Why We Dare Call It Enrongate
Enron-gate has all the elements of a Hollywood blockbuster-type scandal. Shredded documents, shady political-business ties, and scores of once-powerful businessmen taking the Fifth in front of Congress. White House phone calls to and from big political contributors, and damage-control efforts by the administration - it all reminds one of the Nixon White House. Plus, the attorney-general, his top aide, and the entire Houston (hometown of Enron) attorneys staff recused themselves from the Justice Department investigation. If this isnt arousing suspicions of scandal then maybe a small, but telling lie from President Bush will give us more insight into this nascent scandal.
In a speech in January, Bush said that it was after the 1994 governors race that he first got to know Ken, the man he once more intimately referred to as "Kenny Boy." It is apparent now that their relationship goes back much further.
Ken Lay, Bushs largest financial benefactor, has admitted to knowing him long before this time. Lay tried to get the former Bushs presidential library to locate at the University of Houston, whose Board of Regents Lay served on in the late 1980s. During this time, Lay admits to spending quality time with George W. Bush, however, denies that their relationship was ever on the level of personal friends. Also, Lay contributed $122,500 as the CEO of Enron to Bushs governor race before the 1994 election. Another $200,000 came from employees of Enron. In fact, Enrons CEO, its employees and their relatives have contributed $836,800 over Bushs political career -- more than from any other source. Would just an acquaintance give you almost a million dollars for your campaigns? Only if there is reason to believe there will be some benefit. And Enron saw benefits.
It is insulting for George W. to insist he hardly knew Lay before 1994 when Lay was co-chairman of the former Bushs 1990 economic summit for industrialized nations, which was held in Houston. Lay was also co-chairman of the host committee for the Republican National Convention when it was held in Houston in 1992. It is a fact that George W. was actively involved in the campaign, which makes it impossible for them not to have known each other. The more one looks into the relationships of all the key players, the more one realizes that this has the potential to grow into a scandal as big as any other.
It is important to realize that 15 high-ranking officials in the Bush administration owned stock in Enron last year with a combined value of almost one million dollars. The contacts between Enron, the once-biggest energy company in the world, and the most powerful government in the world are vast. Defense Secretary Donald Rumsfield, senior Bush adviser Karl Rove, deputy EPA administrator Linda Fisher, Treasury Undersecretary Peter Fisher and U.S. Trade Rep. Robert Zoellick all had stock in Enron. The biggest connection is Army Secretary Thomas White, who was Enrons vice chairman before he got his Pentagon job and owned up to $100 million worth of Enron stock.
Two other Bush officials had professional ties with Enron. Lawrence Lindsey, White House economic advisor, was a managing director of Economic Strategies, Inc., who served as a consultant firm to Enron. Zoellick also served on the advisory council of Enron. It is important to remember that Bush and Cheney once headed an energy production company and many of his top aides came from oil companies including Rumsfield, Condoleeza Rice, and many others.
Just before Enrons bankruptcy, its top officials were lobbying the administration for help. Calls were made from Lay to Treasury Secretary Paul ONeil, Commerce Secretary Don Evans, and Federal Reserve Chairman Alan Greenspan right before the bankruptcy. ONeil and Evans say they did not notify Bush until January 10th of their contacts with Lay and Enrons trouble. There is even proof that Enron executives called Fisher several times in the fall asking him to help the company secure a bank loan.
Also, Energy Secretary Spencer Abraham called the Enron chairman on November 2. We need to know what was said and decided during all these phone calls. The reasons for these calls are unknown, but the Bush Administration promises that they did nothing to help the company. We cannot take his word on this, and probes need to be made. The President said on January 10th that he never discussed with Mr. Lay the financial problems of the company. It is, of course, possible that none of the officials who acknowledge contacts from Enron much earlier than the fall told Bush or took any action. But it's not very likely.
The White House has admitted that the energy task force had met six to eight times with Enron officials and deny that finances were discussed. These then-secret meetings were held behind closed doors with Enron executives during the drafting of Bushs energy plan last year. Many of the deregulation laws fit with Enrons desire to expand into the giant company it had become. Officials must explain how much influence Enron executives had on administration policies after contributing over a half a million dollars to the Bush campaigns. Energy experts say Enron helped create the new laws that enabled the energy giant to become the most powerful in the market.
As early as August 14, Lay knew his company was sinking. Is it possible that Bush had no idea that the demise of Enron was imminent? There is certainly proof of wrong doings on the part of Lay. He sent e-mails to employees that said I have never felt better about the prospects for the company. This was on the same day of Skillings abrupt resignation as company president. A group of 29 Enron executives and directors began to sell their shares near the top of the market. Those insiders received $1.1 billion by selling 17.3 million shares from 1999 to mid-2001. Lay received over $30 million, with another executive receiving as much as $353.7 million. In all, Lay sold 1.8 million Enron shares between early 1999 and July 2001, five months before Enrons crash. Rep. Henry A. Waxman of California, ranking Democrat on the House Committee on Government Reform, who released the damaging e-mails, said in a letter to Lay, It appears you misled your employees into believing that Enron was prospering and that its stock price would rise. The question remains if Bush had any idea that Enron was going down and what he did to try to prevent it.
Enrons story is not unlike Bushs recent dealings with the energy industry. In fact, Enron could have learned their tricks from the President. While he was a high ranking official of Harken Oil he sold its stock and made $850,000, an almost 200 percent profit. Guess what happened only one week later? The company reported a quarterly loss of $23.2 million. Over the next six months it lost 60 percent of its value. Was Bush privy to inside information that led to this most lucrative business dealing? I would venture to say the chance that he knew the stock would take a dive is as likely that he knew something about the Enron collapse before it was made public.
What is Bush hiding? If he is lying about his relationship with Kenneth Lay, how far does his involvement go into the $90 billion Enron debacle? How close were these two parallel stories of success? How deeply involved does the Bush administration go into the illegality of the Enron scandal?
Between 1989 and 2001, Enron executives contributed an estimated $5.8 million to the campaigns of political officials with 75 percent going to Republicans. Arthur Andersen contributed even more than Enron. Citigroup Inc., the nations largest bank, lent hundreds of millions of dollars to Enron trying to keep it going. They are now owed $800 million. The largest energy company, the largest bank, the largest consulting company, and the most powerful government in the world are engaged in a complex scandal that will take years to unfold. How much of it will unfold before the next Presidential election, and how much will it hurt Bush? One thing is for sure, Bush cannot hide behind the success of war to cover this potentially fatal problem.
Mario Giardiello is a columnist for Political USA, where a version of this column originally appeared.