President's image as Enron's man clings, given company's ties to his administration
Bush eager to escape from taint of scandal
By BARRIE MCKENNA
Wednesday, January 30, 2002 - Print Edition, Page A11
Globe and Mail
HOUSTON -- Before he became President,
George W. Bush was a fixture around Enron
Corp.'s gleaming blue-glass headquarters.
With good reason. Inside the Houston landmark were his friends, his
benefactors and his political compass.
Now, the former Texas governor is struggling to distance himself from a
company that was instrumental in putting him in the White House. The
largest bankruptcy in U.S. history -- a tale filled with dark deeds, ruined
lives and fortunes lost -- has raised deep suspicions about the Texas
cash that put him in office.
Without the Houston-based energy giant and fundraising dynamo
Kenneth Lay, who resigned as chairman last week, it's unlikely Mr.
Bush would have come this far.
Energy made Mr. Lay and other Houston business people wealthy
beyond imagination. What they wanted, they got -- from palatial
mansions and luxury yachts to compliant governments.
Like Houston itself, which rose from a steaming bayou to become the
fourth-largest city in the United States, Enron was built on a simple
concept: governments in Austin and Washington should stand back and
let business do its thing.
"Houston and Texas have always been more business-oriented than the
rest of the country," said Stephen Klineberg, a Rice University sociology
professor and author of an annual survey that takes the pulse of
Houstonians. "The belief here is that the role of government is to
facilitate private enterprise. Texas is America writ large. It's an
exaggeration of that concept."
To ensure it got its way (with deregulated energy markets and little
government oversight) Enron gave handsomely to politicians of all
stripes -- but mostly to those who shared that idea.
"Texas is still the Wild West of money in the political system," said Craig
McDonald, director of Texans for Public Justice, which tracks money in
politics. "The looseness of money in the political system enabled Enron
to dig its claws into the political elite in Texas."
And Mr. Bush, a former oil man and son of former president George
Bush, was the greatest beneficiary of Enron's largesse, receiving at least
$500,000 (U.S.) from Enron and its employees during the 2000 election
year.
He also got people and loads of advice. A half-dozen of Mr. Bush's inner
circle of advisers worked for Enron before accepting his call to duty.
They include Trade Representative Robert Zoellick, Army Secretary
Thomas White, economic adviserLawrence Lindsey and softwood lumber
negotiator Marc Racicot . Several others, such as top political strategist
Karl Rove, owned large chunks of Enron stock.
Mr. Lay himself helped draft Mr. Bush's campaign energy platform and
was reportedly a candidate to become energy secretary in the new
administration. Mr. Lay is even closer to the President's father.
Perhaps not coincidentally, the younger Mr. Bush carried the Enron
message with him to Washington, pushing for lower business and
personal taxes, energy deregulation and hands-off government.
As mightily as he tries, Mr. Bush can't shake the image that he was
Enron's man -- closer to one company than any of the 42 presidents
who preceded him.
Mr. Bush's relationship to Enron was intensely personal. He liked to call
Mr. Lay "Kenny Boy," the nickname favoured by the Enron boss's wife.
In 2000, when baseball's Houston Astros moved into its new stadium,
Enron Field, the father-and-son Bushes sat with Mr. Lay.
Now, the General Accounting Office -- the investigative arm of Congress
-- is threatening to go to court to get details of meetings last year
between Enron executives and White House officials. Mr. Bush has
insisted that disclosure would mark a dangerous encroachment on his
office's ability to do business.
Spokesman Ari Fleischer said yesterday the GAO is asking "for
information that oversteps its bounds."
Meanwhile, the FBI and securities regulators are investigating
allegations of fraud and obstruction of justice at Enron.
Mr. Bush, eager to keep the Enron bankruptcy from becoming a
full-blown political scandal, has said he's "outraged" by what went on at
the company before its collapse. In last night's speech, he also issued a
warning about good corporate behaviour in America, a subtle reference
to the saga.
But as he prepared for that speech, he refused to meet with laid-off
Enron employees who travelled from Houston to Washington by bus to
plead for financial aid.
The faces of Enron
-Deregulation sees Enron develop broking business matching buyers
and sellers of energy. Grows into seventh largest U.S. company with
$100-billion in revenues.
-Executives use offshore companies to hide debt levels. In October,
company records show loss of $618-million. In November it admits
overstating profits since 1997 by a further $600-million.
-Senior executives cash in $1.1-billion in shares. Enron workers, whose
pensions are linked to its stock, are prevented from selling. Many lose
life savings as shares collapse and trading partners and creditors panic.
Enron becomes biggest-ever bankruptcy on Dec. 2.
-It is revealed that executives, including CEO Kenneth Lay made
repeated calls to senior figures in Bush administration asking for help.
-Arthur Andersen, Enron's accounting firm, admits shredding
thousands of documents relating to the company. Two criminal inquiries
and six congressional committee hearings launched.
George Bush: A long-time friend of Lay, he received backing from Enron
of more than $800,000 in his campaigns for governor and then
president
Dick Cheney: The Vice-President met Enron executives at least six
times last year
John Ashcroft: The Attorney General excused himself from the
investigation into Enron. He received a $58,000 donation for his failed
2001 Senate bid
Alan Greenspan: Federal Reserve chairman received call from Lay prior
to collapse but took no action
Pat Wood III: Suggestion Lay may have influenced his appointment as
chairman of the Federal Energy Regulatory Commission
Joseph Berardino: The chief executive of Enron auditors Arthur
Andersen who were paid $52m in fees last year. He admits firm made
"errors of judgment"
Robert Rubin: Treasury Secretary under Bill Clinton, now a senior
figure at creditor Citigroup, lobbied both Paul O'Neill and Peter Fisher
on Enron's behalf
Thomas White: The secretary of the Army is a former Enron
vice-president and owned between $50m and $100m in Enron shares
Lawrence Lindsey: George W. Bush's top economic adviser was a former
paid consultant to Enron
Mitch Daniels Jr.: White House budget director discussed planned
economic stimulus package with Lay
Peter Fisher: The finance undersecretary was contacted "six to eight"
times during October and November 2001
Donald Evans: The Commerce Secretary discussed Enron's finances
with Lay five times last year
Karl Rove: The Chief political adviser to President Bush owned Enron
stock and attended meetings where energy policy was discussed
Phil Gramm: Senator, married to Enron board member Wendy Gramm,
and the second largest beneficiary of campaign cash in the Senate
Robert Zoellick: The U.S. Trade Representative served on Enron's
advisory council
Paul O'Neill: Treasury Secretary took two calls from Lay prior to collapse
Spencer Abraham: Energy Secretary discussed policy with Enron and
took campaign cash as a senator
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