Monitoring Corporate Agribusiness From a Public Interest Perspective
A.V. Krebs Editor\Publisher
Issue #140 January 21, 2002
GREED AND CORRUPTION BLATANT
AS GROWING ENRON SCANDAL UNFOLDS;
IBP'S WENDY GRAMM BECOMES A CENTRAL FIGURE
In the deepening and ever-widening scandal that is Enron it should come as no surprise to the readers of THE AGRIBUSINESS EXAMINER that a member of the infamous company's board of director Dr.Wendy Gramm has become a central figure in the course of the demise of the nation's seventh largest corporation.
Not only has Dr. Gramm, wife of Texas Republican U.S. Senator Phil Gramm, been a director since 1993, but she has also been a member of the board's Audit and Appliance Committee, precisely that committee, along with the company's outside auditors, which should have been recognizing the path on which the nation's leading energy company was taking that has led to its stock becoming almost worthless, thousands of workers' pension funds in disarray, and bankruptcy.
The roll of such audit committees is to normally select a firm of
independent public accountants to audit the financial statements of the company
and its consolidated subsidiaries, subject to approval of the Board of
Directors; discuss with the independent public accountants the scope and results
of their audit; discuss with the independent public
accountants, and with the company management management financial, accounting and reporting principles, policies and practices; discuss with the independent public accountants, and with the Corporate Controller and his staff, the adequacy of the corporation's accounting, financial and operating controls. Clearly, Dr. Gramm and her fellow committee members failed miserably in that regard.
Interestingly enough, however, Dr. Gramm also serves in the same function with IBP Inc., the nation's largest meatpacker and no stranger to questionable financial dealings itself before and during its purchase recently by Tyson Foods, the nation's largest poultry producer and processor.
Prior to the Tyson purchase, IBP was sought after by Smithfield Foods, the nation's largest pork producer and processor. At that time IBP appointed a special committee of independent board members, including Dr. Gramm, to examine the proposal and make a recommendation to the full board and to management. That effort became mute when Smithfield, wary of IBP's financial affairs, withdrew its bid.
Dr. Gramm is also a board member of State Farm Mutual Auto Insurance Co., the largest single institutional stock owner of Archer Daniels Midland (ADM) --- "The Nature of Things to Come" --- and a board member of Invesco Funds. Her roots in corporate agribusiness, however run deep as she also chaired the Commodity Futures Trading Commission (CFTC) from 1988 to 1993.
In addition, she has served as Administrator for Information and Regulatory Affairs at the White House Office of Management and Budget (OMB), was the Executive Director of the Presidential Task Force on Regulatory Relief and directed the Federal Trade Commission's (FTC) Bureau of Economics.
She holds a Ph.D. in economics from Northwestern University and began her career as a professor of economics at Texas A&M University. Currently she is Director of the Regulatory Studies Program of the Mercatus Center at George Mason University in Fairfax, Virginia, the center being one of Enron's major beneficiaries
She is also Chairman of the Board of the Texas Public Policy Foundation, the creation of Dr. James Leininger who has used his enormous wealth to create a conglomerate of a half-dozen influential foundations and think tanks whose pro-business policy positions have become the basis of key Texas legislative initiatives, including tort reform and school vouchers.
Leininger, 55, also has created numerous political action committees, which he has employed so effectively that he has been nicknamed the "Daddy Warbucks" of the Texas Republican Party. The largest single political donor in the state, Leininger helped to engineer the Republican takeover of the legislature and governor's mansion. In the 1998 election cycle alone, Leininger and his family spent more than $4 million to finance think tanks and political campaigns, according to the Texas Freedom Network, a nonprofit group established to counter the religious right, and reports filed with the Federal Election Commission.
Bush's ties to Leininger are strong. Leininger has given Bush's campaigns $83,750 over the years. While only 73 on the list of Bush's all-time career patrons, his ranking, according to the Network, belies the support that Leininger has given Bush over his political career through his various organizations. "In 1992, while cutting his political teeth, Bush sat on the board of advisers of Leininger's flagship think tank, the Texas Public Policy Foundation, which churns out conservative policy positions and is modeled after the influential Heritage Foundation in Washington. Bush also spoke at the foundation's 10th anniversary event in January 1999."
Currently, a U.S. Senate panel investigating Enron's nefarious activities has subpoena Gramm, her subpoena being among 51 issued by the Senate Permanent Subcommittee on Investigations chaired by Sen. Carl Levin, (Dem.-Michigan) which is 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.
Because energy and its farm input cost has become such a key ingredient in
family farm economics and because the Enron scandal so profoundly manifests the
corruption that is rapidly becoming the hallmark of corporate America THE
AGRIBUSINESS EXAMINER is presenting this two-part Special Edition entirely
devoted to the outrageous and scandalous corporation that has been termed "the
genius of capitalism."
GRAMMS PLAY MAJOR ROLE
IN PASSING LEGISLATION
DEREGULATING ENERGY INDUSTRY
JAMES RIDGEWAY, THE VILLAGE VOICE: The one person in the Enron scandal whom Congress is not likely to subpoena is its own revered Phil Gramm, the retiring Republican Senator from Texas. Gramm and his wife, Wendy, have tight links to Enron, Wendy being a director and Gramm the pusher of legislation that assisted the company during its troubles last year. In December, his press secretary denied the latter charge, saying, "Senator Gramm took no role, had no say, and did not vote on the energy futures provisions."
That's not the story presented by the D.C. watchdog Public Citizen, whose tale goes like this:
In an apparent response to a 1992 plea from Enron, Dr. Wendy Gramm, then chair of the federal Commodity Futures Trading Commission, moved to exempt the company's energy-swap operation from government oversight. By then, the Houston-based Enron was a major contributor to Senator Gramm's campaign.
A few days after she got the ball rolling on the exemption, Wendy Gramm resigned from the commission. Enron soon appointed her to its board of directors, where she served on the audit committee, which oversees the inner financial workings of the corporation. For this, the company paid her between $915,000 and $1.85 million in stocks and dividends, as much as $50,000 in annual salary, and $176,000 in attendance fees, according to a report by Public Citizen, a group that has relentlessly tracked which in turn Enron has called the report unfair.
Meanwhile Enron had become Phil Gramm's largest corporate contributor --- and according to Public Citizen, the largest across-the board donor in its industry. Between 1989 and 2001, the company tossed Gramm just under $100,000. In 1998, Wendy Gramm cashed in her Enron stock for $276,912. There's nothing unusual about a Washington regulator quitting the government and going to work for a private company she was regulating. And people often get rich in the process. Wendy Gramm, whose office didn't return Voice calls, has told reporters she sold the stock expressly to avoid any hint of a conflict of interest.
But that's not the end of the story.
In June 2000, Senator Gramm co-sponsored the Commodity Futures Modernization Act, a measure aimed at deregulating certain kinds of futures trading, but not energy futures. That bill never made it to the floor, and thus quietly died. Six months later, on December 15, Gramm curiously turned up as co-sponsor of a bill with the same name, the Commodity Futures Modernization Act, which did deregulate energy futures and which, without undergoing the usual committee hearings and preliminary votes, was immediately attached as a rider to an 11,000-page appropriations bill. It passed and was signed into law by President Bill Clinton six days later. Few lawmakers had likely perused the rider carefully, if they even knew it was there. And at any rate, Enron had given to the campaigns of over 200 legislators.
That's not to say no one opposed Enron's aims. An economics advisory group to Clinton --- with representatives from the Federal Reserve, SEC, and Commodity Futures Trading Commission --- had come out against deregulated energy trading. They argued the market was ripe for manipulation. Yet the bill passed, setting Enron free to run what amounted to an energy auction, which Public Citizen claims "gained control over a significant share of California's electricity and natural gas market."
All during this period there was a series of remarkable coincidences. Between June and December 2000, the California energy situation was worsening but still not in crisis. After the Gramm bill went through, all hell broke loose, with one emergency rolling blackout after another. There were charges that out-of-state suppliers were withholding gas and running up the price. Finally, in June 2001, public pressure forced the Federal Energy Regulatory Commission, or FERC, to reassert price controls.
In the midst of this mess, Enron's "wholesale services" revenues quadrupled, hitting the $48.4 billion mark in the first quarter of 2001. That gain came on top of an earlier jump in income, from $35.5 billion to $93.3 billion from 1999 to 2000. By reasserting federal controls, FERC basically killed Enron's auction system. Company executives then rushed to dump stock. . . .
Little noticed in the melee has been the transfer this month of Enron's major
asset, the 17,000-mile Northern Natural Gas Company pipelines, to Dynegy, a
smaller competitor. Northern pipelines carry gas from Texas's Permian Basin to
the West and Midwest markets. The power behind Dynegy is ChevronTexaco, which
has a 26% stake. When completed, this transaction will transform Dynegy into a
vertical gas giant, with a hand in production, distribution, and end-use
markets. In short, Dynegy becomes the next big player, controlling both the
product and the pipes. . . . .
GRAMMS WELL TAKEN CARE OF BY ENRON;
"CONVENIENT SYMPTOMS" OF GOP OBSESSION
OF DEREGULATING CORPORATE AMERICA
BOB HERBERT, NEW YORK TIMES: When Senator Phil Gramm and his wife Wendy danced, it was most often to Enron's tune.
Mr. Gramm, a Texas Republican, is one of the top recipients of Enron largess in the Senate. And he is a demon for deregulation. In December 2000 Mr. Gramm was one of the ringleaders who engineered the stealth like approval of a bill that exempted energy commodity trading from government regulation and public disclosure. It was a gift tied with a bright ribbon for Enron.
Wendy Gramm has been influential in her own right. She, too, is a demon for deregulation. She headed the presidential Task Force on Regulatory Relief in the Reagan administration. And she was chairwoman of the U.S. Commodity Futures Trading Commission from 1988 until 1993. In her final days with the commission she helped push through a ruling that exempted many energy futures contracts from regulation, a move that had been sought by Enron. Five weeks later, after resigning from the commission, Wendy Gramm was appointed to Enron's board of directors.
According to a report by Public Citizen, a watchdog group in Washington, "Enron paid her between $915,000 and $1.85 million in salary, attendance fees, stock options and dividends from 1993 to 2001." As a board member, Ms. Gramm has served on Enron's audit committee, but her eyesight wasn't any better than that of the folks at Arthur Andersen. The one thing Enron did not pay big bucks for was vigilance.
There's a lot more you can say about the Gramms and Enron, and not much of it good. But Phil and Wendy Gramm are just convenient symptoms of the problem that has contributed so mightily to the Enron debacle and other major scandals of our time, from the savings and loan disaster to the Firestone tires fiasco. That problem is the obsession with deregulation that has had such a hold on the Republican Party and corporate America. . . . .
Enron exploited the deregulation mania to the max, and the result has been economic ruin for thousands upon thousands of hard-working families. As Public Citizen put it, "Enron developed mutually beneficial relationships with federal regulators and lawmakers to support policies that significantly curtailed government oversight of [its] operations."
The kind of madness that went on at Enron could only have flourished in the dark. Arthur Andersen was supposed to have been looking at the books, but the vast shadows cast by the ideology of deregulation allowed that company to escape effective scrutiny as well. So you have revolving-door abuses and pernicious financial arrangements between companies like Enron and auditors like Andersen that are similar to those between private companies and government agencies.
Who's left to look out for the small fry?
If the deregulation zealots had their way, we'd be left with tainted food, unsafe cars, bridges collapsing into rivers, children's pajamas bursting into flames and a host of corporations far more rapacious and unscrupulous than they are now.
Enron manipulated the energy markets and cooked its own books in ways that would not have been possible if its operations had had a reasonable degree of transparency. But Enron operated in what has been widely characterized as a "black hole" that left competitors and others asking such basic questions as how the company made its money.
How long will it take? How many decades and how many scandals have to come
and go before we catch on? We're human. We're self-interested. And when left to
our own devices, some of us will do the wrong thing. Some perspective is
needed. Unchecked deregulation is an express route to chaos and tragedy. Where
the public interest is involved, a certain amount of oversight --- effective
oversight --- is essential.
BIDDING FAREWELL TO THREE MEN
WHOSE DEPARTURE WILL RAISE
MEDIAN DECENCY OF U.S. SENATE
BILL KELLER, NEW YORK TIMES: Whenever a truly dreadful person dies or retires and the chorus of polite, speak-no-ill-of-the-departed accolades begins, I think of the nasty bee-sting E. E. Cummings bestowed on the editor and poet Louis Untermeyer. Untermeyer's influential 1919 anthology, Modern American Poetry, omitted some of the great poetic innovators of the time, but included three poems by Untermeyer himself and one by his wife. Cummings gutted him in four lines.
mr u will not be missed
who as an anthologist
sold the many on the few
not excluding mr u
The epigram was mean-spirited (later Untermeyer editions included the overlooked poets, and plenty of Cummings), but it was a memorable kick against the collective deference that accumulates around powerful people.
In that dyspeptic spirit I'd like to begin the new year by bidding farewell to three men whose departure will raise the median decency of the United States Senate. In their remaining, lame-duck months, Jesse Helms, Strom Thurmond and Phil Gramm will enjoy the ritual tributes of colleagues and the sanitized adieus of home-state editorialists. Let's be frank. They will leave behind an institution they have helped appreciably to debase.
Senators Helms, Gramm and Thurmond have in common the fact that they harnessed their collective century of seniority to the Taliban wing of the American right. Point to an act of cultural division, bullying unilateralism or anti-government populism committed in the Senate during their decades there you will usually find these three men among the sponsors. But there are others in the Senate who have voted for egregious causes, right and left, and still others who have never stood for much of anything. What sets these three apart is that each has made his own special contribution to the cynicism of our public life. . . .
Mr. Gramm should be remembered for perfecting one of the more duplicitous roles in politics --- the anti-government welfare queen. He has run his every campaign as a scourge of government spending and a champion of the beleaguered little taxpayer. At the same time he has built a great money sluice from Washington to his home state and pandered to the energy, banking and insurance lobbies that underwrite his political ambitions. His politics could be called hypocrisy, but only in a language that places a huge premium on understatement.
Contrast Mr. Gramm with Representative Dick Armey, another Texan with a mean streak, a Ph.D. in economics and a professed distaste for government spending. Mr. Armey, who is also retiring after this Congress, had the intellectual integrity to fight federal farm subsidies and to engineer the closing of unneeded military bases, including one serving his home district. Not so Mr. Gramm, who once boasted, "I'm carrying so much pork, I'm beginning to get trichinosis."
One of Senator Gramm's most generous benefactors was Enron, which lavished
money on his campaigns and paid his wife handsomely as a corporate director.
Senator Gramm, in turn, had a hand in legislation that exempted Enron's
explosive energy derivatives business from government regulation and oversight.
How big a hand, and whether that legislation enabled the secret funny business
that led to the companys collapse, may emerge in one of the many investigations
under way. Enron's business was built on the premise that just about anything
could be turned into a commodity and bought and sold. The beleaguered little
taxpayers who lost their jobs and pensions in the Enron fiasco will be
interested to know whether that included their senator. . . . .
A CULTURE OF GREED AND ARROGANCE
BREEDING EXCESSIVE SECRECY
KURT EICHENWALD, NEW YORK TIMES: . . . . Competitors and analysts said the ultimate cause of Enron's brutal collapse was a culture of greed and arrogance that bred excessive secrecy. As some of the company's secrets began to be revealed last fall --- stunning Wall Street with tales of mysterious partnerships that had been used to pretty up Enron's books --- the stage was set for disaster.
Whispers in the energy markets and the company's growing financial weakness set off a swift loss of confidence among traders and bankers. Sources of financing evaporated, a merger deal collapsed and, finally, Enron hobbled into bankruptcy court. As creditors quarrel over its remains, investigators in Congress, the Justice Department and the Securities and Exchange Commission are demanding answers.
Enron executives had hoped to make the company a new model for American industry. And indeed, the tale of the company's rapid rise and astonishing collapse will be studied for years --- but as an object lesson in the dangers of relying on financial juggling for big profits, and the hazards of a business that corporate executives and directors, Wall Street analysts and government regulators barely understood.
The woods were filled with smart people at Enron, but there were really no
wise people, or people who could say `this is enough,'`" said John Olson, a
veteran energy industry analyst with the investment firm Sanders Morris Harris.
"Given an adrenaline-driven culture, given an obsession with 15% a year or
better earnings growth, you had this situation develop where Enron was set to
metastasize." . . . .
BUSH ADMINISTRATION OFFICIALS
DESCRIBE ENRON SCANDAL
AS "TRIBUTE TO AMERICAN CAPITALISM"
PART OF THE "GENIUS OF CAPITALISM"
PAUL KRUGMAN, NEW YORK TIMES: Clearly, Larry Lindsey shouldn't have described the Enron affair as a "tribute to American capitalism," and Paul O'Neill shouldn't have declared: "Companies come and go. It's part of the genius of capitalism." Both the top White House economist and the Treasury secretary have been excoriated for their callousness. But did they have a point?
Yes, they did --- but their remarks suggest that they still don't understand what happened. The Enron debacle is not just the story of a company that failed; it is the story of a system that failed. And the system didn't fail through carelessness or laziness; it was corrupted.
Mr. Lindsey and Mr. O'Neill were, in effect, patting themselves on the back for allowing Enron to fail. Indeed, that is one redeeming feature of the saga. It turns out that you can be too well connected; Enron was so enmeshed with the Bush administration that any bailout would have been politically disastrous. But it's missing the point to focus on Enron's eventual failure. The real issue is what Enron executives got away with during the good times. . . .
Mr. Lindsey and Mr. O'Neill would have us believe that all's well that ended badly; because Enron was allowed to fail, justice was done and the system worked. But Enron isn't a person; the evildoers here were Enron executives, who collectively walked off with at least $1.1 billion.
It's not just a matter of the utter unfairness of it all --- employees lose their life savings while crooked executives walk away rich. It's also a matter of what it takes to make capitalism work. Investors must be reasonably sure that reported profits are real, that executives won't use their positions to enrich themselves at the expense of stockholders and employees, that when insiders do abuse their positions their actions will be discovered and punished. Now we have seen a graphic demonstration that the system that was supposed to provide those assurances doesn't work. And nobody I know in the financial community thinks Enron was an isolated case.
Yet all the evidence suggests that the Bush administration doesn't get it. On
the contrary, until the latest revelations it was moving in the wrong direction.
Harvey Pitt, the new chairman of the Securities and Exchange Commission, made
his reputation as a lawyer who represented accounting firms --- including
Andersen --- in struggles to maintain auditor independence. Now we've seen what
Andersen did with that independence. The truth is that key institutions that
underpin our economic system have been corrupted. The only question that remains
is how far and how high the corruption extends.
BUSH CABINET MEMBERS
FAILED TO INFORM PRESIDENT
OF ENRON PHONE CALLS SEEKING AID
H. JOSEF HEBERT, ASSOCIATED PRESS: Two Bush Cabinet members said . . . that they neither considered intervening in Enron's spiral toward bankruptcy nor informed President Bush of requests for help from the fallen energy giant.
"Companies come and go. It's ... part of the genius of capitalism," said Treasury Secretary Paul O'Neill, when asked if he was surprised at the sudden collapse of Enron. The company's failure has left the one-time energy trading behemoth's stock virtually worthless and thousands of workers' pension funds in disarray. Last fall, a month before Enron declared bankruptcy, O'Neill received two telephone calls from Enron's chief executive, Kenneth Lay. Lay also called Commerce Secretary Don Evans at the time, seeking help to stem the collapse.
Neither O'Neill nor Evans said they informed President Bush of the telephone
calls specifically, but Evans said he frequently discussed Enron's situation
during general meetings with the president in November and December. Enron filed
for bankruptcy December 2. . . . .
ENRON ROUTINELY MISLED INVESTORS
CONCERNING ITS FINANCIAL POSITION
GRETCHEN MORGENSON, NEW YORK TIMES: For years, the Enron Corp. was known and admired as one of the nation's most innovative companies. Now, it looks as if the only innovations the company will be remembered for are the many labyrinthine schemes it used to mislead investors about its financial position.
It is not yet clear how early and often Enron substituted fantasy for reality in its reports to shareholders. But knowing the extent of the dishonesty is central to answering the question being asked by many people as they watched Enron implode. How could a company as big, profitable and powerful as Enron slide into oblivion so quickly?
Part of the answer is that Enron was neither as large nor as profitable as it claimed. But the company was a master of obfuscation in its financial statements, so investors were kept pretty much in the dark about its stature. For example, the company said it was a highly profitable enterprise. But a determined investor looking closely at its financial statements would have found that even in the California power crisis, when energy costs were in the stratosphere and profits should have rolled in, Enron was earning only one- half of one percent on its sales.
Another half-truth concerned Enron's appearance last year at No. 7 on the Fortune 500 list of largest American companies. The company's $101 billion in revenue placed it between the powerhouses Citigroup and IBM on the list. But it rose to that level only because energy trading companies can record as revenue the total amount of their transactions, rather than the profit made on each trade, as is typical at brokerage firms.
If viewed this way, Enron's revenue would have been $6.3 billion last year,
pushing it to the bottom half of the list, at No. 287. . . . .
MULTITUDE OF BUSH ADMINISTRATION OFFICIALS
FORMER ENRON PAID CONSULTANTS,
RECEIVED CAMPAIGN FUNDING, STOCK OWNERS
DANA MILBANK & GLENN KESSLER, WASHINGTON POST: As presidential candidate George W. Bush's top economic adviser in 2000, Lawrence B. Lindsey was also a paid consultant to Enron Corp. At one point, those two roles merged. For $50,000 a year, Lindsey attended meetings in 1999 and 2000 of the energy company's economic "advisory board." In those sessions, Enron Chairman Kenneth L. Lay convinced Lindsey of the wisdom behind one of Enron's businesses, a consulting operation that advised companies on energy efficiency.
"It stuck with me," Lindsey said in an interview . . . .
In fact, Lindsey incorporated Lay's ideas into the Bush campaign's energy policy. During the campaign, Lindsey described Lay's contribution as key. The cozy relationship --- in which a Bush campaign adviser, being paid by Enron, placed an Enron idea on the candidate's agenda --- served as one more reminder of the political influence and reach of the once-giant energy company. Its ties extend deep into President Bush's staff, appointments, Cabinet members, friends, family -- and his own past.
According to financial records, 35 administration officials have held Enron stock. A few, such as top Bush political adviser Karl Rove, had six-figure holdings. Several others --- Lindsey, U.S. Trade Representative Robert B. Zoellick, Commerce Department general counsel Theodore W. Kassinger, Maritime Administrator William G. Schubert --- served as paid Enron consultants. . . . .
Still others, such as Attorney General John D. Ashcroft and Energy Secretary Spencer Abraham, received campaign contributions from Enron, while many more --- including Securities and Exchange Commission Chairman Harvey L. Pitt, Federal Energy Regulatory Commission Chairman Patrick H. Wood III and Deputy Attorney General Larry D. Thompson --- have indirect ties to Enron or auditor Arthur Andersen. And Enron consulted on policy with top administration officials such as Commerce Secretary Donald L. Evans, Treasury Secretary Paul H. O'Neill and Vice President Cheney.
There has been no indication that the administration's ties to Enron are illegal, and the giant company had similar connections to several Democrats and Republicans in Congress. But the sheer volume of Enron connections to the executive branch offers a study in the long reach of a powerful campaign contributor and aggressive corporation. Though the administration says it made no effort to keep Enron afloat, the extensive ties between the two may present Bush with a political difficulty if Democrats can create a perception of guilt by association.
Enron began in 1985 as a traditional gas pipeline company, but transformed itself into an innovative trader of gas, electricity and other commodities. Its stock became a Wall Street favorite as it tried to enter markets for fiber-optics, movie rentals, paper, even advertising. Many of its businesses were regulated or otherwise affected by federal decisions. . . .
Bush last week played down his ties to Lay. He said he "first got to know Ken" in 1994, when "he was a supporter of Ann Richards," the Democratic Texas governor whom Bush ousted. In fact, Bush knew Lay from their work on the 1992 Republican National Convention and the Bush presidential library. The current president received $47,500 from Lay and his wife in 1994 --- many times what Richards received. Lay has said he supported Bush, not Richards, in 1994.
Over the years, Lay and Enron interests have contributed more than a half million dollars to Bush campaign funds, according to the Center for Public Integrity, making him Bush's greatest patron. The Bush presidential campaign reimbursed Enron for use of its corporate jets. Lay, who got the nickname "Kenny Boy" from Bush, served on Bush's presidential transition advisory team for the Energy Department. Enron employee Cynthia Sandherr served on the transition team for the Commerce Department. . . .
At the Justice Department, Ashcroft and staff chief David Ayres ---
Ashcroft's former campaign manager --- recused themselves from the Enron probe
because of Enron contributions to Ashcroft's campaign funds. The Justice
Department decided that deputy staff chief David Israelite and communications
director Barbara Comstock need not recuse themselves; both had worked for the
Republican National Committee, which received hundreds of thousands of dollars
from Enron. Thompson, Ashcroft's deputy, was a partner in a law firm, King &
Spalding, that represented Enron, but he disagreed with a Democratic lawmaker
who said Thompson should disqualify himself. . . . .
VP CHENEY, AIDES MET ENRON OFFICIALS
SIX TIMES BEFORE AND AFTER
BUSH ENERGY POLICY RELEASED
MIKE ALLEN, WASHINGTON POST: The White House told Congress in a letter released [January 8] that Vice President Cheney or his aides met six times with Enron Corp. representatives last year, including a session two months before the energy trading company made the largest corporate bankruptcy filing in American history. The meetings continued after President Bush released the energy policy that Cheney's staff had developed, according to the letter. Five of the meetings were with Cheney aides, and one was with the vice president. One of the staff meetings occurred six days before Enron announced actions that reduced its shareholder equity by $1.2 billion.
Cheney met for half an hour on April 17 with Kenneth L. Lay, Enron's chairman, according to a January 3 letter by David S. Addington, the vice president's counsel. The letter was written in response to a December 4 request by Rep. Henry A. Waxman (Dem.-California), ranking minority member of the House Committee on Government Reform, who released the correspondence.
Addington wrote that Cheney and Lay "discussed energy policy matters, including the energy crisis in California, and did not discuss information concerning the financial position of the Enron Corporation." Cheney's office has resisted inquiries into the operations of his energy policy task force by the General Accounting Office, the investigative arm of Congress, and by Senate Democrats who are hoping to measure Enron's influence on policy. . . . . .
[To be continued]