More calls were made to aid Enron
Former Treasury secretary lobbied on behalf of firm
By DAVID IVANOVICH
Jan. 12, 2002, 12:29AM
chron.com
WASHINGTON -- Former Treasury Secretary Robert Rubin joined Enron Corp. executives in a futile effort to persuade the Bush administration to help keep the company from plunging into bankruptcy, government officials said Friday.
Rubin, Treasury secretary under President Clinton and now head of one of Enron's largest creditors, Citigroup, called the Treasury Department and raised the prospect of the government intervening on the company's behalf.
Rubin's attempt to lobby on Enron's behalf highlighted just how extensive the efforts were to prod the Bush administration to save the one-time political powerhouse.
On Thursday, White House spokesman Ari Fleischer disclosed that Enron Chief Executive Officer Ken Lay had contacted two Cabinet members, Treasury Secretary Paul O'Neill and Commerce Secretary Don Evans, warning them about the company's troubles and raising the prospect of a bailout.
But the Federal Reserve confirmed Friday that Lay also called Fed Chairman Alan Greenspan, while Energy Secretary Spencer Abraham didn't wait for a call from Lay but dialed up the Enron executive himself, government officials said.
The Houston-based energy and trading giant's attempts to use its legendary political muscle to avoid the largest bankruptcy in history is morphing into the first scandal-like controversy of the Bush administration.
White House officials have been scrambling to try to distance the president from Lay, one of Bush's most steadfast political supporters.
Fleischer insists "this dog won't hunt," but some of the political pundits already are dubbing it "Bush's Whitewater."
Robert Bennett, an attorney representing Enron here in Washington, said he could not understand why there should be such a fuss over Enron officials making calls to government officials.
"Now that we're into scandal psychology, everything gets turned upside down," Bennett said.
Corporate leaders are in contact with the government all the time, Bennett said. And the government has not hesitated to bail out companies considered crucial to the nation's economic health, from the airlines to Chrysler Corp.
"They're not calling the Soviet Union and sharing U.S. secrets," Bennett said.
Many of the Enron calls were directed to the Treasury Department, which has responsibility for monitoring the credit markets.
On Nov. 8, Enron announced it would have to reduce its earnings by $586 million going back more than four years. The company was in danger of yet another credit downgrade.
Rubin called Peter Fisher, Treasury's undersecretary of domestic finance, who had been assigned to monitor the Enron fallout, Treasury spokeswoman Michele Davis said.
Rubin asked Fisher "what he thought of the idea of Fisher placing a call to rating agencies to encourage them to work with Enron's bankers, to see if there was an alternative to an immediate downgrade," Davis said.
"Fisher responded that he didn't think it was advisable to make such a call," Davis said. Rubin "thought that was a reasonable answer."
A spokesman for Citigroup could not be reached for immediate comment late Friday.
Enron President Lawrence "Greg" Whalley had been peppering Fisher with calls as well, telephoning him "six to eight" times between late October and early November, Davis said.
"Fisher inferred he was being asked to encourage the banks to extend them credit," Treasury spokeswoman Michele Davis said. "He made no such calls. It was just not something he would ever consider doing."
The Federal Reserve confirmed Friday that Lay placed a call to Greenspan on Oct. 26, just days before Moody's Investors Service downgraded the credit rating on the company's long-term debt, a decision which sent Enron's stock nosediving.
The Federal Reserve had orchestrated the bailout of the hedge fund Long Term Capital Management, using $3.5 billion ponied up by the private sector to save the firm. Lay had recalled the government's role in the Long Term Capital rescue in his conversation with O'Neill.
A Fed spokesman would not characterize Greenspan's conversation with Lay, but he did note: "The Fed chairman did nothing in response because it would have been inappropriate."
Bennett contends there is no reason for anyone to be squeamish about Enron's calls.
"There has not been the slightest bit of evidence presented that anything was asked that was improper ... and nobody offered anything," he said.
Abraham called Lay himself on Nov. 2 "to ask about the situation," Energy spokeswoman Jeanne Lopatto said. "Mr. Lay did not ask for any help during that conversation, and he seemed to convey that the situation was improving. But he did not disclose any details. It was a brief conversation."
While the controversy over Enron's lobbying campaign raged, a slew of Congressional panels continued their various probes into the company's debacle.
On Friday, the House Energy and Commerce Committee called on Andersen, Enron's outside auditor, to provide its documents on the Enron account.
On Thursday, Andersen officials revealed that company employees destroyed a "significant but undetermined number" of electronic and paper documents related to the Enron case.
"It wasn't until we went knocking on their door that we learned that many documents had been destroyed," said Ken Johnson, a spokesman for the committee.
"We found out (Thursday) that records had been destroyed," Johnson said. "The burning question is: How long did Andersen officials know?"
The committee wants to see the files of David Duncan of Houston, Andersen's partner-in-charge for the Enron account, as well as the other top five partners working on the Enron audits.
They also want to see copies of the company's document retention policy dating back to 1997, as well as documents authorizing the destruction of documents.
"We have pledged our full cooperation with the congressional investigators and I am sure we will do everything reasonable and possible to respond," Andersen spokesman David Tabolt said.
Also Friday, the Senate Governmental Affairs Committee's Permanent Committee on Investigations issued 51 subpoenas for documents from 49 Enron officials, as well as the corporation and from Andersen.
Meanwhile, analyses of financial disclosure records found at least 15 top-ranked Bush administration officials -- including Defense Secretary Donald Rumsfeld and White House political adviser Karl Rove -- among Enron stockholders last year.
Among those receiving a subpoena was Wendy Gramm, wife of Texas Sen. Phil Gramm, the Boston Globe reported. Wendy Gramm, a former chairwoman of the Commodities Futures Trading Commission, was asked for documents in her capacity as a member of the Enron board, staff aides said.
The analysis by the Center for Public Integrity found that Deputy EPA Administrator Linda Fisher, U.S. Trade Rep. Robert Zoellick and Treasury Undersecretary Fisher owned Enron stock when they took office last year.
In addition, Army Secretary Thomas White, who was Enron's vice chairman before assuming his post at the Pentagon. Records -- which show only ranges of stock ownership -- indicate that White owned between $50 million and $100 million worth of Enron stock.
Both White and Rove reported selling their stock last year when they divested holdings that might present conflicts of interest under government ethics rules. It was not immediately known how their investments fared. Enron stock traded as high as $83 a share last year and currently is worth less than $1.
Enron's reach was not limited to administration officials.
An analysis of campaign finance records for the past 12 years found that 187 of the current House members and 71 senators have received donations from Enron officials or the company's political action committee. The Center for Responsive Politics tally of Enron donations to lawmakers has topped $1.1 million since 1989.
The top Senate recipients are Texas Republicans Kay Bailey Hutchison, who received $99,500 over the period, and Gramm, who received $97,350. Among House members, the top recipients were Houston Democrats -- Rep. Ken Bentsen, with $42,750, and Rep. Sheila Jackson Lee, with $38,000.
Houston Chronicle Washington Bureau Chief John C. Henry contributed to this story. |
