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Posted on 01/11/2002 5:44:42 AM PST by MeekOneGOP
Friday January 11 8:17 AM ET
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By MARCY GORDON, AP Business Writer
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.
Other Enron-Bush administration ties:
-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.
Earlier Stories
Enron-White House Dealings Questioned (January 11)
I would like to be ON your ping list. ;o)
Apparently, Enron incorporated on January 21, 2001. ;-)
Steyn: They can't Pin This on Bush
http://www.freerepublic.com/focus/fr/607112/posts
This is the belly laugh of the day, we all know he's a DemocRAT.
Oh yeah Henry? Let's look at the timeline:
October 16th-Enron issues public restatement of earnings indicating huge losses
October 26th-Enron contacts Evans
October 26th-Enron contacts Greenspan
October 28th-Enron Contacts O'Neill
October 29th-401k lockdown
November 12-Lockdown lifted
Now you tell me. The losses had already been publically announced and the stocks began to fall on October 16th. Just what was supposed to be done?
Democrats are Bush Hatersnth.
http://www.milberg.com/enronpress/enron_chart.pdf
Enron stock prices over the last few years. :-)
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