Army Chief Being Challenged on Ties to Company
January 25, 2002
The New York Times
THE SECRETARY
By CHRISTOPHER MARQUIS
WASHINGTON, Jan. 24 - When
Thomas E. White was chosen
last spring to become secretary of the
Army, administration officials
portrayed his nomination as part of an
effort to bring corporate discipline to
the Pentagon.
Mr. White, who had been vice
chairman of Enron Energy Services,
arrived with a boardroom boast that he and his private-sector colleagues were the
new "C.E.O.'s of wholly owned subsidiaries of the Department of Defense."
But now an advocacy group founded by Ralph Nader contends that Mr. White's
business dealings present a conflict of interest. The group, Public Citizen, is raising
questions while Congress investigates the collapse of the Enron Corporation,
which has filed for bankruptcy protection.
Mr. White, through a spokesman, denied any wrongdoing.
Public Citizen this week accused Mr. White of taking action to benefit Enron within
weeks of becoming Army secretary. In remarks to the media in June, Mr. White
vowed to accelerate efforts to privatize energy utilities serving the military.
The privatization effort had slowed while California's energy crisis unfolded, but
Enron continued to promote the program. Mr. White himself had lobbied on its
behalf while at Enron, and in 1999 the energy division had been awarded a
contract worth $25 million over 10 years to provide energy to Fort Hamilton in
Brooklyn, Public Citizen said.
"It's a huge conflict of interest," said Tyson Slocum, the group's research director.
At the time of Mr. White's confirmation as Army secretary, Mr. Slocum said, Enron
had seven bids pending at the Pentagon.
A spokesman for Mr. White denied today that Mr. White
had behaved inappropriately. The secretary had explicitly
excused himself from decisions affecting Enron, but he
was determined to advance efforts to privatize Defense
Department services and save taxpayers money, said the
spokesman, Lt. Col. Ryan Yantis.
As part of a government ethics agreement, Mr. White was
compelled to sell his shares in Enron. He was given 90
days to do so, then received an extension that gave him
until Nov. 20 to complete the sale. He sold the last of his
shares for $13 each in mid-October, just before the
company disclosed the problems that led to its bankruptcy
filing.
Mr. White acknowledged having contacts with Enron
employees since last June, including a call with Kenneth
L. Lay, the chairman and chief executive, in September,
but he called them personal in nature.
Administration officials voiced confidence in Mr. White,
and Congress members investigating the Enron collapse
say they have no evidence that he acted in bad faith
during his 11 years as an Enron executive or
subsequently.
Mr. White, in a letter to one investigator, Representative
Henry A. Waxman, Democrat of California, noted this
week that he had incurred "significant personal losses" in
the Enron bankruptcy.
In the letter, which responded to questions by Mr. Waxman, Mr. White said he had
briefly discussed Enron with Defense Secretary Donald Rumsfeld in November and
with Secretary of State Colin L. Powell last month.
"The nature of both conversations was a concern on their part for the impact that
the bankruptcy of Enron may have had on my personal well- being," Mr. White
wrote. "My response in both cases was that I had suffered significant personal
losses, but that I would persevere."
Mr. White also detailed the 30 contacts he had with Enron employees since last
June, involving both phone calls and personal meetings. The contacts included a
telephone conversation on Sept. 10 with Mr. Lay.
Mr. White initiated the call to Mr. Lay "to wish him luck as he assumed his new
duties as C.E.O. of Enron," Mr. White's letter said. The contacts with other Enron
officials, he said, were all "personal in nature, with their inquiring about my
progress as Secretary of the Army and my inquiring about their personal
challenges as they dealt with Enron's deteriorating financial conditions."
Mr. White added that "at no time" did Mr. Lay or any other Enron employee ask
him to intercede with federal officials on Enron's behalf.
Mr. Waxman, the ranking Democrat on the Government Reform and Oversight
Committee, is still studying Mr. White's letter, aides said, and was not available for
comment.
A review of Mr. White's financial disclosure information shows that he amassed a
considerable fortune while working for Enron.
According to his filings in May, Mr. White last received a salary of $5.5 million at
Enron and owned homes in Naples, Fla., and Aspen, Colo., valued at more than $5
million each. He bought a $5.5 million penthouse in Washington last June.
Mr. White held more Enron stock than any other senior official joining the Bush
administration. According to the disclosure forms, he held $25 million to $50
million in Enron shares, $25 million to $50 million in stock options and $5 million
to $25 million in a phantom stock award, which is a promise to pay a future bonus
in appreciated stock or its cash equivalent.
To comply with the ethics agreement, Mr. White was compelled to sell 405,710
shares of Enron. He made the sales, from June 13 to Oct. 14, 2001, as the value of
Enron stock steadily diminished. For example, he sold 92,000 shares at $50 in
mid-June and 86,709 shares at $13 in October.
In his letter, Mr. White said he had sold all of his Enron stock and had renounced
his stock options.
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