M E M O R A N D U M
TO: Interested parties
FM: Jeff Flint, Senior Strategist, Simon for Governor
DT: May 16, 2002
RE: Gray Davis and Enron
5 QUESTIONS GRAY DAVI$ NEEDS TO ANSWER ABOUT ENRON AND CALIFORNIA’S POWER CRISIS
1.WHY DOES GRAY DAVI$ BELIEVE ENRON DEALT HONESTLY WITH CALIFORNIA? In the now infamous San Diego Union-Tribune Editorial Board on March 8, 2002, Gray DAVI$ – recipient of $120,000 in Enron campaign contributions -- gave Enron a big thumbs up. “Surprisingly, DAVI$ offered a pat on the back to Enron, the bankrupt Houston power trader accused of fraud. ‘Enron was the best of the lot,’ he said. “They dealt with us more honestly.’” (emphasis added). Think we’ll see this quote again (and again) in the campaign?
2.WHEN IS GRAY DAVI$ RETURNING HIS ENRON CAMPAIGN CONTRIBUTIONS? Given that the governor has repeatedly vilified Enron in the press for waging war against California, when can the people of Californian expect that Gray DAVI$ will return the $120,000 in campaign cash he has taken from Enron?
3.WHEN WILL GRAY DAVI$ FIRE HIS OWN HIRED ENERGY PRICE GOUGERS? The governor and his staff have stated that there were good players and bad players in the energy crisis, and produced a list of the “gougers” who may have manipulated California’s markets. What the governor failed to mention was the fact that his handpicked chief energy advisor, S. David Freeman, was one of the biggest gougers in California. During the first 18 months of the 2000-2001 energy crisis, the Freeman-led Los Angeles Department of Water and Power made an extra $200 million. The United States Congress should add Mr. Freeman and Mr. DAVI$’ role with Enron CEO Ken Lay into their investigation. In addition, the criminal investigation called for by Senator Barbara Boxer should also include Freeman, Michael Peevey (who played a central role in the crisis but filed no conflict of interest statement), Vikram Budhraja and Governor DAVI$ himself. What was the role of senior DAVI$ administration officials in this crisis and did any of them profit personally? It certainly appears that Governor himself has profited to the tune of $120,000 in Enron campaign cash.
4.WHEN WILL GRAY DAVI$ DISCLOSE HIS conversations WITH KEN LAY? What did DAVI$ and Enron CEO Kenneth Lay talk about in repeated telephone conversations the two men had during the height of California’s energy crisis, (as disclosed by investigative journalist Lowell Bergman), while the governor was actively soliciting money from Enron to help fund Democratic campaign efforts?
5.WHEN WILL GRAY DAVI$ DISCLOSE ALL HIS STAFF ENERGY CONFLICTS? Does anyone else from the governor’s staff have any potential insider trading issues similar to those surrounding Press Secretary Steve Maviglio, who the Los Angeles Times called upon last year resign or be fired for his actions seeking personal financial gain during the state’s energy crisis?
Mid 2000: Three factors, in order of their impact, combine to leave California short of energy: 1) Failure of the state government to legislate a workable energy plan, 2) Failure of satate government to manage it's growth and 3) Mother nature delivers a short water year in the 2000/2001 winter.
Late 2000: Electrical energy reserves fall below 2% and Davis panics. Davis can't have blackouts on his political record and win reelection. Davis allows his ISO to purchase power at exhorbitant rates to avoid blackouts during the holidays. The plan works, sort of, but Davis still feels the sting.
Early 2001: Davis' political advisors whisper in his ear "you got by this time but this summer will ruin you politically". Now Davis doesn't panic. He makes a cold, calulated political decision. He enters into long term contracts at double the going rate and hides the costs in long term bonds that won't effect the budget for some time.
Mid 2001: Davis starts his "look good" plan. he loosens the state regs (that have been restricting power development for years) and then brags that he got 11 new plants on line. He also starts cranking up the rhetoric against Bush (the FERC).
Mid 2002: Davis latches on to his sole remaining lifeboat, some Enron memos, and screams "THEY'RE THE BAD GUYS" and beside Bush helped them and give us our money back.
All the while Davis has done little about reforming the state's energy policy, nothing about managing it's growth and has no idea how to pay back the bonds let alone get through the next fiscal year.
Regardless how unkind the adjectives describing Davis may seem they are certainly true. I agree with Davis ...he should go to jail.
Great close. Dump Davis.