Enron-White House Dealings Probed

WASHINGTON (AP) - A cascade of revelations about the bankrupt Enron Corp. and its dealings with Bush administration officials is raising questions about potential conflicts of interest as the Justice Department (news - web sites) investigates the politically connected company.

The White House revealed Thursday that Enron officials sought the administration's help last fall shortly before the energy-trading company melted down along with the life savings of many of its employees. Several administration officials - and Federal Reserve (news - web sites) Chairman Alan Greenspan (news - web sites) - received telephone calls from the Enron chairman, Kenneth Lay.

Enron's auditing firm, whose work is under investigation by federal regulators, disclosed that its employees had destroyed a ``significant'' number of documents - which a congressional source said was thousands of pages - related to Houston-based Enron.

In another startling development in a day brimming with them, Attorney General John Ashcroft (news - web sites) disqualified himself from Justice's criminal inquiry into Enron's conduct. The energy-trading company donated thousands of dollars to Ashcroft's Senate campaign in 2000. In Houston, Enron's hometown, U.S. Attorney Michael Shelby announced that his entire office disqualified itself from the investigation because he and other local prosecutors ``have family relationships with individuals who are arguably affected by the Enron bankruptcy.''

Bush, who counts Enron among his biggest political contributors, pledged to pursue aggressively the investigation into whether the company defrauded investors, including 401(k) plan holders, by concealing vital information about its finances.

``Ken Lay is a supporter,'' the president said. ``But what anybody's going to find is that this administration will fully investigate issues, such as the Enron bankruptcy, to make sure we can learn from the past and make sure that workers are protected.''

Treasury Secretary Paul O'Neill said Friday: ``On first blush it looks like Enron operated within the rules and regulations ... with regard to how they managed their 401(k) plan, and if they did, then we need to look and see if there are appropriate changes we could make.'' He was interviewed on ABC's ``Good Morning America.''

Bush said he saw Lay twice last year, but they did not discuss Enron's financial problems. Lay sought help last fall from Commerce Secretary Don Evans, Bush's chief political fund-raiser and confidant, and contacted O'Neill about the firm's financial problems, O'Neill and Evans said Thursday. Enron also revealed that Lay called Greenspan, the independent Fed chairman, about the company's problems.

Lay denied that he sought help from the officials. Enron said Lay's calls to O'Neill, Evans and Greenspan were simply to give them a ``heads-up'' about Enron's problems.

``He felt an obligation to let them know what was going on,'' Enron said in a statement. ``At no time did he ask for any assistance from the government, nor did he intend to leave the impression that he was asking for assistance.''

Dave Skidmore, a spokesman for the Federal Reserve, said Lay contacted Greenspan on Oct. 26, and ``the chairman did nothing in response to the call. It would have been inappropriate.'' Skidmore would not characterize the conversation. Lay also first reached out to Evans on Oct. 26. The two eventually spoke three days later. The first of Lay's two conversations with O'Neill was Sunday, Oct. 28.

Enron's bankruptcy, already the subject of criminal, civil and congressional investigations, threatens to pull the White House into a political quagmire even as Bush's approval ratings reach near-record levels because of the war against terror.

``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,'' said Rep. Henry Waxman (news), D-Calif.

Firing back, Bush spokesman Ari Fleischer (news - web sites) urged Democrats to avoid ``partisan witch hunts, endless investigations or fishing expeditions.'' Democrats hope to make a political issue out of the administration's many ties to Enron.

The bankruptcy has forced White House officials to face questions once posed to the scandal-tainted Clinton White House.

Would Bush support naming a special prosecutor to investigate? Fleischer said no. He also said he did not know any White House aides who had hired lawyers.

And there was a development reminiscent of Clinton's Whitewater: missing documents.

The big accounting firm that audited Enron's books, Arthur Andersen LLP, notified investigators that it had destroyed a ``significant'' number of documents related to the company. Andersen said it didn't know whether its directive to preserve documents demanded by government investigators was violated.

At the Securities and Exchange Commission (news - web sites), already investigating Andersen's auditing work for Enron, Enforcement Director Stephen Cutler said destruction of documents was ``an extremely serious matter'' but would not deter the SEC from pursuing its probe.

As for the company's contacts last fall, administration officials said Lay told Evans on Oct. 29 that he would welcome any support to help the company deal with a bond-rating firm that was considering downgrading Enron. Enron's credit rating was critical because, if lowered, $3.9 billion in debt would come due. Of that amount, $2.4 billion previously had been hidden in partnerships that were created to keep debt off Enron's books.

In a brief interview, Evans said Lay told him: ``I would appreciate any support you could give.'' Evans said Lay was not more specific. In response to the plea, Evans said, ``I did nothing.''

Evans said he didn't tell the president about the call because ``I didn't think he needed to know.''

In one of two conversations with O'Neill, Lay discussed a past example in which the Federal Reserve pressured several large financial institutions to bail out a Connecticut hedge fund, Fleischer said.

The calls to Evans and O'Neill came after investors and the public learned of the extent of Enron's problems, when the company posted major losses Oct. 16.

Enron filed for bankruptcy Dec. 2, after months of conjecture about its finances.

-Bush raised nearly $114,000 in political action committee money and individual donations from Enron during the presidential campaign. Enron also gave hundreds of thousands of dollars to Bush's two gubernatorial campaigns in Texas. Independent analyses show that Enron employees donated almost $800,000 from 1999 to 2001 to Bush, members of Congress and both parties. Most went to GOP causes.

-Lay met with Vice President Dick Cheney (news - web sites) or his aides six times last year before release of the administration's energy plan. A Cheney spokeswoman said he last talked with Lay in June, and never about Enron's financial status.

-Senior Bush adviser Karl Rove owned Enron stock at the beginning of Bush's term but sold it because of federal ethics rules. Economics adviser Larry Lindsey earned $50,000 from Enron for serving on a company board last year.

-Marc Racicot, whom Bush has appointed chairman of the Republican National Committee (news - web sites), was a lobbyist for Enron last year. Racicot said he will do no more lobbying work after he takes the GOP's top job.

And they say character doesn't count

The decision by the U.S. Department of Justice to set up a special task force to spearhead a criminal probe of the circumstances surrounding the sudden collapse of Enron Corp. should come to no one's surprise.
After all, this isn't the Reno/Clinton DOJ anymore.
Recall the myriad stunts the Clinton White House would roguishly pull to frustrate, stonewall, impede or choke-off legitimate inquiries into Whitewater, Chinagate, Travelgate, Filegate, impeachment, etc. Indeed, in the Tyson Food case alone, tallying up the number of roadblocks and backroom maneuvers to bottleneck the work of Independent Counsel Donald Smaltz could easily fill the Clinton library -- and then some.
Moreover, the department's decision to plumb the depths of the looting and fraud -- the mammoth shellgame -- which led this erstwhile energy trading colossus, whose stock once traded at $90/share, straight into bankruptcy court last December has wider implications, beyond the prosecutorial.
The Justice Department, by taking this unprecedented step, steals the thunder right from under the partisan Bush-haters on Capitol Hill. U.S. Senators Carl Levin (D-Mich) and Joseph Lieberman (D-Conn) -- the latter mulling a run for the White House in '04 -- had planned to launch a lavish fishing expedition, featuring highfalutin, made-for-TV, dog-n-pony 'show-trial' "hearings", all in the "noble" pursuit of trafficking in innuendo, in the hopes of inflicting maximum damage on the Bush administration.
Senator Levin et al wouldn't want to jeopardize the Enron investigation, or undermine the tedious work of prosecutors while tipping-off potential criminal targets, just to indulge their cheap, political vendetta against this President, now would they? (Wink, wink).
In coordinating the work of prosecutors in cities across the land, and mustering the dept's fraud section to the task, DOJ catapults this probe on the fast track, rendering any shrieks of 'cover-up' wholly vacant and silly.
As in all investigations, expect the unexpected. In the end, ironically enough, the Democrats may rue having foolishly politicized the fall of Enron. DOJ, un-encumbered by petty political considerations, will probe ALL of Enron's nefarious dealings/machinations. Particularly delicious are the links between former TVA (Tennessee Valley Authority) director Johnny Hayes, Charles Bone of Wyatt, Tarrant & Combs, a Nashville law firm and one former U.S. vice-president who's sporting a beard these days. Gore pals Hayes and Combs, according to a recent MSNBC report, were paid lucrative sums last year by -- you guessed it -- Enron Corp. for lobbying purposes.
But that's not all. According to the Tribune-Review, Enron and the Clinton-Gore administration were joined at the hip, profiting mutually from their incestuous relationship. Bill Clinton personally opened up many overseas markets for Enron especially, and Enron, in return, introduced Clinton-Gore to the infamous Lippo Industries and John Huang. But there's more -- much more, all of which will now come under the proverbial kleig lights.
And they say character doesn't count, eh?
My two cents..
"JohnHuang2"

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Enron and the vengeful Democrats

Democrats, who still bear the scars from the Clinton scandal machine, believe they've (finally) hit pay-dirt with the Enron debacle.
And so does the media.
The 'Grey Lady' of yellow journalism, predictably, was on the warpath yesterday. In a piece ominously titled, "White House Moves to Contain Political Damage From Enron Turmoil", "reporter" Jack Lynch wrote in his opening paragraph that Enron chief Kenneth Lay "had contacted two Cabinet members a few weeks before the giant energy company's collapse to warn of it's growing difficulties".
Clearly, the writer's implicit aim was not to inform so much as to cast aspersions on the Bush administration with derogatory innuendo and smear. The reader is beckoned to assume the worst -- ergo, some malfeasance had taken place -- sans a smidgen of evidence. By artfully lifting these calls wholly out of context, Mr. Lynch ipso facto maliciously insinuates guilt -- guilt on Bush's part, as much as the two Cabinet officers Mr. Lay contacted.
Indeed, only well into his article (paragraph 7) does Mr. Lynch, after weaving his mudslinging web of innuendo, finally divulge the actual mission behind these calls, one to Treasury Secretary Paul O'Neill, the other to Commerce Secretary Don Evans. Both calls were reportedly made last October, prior to Enron's spectacular collapse in early December.
The reason for Lynch's beguiling foot-dragging? Simply this: Far from snarling Bush administration officials in wrongdoing, the calls were inherently exculpatory. Yes, you heard right -- exculpatory. After warning Secretaries O'Neill and Evans of Enron's precarious financial position, Mr. Lay beseeched them for a bailout. Absent massive government assistance, the troubled company would slide into bankruptcy, the officials were told. Their answer, according to White House spokesman Ari Fleischer, was flat-out no. No bailout.
Agree or disagree with the decision, the refusal is inconsistent with the notion of Mr. Lay having undue influence over this administration. In fact, the bailout denial is the opposite of what one would expect if campaign money and friendship were what they are cracked up to be.
Imagine the outcry had the bailout request been granted. The raging firestorm among frothing Bush critics would rival Nixon's Watergate.
"Quid-Pro-Quo! Quid-Pro-Quo!", they would shriek. As far as punishment, the haters would be divided, however: Some would demand impeachment, others a public hanging.
Instead, the erstwhile oil trading colossus, with 20,000 employees, and marketing business in everything from pulp to bandwidth, was allowed to go belly-up. It's high-flying stock tumbled from $90 per share to under a dollar today.
So much for the 'Ken Lay-controls-George W. Bush' urban legend.
Moreover, the Justice department's decision to convene a national task force to probe Enron's demise -- an unprecedented maneuver -- only further debunks the nitpickers' swill. But the department went even further yesterday. To avoid even the appearance of 'conflict-of-interests', Attorney General John Ashcroft (who had received Enron contributions during his Senate campaign) announced his recusal from all matters pertaining to the Enron investigation. The recusal includes his chief-of-staff, David Ayers.
To get even further ahead of the curve, President Bush yesterday directed the Treasury, Labor and Commerce departments to comb the plethora of rules governing 401 (k) and other pension plans with a fine tooth comb. His goal is to ferret out the flaws in a system which allowed Enron employees to lose their life's saving when the company went under.
The President wants reform in corporate disclosure rules, as well. To this end, he's ordered the formation of a 'working group', consisting of Sec. O'Neill, the Federal Reserve, the S.E.C. among other agencies.
Bottom line? The President has grabbed this bull by the horns and, for all the prattle about political "damage", he's handled this teapot-sized tempest with aplomb, to the chargin of all of the Bush-haters and bashers.
Another thing: If the vengeful Democrats, gung-ho on exacting revenge over Clinton's impeachment, see Enron as Bush's Waterloo, they're in for a crushing disappointment.
Their Enron obsession is understandable, of course: Bush's rock-solid popularity is holding steady, even as their party wallows in disarray and dysfunction. On the other hand, one thing does unite the beltway Democrats like nothing eles: Hate. Their shared hatred of Bush. It's ugly, it's spiteful, it's vile. And it's unseemly. For Bush-haters, it's not enough to disagree with the President: Policy differences must be criminalized.
This is the root of their Enron fixation. But unfortunately for them, Enron won't save them either. Their fanatical putsch will not only fail, it will backfire. The reason is simple: This President has forged a powerful bond with the people, especially in the wake of September 11. There's a chemistry there, one which Democrats, blinded in their hatred, have yet to fathom. This rapport, this wonderful chemistry, this mighty solidarity transcends race, ethnicity, party, religion, gender; Americans of all walks of life see in this humble man, this down-to-earth, straight-talker from Midland someone whom they can trust, someone they can believe in again. His persona embodies the optimism, the idealism, the cheerful self-assurance and confidence which makes us Americans.
America can not -- and will not ever -- say die.
So let the Democrats flail away in their smoldering anger; let them scour, let them probe, let them hound, let them stalk, let them rummage, let them shake their fists at this President: They will only hoist themselves on their own petard.
For America loves George W. Bush -- and nothing's going to change that.
God bless our President, God bless our troops and God bless the United States of America!
My two cents..
"JohnHuang2"

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