opted to do nothing to aid Enron, according to White House spokesman Ari Fleischer, who said Bush was not notified about the decision.
Associated Press
"The American people are sick and tired of partisan witch hunts," press secretary Ari Fleischer said.
Larry Sabato, a professor of political science at the University of Virginia, said that such contacts may reaffirm to some voters the impression that the Bush White House is beholden to big business.
"The average person can hardly call up the secretary of the Treasury. This just reinforces the charge that his administration was in bed with Enron," Sabato said.
Sabato, who has written extensively on political scandal, said that Bush has fallen into the same trap that has ensnared other presidents by waiting too long to release pertinent information.
"The administration has already violated one of the fundamental rules of scandal control. Get out the truth and get it out as quickly as possible," Sabato said.
Already, a chief Democratic critic, Rep. Henry Waxman, D-Calif., has called on the administration to be more forthcoming about its contacts with Enron.
Bracing for potentially explosive congressional hearings on the issue, White House officials are already warning Democrats about making the Enron investigation a partisan issue.
"I think that people need to remember that the American people are sick and tired of partisan witch hunts, and endless investigations, particularly in the case here, if people try to make hay out of one party's involvement and contacts or relationships with Enron," Fleischer said.
The spokesman noted that Enron had given "hundreds of thousands of dollars to Democrats."
However, according to the Center for Responsive Politics, Republicans received 72 percent of Enron's $2.4 million in political contributions during the 2000 election cycle.
Enron has also been Bush's most generous contributor over the course of his political career, giving him $550,025, according to a study by the Center for Public Integrity.
But Bush suggested that Lay originally had been a supporter of his Democratic gubernatorial opponent, Richards, before he transferred his allegiance to Bush.
He noted that Richards appointed Lay to an advisory business panel when she was governor in the early 1990s.
"He was a supporter of Ann Richards in my run in 1994," Bush said. "And she named him the 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, and worked with Ken, and he supported my candidacy."
But Richards' former chief of staff, John Fainter, said that business council was a non-partisan board made up of civic leaders.
He said it was always assumed that Lay was supporting Bush against Richards because of his longtime support for the president's father.
"I don't have any recollection of him supporting Gov. Richards," said Fainter.
According to the Center for Responsive Politics, Lay did not contribute to Bush's 1994 gubernatorial campaign but his wife, Linda, gave $12,500 to Bush that year.
Lay had been a big supporter of Bush's father when he was president.
The former president tapped Lay to head the local host committee for the 1992 Republican National Convention in Houston. In 1990, the elder Bush asked Lay to co-chair the host committee for the Economic Summit of Industrialized Nations in Houston.
Chronicle reporter R.G. Ratcliffe in Austin contributed to this report.
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