Enron Scandal Points to Bush

The Enron scandal, which has laid waste to thousands of employees' life savings and revealed questionable ties to the Bush White House and members of Congress, spotlights a conflict of interest in government and shouts the need for campaign finance reform.

A lawsuit filed by Enron employees last month charged that before Enron's management declared the company bankrupt 29 insiders sold $1.1 billion worth of their stock between Oct. 1998 and Nov. 2001, the Center for Public Integrity reported.

Meanwhile, employees, who invested in the company's 401(k) plan, were forbidden to sell their holdings in Enron stock and were forced to watch the stock's value decline to less than one dollar per share. Roy Rinard, who worked for an Enron subsidiary, "watched helplessly...as his 22-years of retirement savings dwindled from $472,000 to less than $3,500," according to AFL-CIO Secretary-Treasurer Richard L. Trumka's testimony before a House committee that is investigating the Enron case.

"It is a story of people so shameless and greedy that, literally, as the bankruptcy papers were being drawn up, (Enron executives) were still passing what remained of the firm's cash out to themselves: $55 million on the last working day before they filed for Chapter 11," Trumka testified.

After the White House disclosed that Enron chairman Kenneth L. Lay warned the Bush administration of the company's massive financial troubles last fall, Rep. Henry Waxman (D-Calif.) said, "It is now clear the White House had knowledge that Enron was likely to collapse but did nothing to try to protect innocent employees and shareholders, who ultimately lost their life savings."

While corporate insiders were cashing out, Enron was making campaign contributions that totaled more than $5.7 million between 1989 and 2001. Republicans received 73 percent of the money and Democrats received 27 percent. George W. Bush received $113,800 and Sen. Phil Gramm, whose wife, Wendy Gramm, served as a paid member on Enron's board of directors, was paid $99,500 during the period. Even campaign finance reform advocate Sen. John McCain (R-Ariz.) received $9,500 from Enron, according to the Center for Responsive Politics.

These incidents show the enormous conflict of interest in government and give proof to the statement made in a San Diego Tribune editorial, "So long as lawmakers are beholden to monied interests, the legislative process will be compromised...." In the case of Enron, Congress passed laws that deregulated the company's business activities, allowing the company to avoid government scrutiny of practices that profited insiders but led to its eventual downfall.

In April of last year the McCain-Feingold campaign finance reform bill was passed in the Senate, but a similar measure in the House, the Shays-Meehan bill, was stalled after House Speaker Dennis Hastert (R-Ill.), supported by House Majority Whip Tom DeLay (R-Texas), refused to schedule the bill for a vote. Hastert and DeLay received Enron donations of $7,432 and $28,900, respectively, between 1989 and 2001, according to the Center for Responsive Politics.

A key provision of the Shays-Meehan bill calls for abolishing "soft money." Soft money allows unlimited contributions to political parties from corporations, labor unions and rich individuals to national, state and local political parties. The effect of this system is to marginalize all but the wealthiest contributors in the political process.

Under a bipartisan effort, a discharge petition was drafted to override the House Republican leadership's obstruction to campaign finance reform. In order for the discharge petition to prevail, a House majority of 218 members must sign it. So far 214 signatures have been obtained. A discharge petition is a special procedure to bring legislation directly to the House floor for consideration, bypassing the committee process.

While Congress battles over campaign finance reform, "the (political) parties are actually raising more soft money contributions than ever before," said Common Cause President Scott Harshbarger. "And donors, regrettably, seem to be getting their money's worth. Democracy itself needs a stimulus package and campaign finance reform is a necessary first step."

Following reports of campaign finance abuses in the 1972 presidential election, Congress passed laws limiting the amount that individuals, political parties and political action committees could donate to candidates. But after discovery of the soft money loophole, which allows unlimited contributions to political parties, the laws passed in the 1970s and upheld by the U.S. Supreme Court in Buckley v. Valeo, became virtually obsolete.

"The soft money system works just fine for special interests and party leadership," Harshbarger said. "But ordinary people—and even rank-and-file members of Congress—lose influence over their government. The system invites cynicism and mistrust. Breaking the system which gives special access and influence to big money will restore confidence in government when it's needed most."

During the first six months of last year, soft money donations poured into the Republican and Democratic parties to the tune of $98.8 million, an increase of 82 percent from the same period in 1999. The Republicans raised twice as much as Democrats, according to Common Cause.

Edward B. Winslow is a freelance journalist who can be reached at edwardwinslow@attbi.com.

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