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Enron Called Bush Cabinet Officers Before Bankruptcy
Reuters ^ | January 10, 2002 | By Arshad Mohammed

Posted on 01/10/2002 4:30:08 PM PST by MeekOneGOP

Thursday January 10 6:09 PM ET

Enron Called Bush Cabinet Officers Before Bankruptcy

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By Arshad Mohammed

WASHINGTON (Reuters) - The collapse of Enron Corp. entangled the Bush administration on Thursday as the White House said two Cabinet officers were warned of its looming bankruptcy and Attorney General John Ashcroft (news - web sites) recused himself from the criminal investigation into the company.

Trying to inoculate himself from the political fallout, President Bush (news - web sites) ordered a review headed by Treasury Secretary Paul O'Neill of U.S. pension and corporate disclosure rules to avoid a repeat of the energy trading firm's collapse, in which thousands of employees lost their pension savings.

In a series of stunning disclosures that followed Wednesday's announcement of a criminal probe into Enron, the energy firm's auditor, Andersen, said its employees had destroyed documents related to the former energy giant's balance sheet.

Bush's team has close ties to Enron and its chairman, Kenneth Lay, a major Bush campaign contributor who last autumn called O'Neill and Commerce Secretary Don Evans, Bush's 2000 campaign manager, to warn them of the impending bankruptcy.

The White House said O'Neill and Evans opted to do nothing about Lay's calls, which appeared to hint at the possibility of a private bailout like the one orchestrated by the New York Federal Reserve (news - web sites) in 1998 for hedge fund Long Term Capital Management.

A senior U.S. official, however, said that Lay ``did not ask for anything'' in the telephone calls.

The Justice Department (news - web sites) on Wednesday announced it had opened a criminal investigation into the energy trading company, whose December bankruptcy threw thousands out of work, devastated investors and wiped out the pension plans of many employees when its stock price plunged.

Ashcroft removed himself from the investigation, which is expected to focus on whether the firm misled investors about its accounts, because Enron gave him political contributions for his run for a U.S. Senate in his home state of Missouri.

DOCUMENTS DESTROYED

Anderson, the Big Five accounting firm that served as the company'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.

Rep. Henry Waxman (news), a California Democrat who has already been seeking information about contacts between the White House and Enron, questioned whether the Bush administration could have done more to help the company and its employees.

``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,'' he said in a statement. ``I am deeply troubled that the White House stood by and let this happen to thousands of families.''

Bush, who worked in the oil industry and has known Enron's chairman since he was governor of Texas, appeared to distance himself from Lay, saying he never discussed Enron's financial difficulties with him and last met the executive last spring.

``I have never discussed with Mr. Lay the financial problems of the company,'' Bush said, adding that the last time he had seen Lay was last spring at a literacy fund-raising event organized by his mother, former first lady Barbara Bush.

PHONE CALLS

White House spokesman Ari Fleischer (news - web sites) disclosed on Thursday that Lay telephoned O'Neill and Evans last autumn saying his company might not be able to meet its obligations.

Fleischer said Lay suggested the possibility of using the case of Long Term Capital Management (LTCM), a hedge fund which benefited from a private bailout orchestrated by the New York Federal Reserve in September 1998, as model for his company.

After studying the matter and concluding that Enron's problems would not have the kind of systemic effects on the economy that were feared in LTCM's case, O'Neill and Evans decided against taking any action.

``They both agreed no action should be taken to intervene,'' Fleischer said, adding that Bush was not informed of the decision but believes O'Neill and Evans acted ``wisely.''

At his daily briefing, the spokesman fended off questions about why Bush was not informed of the decision, the propriety and timing of Enron contacting top government officials about its problems, and whether Evans and O'Neill acted properly.

``Communication is not a wrong-doing. What took place here was they received phone calls and took no action,'' Fleischer said. ``The charge has been did the government take any action, and the answer from these two officials is no.''

Treasury spokeswoman Michele Davis said Lay called O'Neill on Oct. 28 and Nov. 8 -- after Enron's key Oct. 16 disclosure that it was taking huge charges related to its partnerships, which provided the first hint of its spectacular unraveling.

Speaking to reporters after meeting with economic advisers on Thursday, Bush placed the emphasis on workers and investors who suffered as a result of Enron's troubles and ordered two reviews to recommend how to better protect them in the future.

He said the first review, by the Treasury, Commerce and Labor departments, would analyze pension and 401(k) rules and recommend ways to reform them so that ``people are not exposed to losing their life savings as a result of a bankruptcy.''

The review of disclosure rules would be conducted by the Presidential Working Group on Financial Markets, which includes the Treasury Department (news - web sites), Securities and Exchange Commission (news - web sites), Federal Reserve and Commodity Futures Trading Commission.

Once the world's largest energy trader, Enron slid in mere weeks last year from Wall Street stardom to the largest bankruptcy filing in U.S. history on Dec. 2. Its downfall, after withdrawal of a rescue takeover bid by rival Dynegy Inc., threw thousands out of work and hammered investors.

The episode sapped the life savings of many Enron employees who held large amounts of company stock in their 401(k) retirement plans, while top executives allegedly pocketed fat profits by selling before a plunge in Enron's share price.

``I have great concerns for ... (those) who put their life savings aside and, for whatever reason, based upon some rule or regulation, got trapped in this awful bankruptcy and have lost life savings,'' Bush told reporters at the White House, saying the groups would take a ``good hard look'' at the matter.

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Earlier Stories
Bush Reviews Pension, Disclosure Rules After Enron (January 10)
Bush Orders Pension Rules Review After Enron Woes (January 10)
Bush Orders Treasury to Review Pension Rules (January 10)


President George W. Bush is introduced at the Pentagon January 10, 2002 to sign the Defense Department Appropriations Bill. Concerning the collapse of Enron, Bush ordered reviews of pension and corporate disclosure rules of the company, which was a key contributor to the Bush presidential campaign. (Win McNamee/Reuters)


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Easy Link to this article:

Enron Called Bush Cabinet Officers Before Bankruptcy
http://dailynews.yahoo.com/h/nm/20020110/ts/bush_enron_dc_7.html

1 posted on 01/10/2002 4:30:08 PM PST by MeekOneGOP
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To: MeeknMing
Everybody INCLUDING WAXMAN took donations from Enron. Every company has the right to succeed or fail. With the exception of food or defense the GOV usually stays away from the situation. Evidently the Whitehouse did not pay special attention to Enron nor any other company. So far there is no problem as far as the Whitehouse is concerned.

It's terrible that the officers sold their stock first if it was illegal. I wait to hear what was illeagal. It does merit investigation though.

2 posted on 01/10/2002 4:38:26 PM PST by A CA Guy
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To: A CA Guy
illegal / whoops
3 posted on 01/10/2002 4:39:38 PM PST by A CA Guy
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To: MeeknMing
". . .thousands of documents were destroyed. . ." Well, soon as Slickass clinton produces the thousands of missing emails and hands over all his records of Chi-Com nuclear secret payoffs and money they gave to Gore and the DNC, well, m-a-y-b-e a few scraps of Enron paper might be found. In the meantime, I'd rather not hear the demoncraps who covered and excused clintons' fat butt for 8 years open their yaps about THIS deal.
4 posted on 01/10/2002 4:42:43 PM PST by D2BAH
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To: A CA Guy
They called the cabinet members and WHAT? Did they ask for help? Because if bankruptcy is the kind of help this White House can deliver, we're ALL in a lot of trouble!

I just watched Brian Williaims' entire report on MSNBC.........not ONE mention of ONE Democrat, but lots of scornful and worried looks while he was talking to Howard Finneman about how bad this was going to be for Bush.

Sure they met at the White House with Cheney; so did a LOT of other energy and business heads.

They are like sharks in the water. Even Finneman said that!

5 posted on 01/10/2002 4:43:18 PM PST by Howlin
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To: A CA Guy
"illeagal" is just a sick bird. :o)
6 posted on 01/10/2002 4:43:57 PM PST by MeekOneGOP
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To: MeeknMing
Bush ordered reviews of pension and corporate disclosure rules of the company, which was a key contributor to the Bush presidential campaign. (Win McNamee/Reuters)

Excuse me whilst I call B$ on this part of the article.

7 posted on 01/10/2002 4:45:00 PM PST by Centurion2000
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To: MeeknMing
Here is the thing that people is missing, Enron would be still in buisness if it had special favors from Bush! If a company was in buisness the Government, it would still be in buisness and making money. Enron went belly up! Plain and simple!
8 posted on 01/10/2002 4:45:15 PM PST by KevinDavis
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To: MeeknMing
The media is so excited about this! They are trying their level best to tie Bush to this somehow. With headlines screaming that "Enron contacted Bush administration officials". Then you have to get a lot further down in the story before you realize that their contact with O'Neill at Treasury was near the END, not the beginning of their troubles. And the thing about Arthur Anderson destroying documents is HUGE, but again, it has nothing that I can see to do with Dubya!

The media wants so desparately for there to be something like Whitewater that they can tie on to Bush. Sorry folks, you're dealing with a different character than x42. For example, Dubya HAS character, x42 didn't.

9 posted on 01/10/2002 4:46:00 PM PST by SuziQ
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To: MeeknMing
Hey..... so what? Did these good ole boys kiss a** in both parties... I'll bet I know the answer.
10 posted on 01/10/2002 4:47:03 PM PST by pointsal
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To: MeeknMing
What happened to the employees is terrible, but as Larry Kudlow said, there is a bright spot in this whole thing. It reminds us that we have a capitalist, free market, and when you screw up, you screw up, and you can't expect any one to help.
11 posted on 01/10/2002 4:49:04 PM PST by July 4th
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To: Centurion2000
Excuse me whilst I call B$ on this part of the article.
Reuters in full bloom, huh?
12 posted on 01/10/2002 4:52:27 PM PST by MeekOneGOP
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To: Howlin
I just watched Brian Williaims' entire report on MSNBC.........not ONE mention of ONE Democrat, but lots of scornful and worried looks while he was talking to Howard Finneman about how bad this was going to be for Bush.

I saw that as well. When Brian Williams did not mention one DemocRAT, I hit the remote. All that I could think about was Bernie Goldberg's "Bias". I don't have time for these liberal DemocRAT media types - Fineman included.

13 posted on 01/10/2002 4:53:11 PM PST by jackbill
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To: MeeknMing
So what exactly is Bush charged with?
I still haven't seen anything.
14 posted on 01/10/2002 4:56:13 PM PST by Jorge
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To: Howlin
I was just wondering - how did Fineman handle this story? Did he do fair commentary or did he side with the biased, Bush-hating Brian Williams?
15 posted on 01/10/2002 4:57:21 PM PST by Wait4Truth
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To: Wait4Truth
He was pretty fair, IMO. He wasn't the way he's been lately about Bush, which I think has been adoring! He just stated the facts; Williams was the one doing the spinning.
16 posted on 01/10/2002 4:58:49 PM PST by Howlin
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To: jackbill
Howard's been really great to Bush lately; HE wasn't that bad tonight. It was Brian.
17 posted on 01/10/2002 4:59:30 PM PST by Howlin
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To: Wait4Truth; jackbill
On the other hand, The Panel on Brit's show agrees with us; there's nothing there; and even Moria said the Dems better be careful.
18 posted on 01/10/2002 5:00:24 PM PST by Howlin
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To: Howlin
I just watched Brian Williaims' entire report on MSNBC.........not ONE mention of ONE Democrat, but lots of scornful and worried looks while he was talking to Howard Finneman about how bad this was going to be for Bush.

BTW - Arshad Mohammed is one of the worst Algore flunkies at Rueters.

I saw that hatchet job by Williams and Fineman as well. Bias? What bias? Their discussion was purely to plant the notion that Bush bilked average Americans out of their life savings, which is crap.

19 posted on 01/10/2002 5:05:39 PM PST by KC_Conspirator
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To: Howlin
Sure they met at the White House with Cheney; so did a LOT of other energy and business heads.

Business heads, union leaders, and all sorts of special interest lobbies meet with both Democrats and Republicans in Washington ALL THE TIME.
So what?

I'm STILL waiting to see what Cheney or anyone in the Bush administration did that was so unusual, or illegal.
So far this entire "scandal" seems like a lot of hot air to me.

20 posted on 01/10/2002 5:06:34 PM PST by Jorge
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