Posted on 01/11/2002 11:29:08 AM PST by kattracks
WASHINGTON (Reuters) - In a widening circle of apparent efforts by major campaign contributor Enron to seek help from the Bush administration, the energy trading giant's president called a top official to ask him to intervene before the firm collapsed, a Treasury spokeswoman said on Friday.
The latest revelation in the largest bankruptcy case in U.S. history followed word from the White House on Thursday that Enron Corp. Chairman Kenneth Lay, a major Bush campaign contributor, called Treasury Secretary Paul O'Neill and Commerce Secretary Don Evans, Bush's 2000 campaign manager, last fall to warn them of Enron's mounting financial problems.
Treasury spokeswoman Michele Davis said Enron President Lawrence "Greg" Whalley also talked to Peter Fisher, Treasury's Under Secretary for Domestic Finance, about "six to eight" times in late October and early November.
"As Enron's negotiations with its bankers for an extension of credit neared a decision point, the president of Enron asked Under Secretary Fisher to call the banks," Davis said. "Under Secretary Fisher inferred he was being asked to encourage the banks to extend credit. He made no such calls," Davis said.
The calls were made after Lay called O'Neill, Davis said. O'Neill has said Lay did not request government help but wanted to make Treasury aware of Enron's mounting financial woes.
Separately on Friday, lawyers for Enron said it had chosen Swiss bank UBS AG to take control of its main energy trading business after a hotly contested auction.
Enron chose between Citigroup and UBS in a drawn out auction that took most of this week in New York. Further details of the winning bid were not immediately available.
"Enron can add this to its pipelines as a foundation for a successful restructuring" of its trading business, said one official close to the Enron negotiations.
Also on Friday, a spokesman for the Federal Reserve Board said Lay telephoned Fed Chairman Alan Greenspan on Oct. 26. The spokesman would not say what was discussed but said Greenspan had not followed up on the call with any action.
CAPITAL MARKET WATCHDOG
The Treasury's Davis said Fisher's role is to monitor the capital markets and be aware of possible developments in them.
"In that role, he is in contact with people in the markets every day to be aware of their concerns," Davis said.
Fisher may have seemed like a logical target of such an appeal for help because in 1998, when he was with the Federal Reserve Bank of New York, he helped orchestrate a private sector bailout for hedge fund Long-Term Capital Management.
Fed officials then feared other markets could have been affected by Long-Term's collapse. However, Davis said Fisher did not see comparable "spillover effects" from Enron.
Trying to inoculate himself from the political fallout, President Bush ordered a review headed by O'Neill of U.S. pension and corporate disclosure rules. The review aimed to avoid a repeat of the Enron collapse.
The Justice Department on Wednesday announced it had opened a criminal probe into Enron, whose December bankruptcy threw thousands out of work, devastated investors and wiped out the pension plans of many employees when its stock price plunged.
Attorney General John Ashcroft recused himself from the criminal probe, citing campaign contributions.
O'Neill and Evans both said they opted to do nothing after speaking with Lay. O'Neill rejected the suggestion that Enron had asked for a bailout. "Absolutely not," he told Reuters.
"It was an information request, telling me that they had problems and that he thought that we would want to have our technical people talk with their technical people ... so that we could execute our responsibility with regard to the function of the capital markets," O'Neill said.
LAY FELT 'OBLIGATION' TO TELL OFFICIALS
Evans, on CNBC television, said Lay had alerted him to media reports that Enron's credit rating was under review, and mentioned Enron's large presence in energy trading markets.
"He said, 'I want you to know that Moody is currently reviewing it. If there's any kind of support you could give us we would welcome that.' But he certainly didn't ask for me to call them (Moody's Investors Service) or anything like that," Evans said. He said Lay called on about Oct. 29, which would be a day after the first of two calls by Lay to O'Neill.
A spokeswoman for Enron said Lay did not seek help from the government, but called O'Neill and Evans to inform them of what was happening with the company.
"Ken said he felt that it was his obligation to tell senior government officials about the situation at Enron," company spokeswoman Karen Denne said. "He said we were working to avoid bankruptcy, but it couldn't be ruled out. He did not ask for anything, he was giving information."
Ashcroft recused himself from the Justice investigation, expected to focus on whether the firm misled investors, because Enron gave him political contributions for his run for a U.S. Senate seat in his home state of Missouri.
Also on Thursday, U.S. Attorney Michael Shelby said his entire Houston office had removed itself from any matter involving Enron. Shelby said he and a number of attorneys in the office "have family relationships with individuals who are arguably affected by the Enron bankruptcy."
Arthur Andersen, the Big Five accounting firm that served as Enron's auditor, on Thursday said its employees had deleted documents related to its review of the company's finances, and congressional sources said thousands were destroyed.
President Bush asks for a review and he's trying to "inoculate himself from the political fallout". clinton avoided, at all costs, any investigations into his administration, via Reno, and the lamestream media didn't pipe up. Bias anyone?
Aside from that, the media seems to be missing the point. No matter what Enron did, or whom they contacted, the people in the Bush administration didn't bite.
No, the media is doing what they have always done, at least for the past 30-40 years. They are filling their role as attack dogs for the Democrats. With the Republicans, if there is even the most vague appearance of impropriety, the media pounces like Gerald Nadler at an all-u-can-eat buffet.
But this will also explain why all the noise about Enron and the threat of investigations will in the end produce nothing -- because both parties are involved.
Back in 1988, the the two national party committee chairs agreed to keep the S&L scandal off the table because both parties had their fingerprints on it. Likewise, in 1996 marital infidelity was kept off the table, and in 2000 it was China.
Both parties have drunk deeply from the Enron bottle. While the Democrats will certainly do what they can to embarrass Bush and his party, the investigation will stop as soon as it gets anywhere near Democratic fundraising. I fully expect McAuliffe and Racicot to quietly work out a gentleman's agreement to limit the investigations and keep this one off the table too.
Or like Bill Clinton on an overweight intern.
Exactly. I just checked some of the latest news articles concerning Loral and NO WHERE did the words, "a major clinton campaign contributor" appear.
They do. At least, enough of them for it to matter.
Yep, silly me, I keep forgetting that.
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