ith the Justice Department and Congress ratcheting up investigations into the Enron Corporation (news/quote), President Bush is seeking to play down his relationship with Enron's embattled chairman, Kenneth L. Lay. But their ties are broad and deep and go back many years, and the relationship has been beneficial to both.
In the Oval Office Thursday, Mr. Bush said that Mr. Lay "was a supporter of Ann Richards in my run in 1994" for governor of Texas and that he first got to know Mr. Lay after that race.
But Mr. Lay appears to have been a bigger supporter of Mr. Bush in that race, as he and his wife, Linda, contributed $37,500 to the Bush gubernatorial campaign — three times the amount, according to a database maintained by The Dallas Morning News, that they donated to Ms. Richards. Mr. Lay has also told interviewers that prior to that election he had become "very close" to Mr. Bush.
Since the two men met over a decade ago, Mr. Lay and his company have been the most generous campaign donors in Mr. Bush's political career. At the same time, Mr. Bush was a strong advocate of many of the issues most important to Enron, like deregulating electricity markets and curbing large civil jury awards.
In all, Enron and Mr. Lay have given more than $550,000 to Mr. Bush's various campaigns. And for the Bush-Cheney inaugural, Enron, Mr. Lay, and the former Enron chief executive, Jeffrey Skilling, each donated $100,000, according to the Center for Responsive Politics.
Last year, Mr. Lay met with Vice President Dick Cheney, who was heading a task force on energy policy. The task force's recommendations conformed with much of what the company had sought in its meeting with Mr. Cheney — but they were also positions embraced by others in industry and government.
With the collapse of Enron amid an accounting scandal, Democrats are seeking to make Mr. Bush's friendship with Mr. Lay into a political liability. The White House, in turn, in seeking to distance the administration from both Mr. Lay and Enron, has said that officials spurned Mr. Lay's personal entreaties for assistance as Enron faltered late last year.
Backers of Mr. Bush note there has never been a showing that Mr. Bush altered any policy solely to satisfy Mr. Lay. And at times, Mr. Bush has taken positions adverse to Enron, like backing away from curbing carbon dioxide emissions, an idea backed by Enron, which sought to generate new business through trading emissions credits.
On Thursday, after the disclosure that the Justice Department had created a task force to pursue a criminal investigation of Enron, Mr. Bush told reporters he "first got to know" Mr. Lay after being elected governor in 1994. In that race, Enron, Mr. Lay and other Enron executives were significant contributors to Mr. Bush, donating a total of $146,500 to Mr. Bush, according to Texans for Public Justice, a group that tracks campaign contributions.
At the time, Mr. Lay was already serving on an advisory body, the Governor's Business Council, that was created by Ms. Richards. Mr. Bush said on Thursday that after he defeated Ms. Richards he kept Mr. Lay on the advisory panel. "I decided to leave him in place, just for the sake of continuity."
Craig McDonald, director of Texans for Public Justice, said yesterday, "President Bush's explanation of his relationship to Enron is at best a half truth. He was in bed with Enron before he ever held a political office."
Scott McClellan, a White House spokesman, challenged that characterization last night. "The White House has clearly noted that Mr. Lay has been a supporter," Mr. McClellan said. "But Mr. Lay was a supporter of Ann Richards during the 1994 race, and public campaign records clearly reflect his support."
In an interview last year with The New York Times (news/quote) and the PBS program "Frontline (news/quote)," Mr. Lay characterized his relationship with the Bush family as "very close," adding that the race between Mr. Bush and Ms. Richards placed him in "a little difficult situation."
"I'd worked very closely with Ann Richards also, the four years she was governor," he said in the interview. "But I was very close to George W. and had a lot of respect for him, had watched him over the years, particularly with reference to dealing with his father when his father was in the White House and some of the things he did to work for his father, and so did support him."
By the late 1980's, Mr. Lay, an economist by training, had become a major force in Houston business and social circles as chief executive of Enron, then primarily a natural gas pipeline operator. He also became a significant fund-raiser for Mr. Bush's father and was working to bring the Bush presidential library to Houston.
In that time, Mr. Lay has said, he got to know the younger Mr. Bush. "That's when I probably spent a little more quality time with George W.," he told The Morning News. Later, Mr. Lay was picked to head the host committee for the 1992 Republican convention in Houston.
But while both Mr. Lay and Enron have historically given far more money to Republicans, they have sought links with prominent Democrats, too. One was President Bill Clinton, who has golfed with Mr. Lay. Another was Ms. Richards, who appointed Mr. Lay to her business advisory panel.
"We knew at the time that he had a close relationship with Bush," said John Fainter, who served as Ms. Richards's chief of staff in 1993 and 1994. Mr. Lay was a good pick for the panel, he said, because of his involvement in the Houston civic and business community.
But Mr. Fainter, who runs the electric utility industry's lobbying group in Texas, added: "To say he inherited Ken Lay from Ann Richards, I don't agree with that. As active as he was in his father's presidential campaign, he would have known him."
Ms. Richards did not return a telephone call yesterday, but in a written statement she confirmed that Mr. Lay donated to her 1994 campaign and said that he did "a very good job" while serving as chairman of the Governor's Business Council.
As governor, Mr. Bush was an advocate of the issue most important to Mr. Lay and Enron, deregulating the utility business. Mr. Bush also appointed Patrick H. Wood III to be chairman of the Texas Public Utility Commission, an appointment that Mr. Lay had recommended. Mr. Wood is now chairman of the Federal Energy Regulatory Commission, where he oversaw and supported the imposition last year of electricity price restraints in California opposed by Enron and other unregulated power companies.
Mr. Lay and Mr. Bush appeared to develop a warm relationship during Mr. Bush's tenure as governor. In April 1997, on Mr. Lay's 55th birthday, Mr. Bush sent him a joking note: "One of the sad things about old friends is that they seem to be getting older — just like you! 55 years old. Wow! That is really old."
Mr. Bush also has done favors for Mr. Lay, such as later that year when, at Mr. Lay's request, he called Tom Ridge, then the governor of Pennsylvania and now the director of Homeland Security, to vouch for Enron, which was trying to break in to that state's electricity markets.
But to one Enron official, Mr. Lay swaggered less after Mr. Bush's presidential victory than some other senior Enron executives who liked to brag about the company's ties to the new administration.
"Ken Lay didn't advertise his connections," the official said, "but some of the Enron officials around him did because they didn't have those connections."