Bush's first big scandal rises from the ashes of Enron

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Title: Bush's first big scandal rises from the ashes of Enron
Author: rich@math.missouri.edu (Rich Winkel)
Date: 8 Jan 2002 19:24:41 -0600

Bush's first big scandal rises from the ashes of Enron

 By Rupert Cornwell in
 Washington

 06 January 2002

It may not yet quite be the "cancer on the presidency" of which
John Dean warned Richard Nixon in the early days of Watergate. But
the collapse of the energy conglomerate Enron is suddenly shaping
up as big, big trouble for George Bush.

All the ingredients of a classic Washington scandal are there: the
biggest corporate failure in history, a chief executive on such
good terms with George Bush that the President refers to him as
"Kenny Boy" and a history of massive contributions by the Houston-based
Enron to the White House campaigns of Bush the father and Bush the
son.
lay-kenneth.jpg (4588 bytes)"Kenny Boy"
The final element fell into place last week with the announcement
of a full-scale Senate investigation, complete with subpoenas for
top Enron executives including Kenneth Lay (aka "Kenny Boy"),
representatives of the Arthur Andersen accounting firm which
singularly failed to spot the impending disaster, and perhaps senior
figures in the Bush administration as well.

Even the cast of characters is comfortingly familiar. Enron's lead
attorney, for instance, is Robert Bennett, the $500-an-hour DC
superlawyer who featured in Washington's most recent presidential
scandal when he represented Bill Clinton in the Paula Jones sexual
harassment suit. That led directly to the Monica Lewinsky saga.

By any yardstick, Enron is a massive financial scandal, a tale of
concealed debt and shell companies, incompetent auditing and scanty
regulatory oversight - not to mention the sudden impoverishment of
thousands of employees obliged to hold their pension savings in
now worthless Enron shares, even as senior executives cashed in
stock and stock options for up to $1bn (700m) during 2000 and 2001.

Until now, however, Enron has been the dog which failed to bark -
or, more exactly, was ignored as the media concentrated on Afghanistan
and barely dared mention such goings-on as the presidential approval
ratings hovered around the 90 per cent mark. Enron unravelled in
November, but not until 28 December was Mr Bush first asked about
the debacle. All that is about to change as the news focus starts
to shift from the anti-terror campaign to domestic politics. Not
only is this a mid-term election year in which the Democrats need
just half-a-dozen seats to recapture the House of Representatives,
but thoughts are already turning to the 2004 White House race. In
all these calculations, Enron could prove a factor.

Already, at least three Congressional committees have been sniffing
around the affair. But the main investigation will be conducted by
the Senate's governmental affairs committee, headed by the Democrat
Joe Lieberman of Connecticut.  Mr Lieberman, it will not be forgotten,
was Al Gore's vice-presidential running mate last time and is is
widely believed to have ambitions for the top job in 2004.
lieberman.gif (4901 bytes)

Thus far, Mr Lieberman has followed the Washington scandal script
to a T. Echoing investigators of Watergate, Iran-Contra and Whitewater
before him, he promises solemnly that his probe will be even-handed,
"a search for the truth, not a witchhunt". But, he warns, "we're
going to go wherever the search takes us". If so, it could be a
most interesting journey.

Enron has been a fountain of money for politicians of every hue.
Since 1990, according to the Center for Responsive Politics, which
monitors such donations, it has made campaign contributions of
$5.8m (4m), three-quarters of it to Republicans. The biggest single
beneficiaries, unsurprisingly, have been the two Texas senators,
Kay Bailey Hutchinson and Phil Gramm, whose wife Wendy sits on the
Enron board.

Like most big corporate donors, it has hedged its bets. On Capitol
Hill, 71 of the 100 current senators and nearly half the 435
congressmen have received contributions. The investment paid off
with a vengeance, when Enron secured exemption for its energy
derivatives business under a 2000 Act regulating commodity futures
trading. But the Bush family has been a special object of its
attentions. Mr Lay was listed by the Bush-Cheney campaign as one
of the "Pioneers" who raised at least $100,000 (70,000) for the
election, while Enron gave $100,000 to the inauguration gala, a
contribution matched by "Kenny Boy" and his wife.

Potentially most damaging is its possible backstage role in the
formulation of Mr Bush's energy policy. At least four Enron
consultants and executives have done work for the administration.
A champion of the deregulation favoured by the White House, Mr Lay
was a frequent informal adviser to the panel under the Vice-President,
Dick Cheney, which drew up a national energy strategy.

"We've got to ask whether the advice tendered was self-serving,"
Mr Lieberman says. Or, to put it more bluntly, were the Texan oilman
in the White House and the Texan energy baron in Houston running
a mutual benefit society? These questions can no longer escape an
answer.
http://www.thenation.com/blogs/thebeat?bid=1&pid=86743 

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