Sen. Gramm's wife gets Enron subpoena

WASHINGTON, Jan. 12 (UPI) -- A Senate panel probing energy conglomerate Enron Corp.'s sudden collapse sent a subpoena Friday to Texas Republican Sen. Phil Gramm's wife, Wendy Gramm, panel sources confirmed, while a new contact with a Bush administration official -- by a prominent Democrat -- was disclosed by the Treasury Department.

Wendy Gramm has been a member of Enron's board of directors for eight years and of the crucial Audit and Compliance Committee as the giant company's financial condition was deteriorating.

Her subpoena is among 51 issued by the Senate Permanent Subcommittee on Investigations chaired by Sen. Carl Levin, D-Mich., seeking documents from Enron, the Arthur Andersen LLP accounting firm, and current and former officers, employees and board members of Enron.

Of the 51 subpoenas, 49 went to individuals, one to Enron Corp. and one to the Andersen firm seeking documents as far back as January 1999.

Phil Gramm is the second-largest recipient in the Senate of financial contributions from Enron, receiving $97,350 from the company between 1989 and 2001, according to data provided by The Center for Responsive Politics. The senator receiving the largest contribution from Enron is Sen. Kay Bailey Hutchinson, R-Texas, who received $99,500.

The subpoenas came as government and congressional scrutiny of the collapse intensified.

Friday evening, the Treasury Department disclosed that Clinton administration Treasury Secretary Robert Rubin contacted a department under secretary in early November to suggest he call ratings agencies who were poised to downgrade Enron's credit rating.

A Treasury spokesperson said Rubin, now chairman of the executive committee of a banking conglomerate with hundreds of millions of dollars of exposure to the Enron collapse, Citigroup, called Under Secretary for Domestic Finance Peter Fisher to ask what he thought of Fisher contacting the ratings agencies to encourage them to "worth with" Citibank and other Enron banks.

The spokesperson said Fisher responded negatively, saying he did not think such a call was appropriate and Rubin responded that he thought that was a reasonable position. "Fisher made no such call," the Treasury spokesperson said.

It was Fisher to whom Enron President Lawrence Whalley made six to eight calls in late October and early November, calls a Treasury spokesperson earlier Friday said Fisher took to be suggestions he call Enron's banks.

Over Thursday and Friday, it was disclosed that Enron's chairman, Kenneth Lay, contacted top Bush Treasury Secretary Paul O'Neill, Commerce Secretary Don Evans and Alan Greenspan, chairman of the Federal Reserve, in October about Enron's financial difficulties.

Secretary of Commerce Evans said Lay sought assistance from the federal government, but Lay said in a statement late Thursday that he only sought to alert top financial leaders that his mammoth firm was having difficulties. O'Neill said he agreed with Evans that nothing was to be done.

President Bush, who has received political and financial support from Enron and Lay in all his political races, said the Enron chief did not contact him.

Several prominent Democrats have attempted to use the various Enron entreaties as evidence of a close association with the Bush administration but no one has accused White House officials of wrongdoing.

When Enron received no outside financial assistance and as the ratings agencies ultimately downgraded its credit standing, the company reported to stockholders that it had $500 million of previously unreported debt. The subsequent selloff of Enron stock was swift and dramatic -- and left many of the company's 21,000 employees with life savings that diminished to near nothing as the stock fell below a dollar a share.

As several employees later told a congressional hearing, they were prohibited from selling their Enron stock from their 401K retirement plans even though top executives sold $1 billion in shares while they still retained their value.

The company sought protection under Chapter 11 of the U.S. Bankruptcy Code on Dec. 2.

Arthur Andersen, the company's auditing firm, reported in testimony in December that it told Enron officials that some of their financial transactions might be illegal. Joseph Berardino, Andersen chairman, also testified that Enron withheld financial information from Andersen. He admitted that his firm's accountants may also have made some mistakes.

Then Thursday, Andersen disclosed that a "significant" number of correspondence, electronic files and other data may have been destroyed, some of it after investigations had begun.

Well before the Enron debacle began gathering steam, on Sept. 5, Sen. Gramm announced that he would not seek re-election after serving 18 years in the Senate. During his retirement announcement, Gramm said that he had achieved his goals as a senator and would move on to another career.

Gramm's spokesman, Larry Neal, declined comment on the subpoenas, but said Enron had nothing to do with Gramm's decision not to seek another term.

"He outlined in detail in his retirement announcement his reasons for leaving, and those were his only reasons," Neal said.

The House Energy and Commerce Committee, run by Republican Rep. Billy Tauzin, R-La., also wants to talk to Wendy Gramm. Tauzin requested the interview with Wendy Gramm by name in a Dec. 10 letter to Enron.

The spectacular financial collapse of Houston-based Enron has drawn broad scrutiny from a host of federal agencies and congressional committees.

On Wednesday, it was revealed that the Justice Department had opened a criminal investigation into the Enron matter.

On Thursday both U.S. Attorney General John Ashcroft in Washington and U.S. Attorney Michael T. Shelby in Houston recused themselves from the investigation. Selby's office announced that he and several other attorneys had relatives who were employed by Enron.

Ashcroft received a $25,000 contribution from Enron during his run for re-election to the Senate from Missouri and in an unsuccessful attempt to win the Republican presidential nomination.

The Securities and Exchange Commission also has opened a probe into whether Enron officers were capitalizing on their knowledge of the firm's financial condition when they sold millions of dollars in stock prior to its nosedive.

The agency also wants to determine whether Enron financial claims to investors were misleading and whether Arthur Andersen's audit of those statements was proper.

The House Energy and Commerce Committee led by Tauzin and Ranking Minority Member John Dingell, D-Mich., Friday announced that it was demanding a host of financial records -- including some that Arthur Anderson says were destroyed -- as well as interviews with Enron's financial oversight officials.

That request covers 43 areas of Enron's finances and corporate behavior including all earnings-related documents and memos, details about the finances and discussions related to several outside investment vehicles operated outside the company's normal procedures.

In the Senate, a Commerce Committee subcommittee -- led by North Dakota Democrat Byron Dorgan -- already has held a hearing on the loss of pension funds when the stock price collapsed. At that hearing, a top Arthur Andersen official said he thought there was a possibility that criminal acts had been committed by the company.

Dorgan plans more hearings into the loss of the retirement funds but so far has been unsuccessful in getting Lay to appear before the committee.

The Senate Government Affairs Committee also announced an investigation on Jan. 2 into the collapse, choosing to focus on whether government agencies failed to detect, or ignored, signs of the impending collapse. The committee plans a hearing on Jan. 24, according to Chairman Joe Lieberman, D-Conn.

The House Government Reform Committee has been slower to formally step into the fray, but its ranking member, California Democrat Henry Waxman, has been vocal about the possibility that Enron used undue influence on administration officials to avoid additional scrutiny of its finances and practices before the collapse. Waxman also has been engaged in a fight with the Bush administration over releasing details of meetings between Enron officials and high-ranking Bush administration officials, when the White House was preparing a national energy policy.

On Jan. 3 the vice president's office provided Waxman with a list of contacts between the vice president or his staff and Enron officials. The letter, from David S. Addington, the vice president's counsel, said that neither the vice president nor his staff had ever discussed Enron's financial status with the company's representatives.

(Mark Benjamin is UPI's chief congressional correspondent, and Nicholas M. Horrock is UPI's chief White House correspondent.)

we see that Senator Gramm had a reason for resigning a few weeks ago. His wife is less of a target for prosecution when he is not in politics.

The federal government sued 20,000 people who merely sat on the Board of Directors of S&L's that went bankrupt over 10 years ago. One fellow was in a coma on the day that a decision was made that he was later sued for after he came out of the coma. Why should Phil Gramm's wife be spared.

It was papa Bush in charge when they decided to sue those 20,000 people. No Republican should be spared here. The government should prosecute regardless of the circumstances because that is the standard used against all who sat on the Boards for the S&L's of yesteryear.

So even if she had nothing to do with this and had no knowledge of what was going on she should be prosecuted? I don't think so. Bush has already asked for a full inquiry and no one will be spared. But to say just because they were on the board they should be sued is ludicros. We all know that W. Bush is different from his father so just because Bush(41) did something that does not mean W. Bush will do it.

this will be the best shot to bring Clinton to justice. If the rats go thru with this smear scam which is designed to smear the republicans ALL during this election year.

cLINTON BROUGHT DOWN THIS WAY AND WHLIE TRYING TO BRING DOWN BUSH AND IT BACKFIRES

No Republican should be spared here

I agree. This is nothing though. This stock issue didn't undergo a one day plunge until it went from $8 to $1 in November ... it fell steadily all summer. It went from $60 in June down to $8 in November. Hey ... that happens sometimes in the market. If the big deal is management selling off their stock at $8/share before the last drop ... there might be a problem there, but the execs were way underwater on their options anyway. There were no big profits there as some intimate.

This could be a securities fraud case, but the Bush Administration declined to help Enron so there is no scandal at least at this point.

The article doesn't seem to mention all the dems who also received money, but it will all come out. Regarding some current pols who divested of all stock before taking ofice, I believe they did so due to "ethics." Otherwise they are accused of having "ties to big______ (fill in the blank.) If Arthur Anderson is involved in this, (and it seems they were since staff destroyed documents) I think it is likely that the bad financials were a tightly controlled secret.

HOWEVER, anyone, that includes Rs, who was involved in the bilking of the Enron shareholders should be tried. This is the kind of bs that gives "business" such a bad name and is so harmful. I agree with others that say this is a can of worms; with very long reaches. For both parties.

I don't see anything to tie to the White House though, and I'm glad there will be investigations.

no friend, I don't agree with you. Ten years ago when Republicans were in power they developed certain standards. Those standards were that every single member of a Board of Directors for any S&L that went bankrupt had to be sued by the federal government. The government paid lawyers $150/hour to find people to sue in an open-ended fashion. The more lawsuits they could bring the more the lawyers would get paid. This is what George Bush did to our country. As I said one man in Florida was in the hospital in a coma, he came out of the coma and found he was being sued for something he allegedly did while he was in the coma. Twenty thousand americans were sued in this scheme by the Republicans.

Now a prominent Republican's wife has been caught in the same circumstance. She sat on the board of a company that folded after allegedly irresponsible things were done. Fairness dictates that the Republicans apply the same standards that they've applied in the past. The idiot George Bush senior applied these ridiculous standards so that his rich liberal friends would like him. It was very unjust, but what does justice matter? That is not the standard we use as a society in these types of situations. Wendy Gramm should be publicly insulted, humiliated and prosecuted. Phil Gramm should be forced to sacrifice his assets on a legal defense. It doesn't matter if she's guilty or not.

The scandal here is Wendy Gramm sat on their board of directors while irresponsible decisions were made that cost many people severely, not that Bush aided Enron in any way. Ten years ago there were 20,000 Americans in a similar situation and they were prosecuted by President Bush. These people merely sat on the boards of S&L's that went bankrupt. In Arizona 100% of the S&L's went bankrupt and 100% of the Board members were sued by president Bush. President Bush took money from the taxpayers at $150/hour to pay lawyers who got paid more the more they sued, then all of those private citizens had to hire expensive lawyers to defend themselves from what was basically frivilous and ridiculous charges.

The same standards applied then by the Republicans should be applied today to a prominent republican's wife, meaning that they should sue Wendy Gramm with federal taxpayer money forcing her family to dig into its pockets merely for the sake of punishing her.

..."Gramm's spokesman, Larry Neal, declined comment on the subpoenas, but said Enron had nothing to do with Gramm's decision not to seek another term"....

Why does this have such a hollow ring? Too bad, Phil....

I doubt much will be made or said abouat Rubin's part....last I heard was his name being put forth as the next head of the Fed.

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