Bush, Cheney and Thomas White

by Gail Martin

"All right. Did you notice all the Enron stuff that everybody was asking about? Look what made it on the air -- the business-scandal side of it." -- White House Press Secretary Ari Fleischer to NBC's Tom Brokaw, January 17, 2002.

Bush and Enron

From 1989 to bankruptcy, Enron anted up nearly $6 million in campaign cash, mostly in soft money, with two-thirds of it going to Republicans. During the 1999-2000 election cycle, the company doled out $2 million, financing 71 senators, 186 representatives and, of course, the president.

Enron's contributions to George W. Bush, separate from contributions to the GOP, total $736,800 since 1993, earning Enron a spot as a top Bush contributor. For the 2000 campaign cycle and inaugural, Bush-Cheney took $424,300 from the company, which by then was well on its way to bankruptcy.

But Enron's checkbook influence over the White House wasn't just through campaign contributions to Bush-Cheney or other administration officials, such as Attorney General Ashcroft. Given that 35 administration officials have been Enron stockholders and others were paid employees and consultants, the company obviously had well-placed friends with vested interests in the company's success.

Representative Henry Waxman, a leader of the House Democrats' Enron investigation, characterized the Bush administration and Enron relationship as a "very intimate connection," and questioned how the administration could have not known about the troubles in the well-connected, vocal company.

Contributing to skepticism that ex-employees and friends of Enron in the administration didn't know about the company‚s problems was Enron's own well-deserved reputation for aggressive lobbying. Since bankruptcy, some former officials have detailed Enron's primary lobbying tool, the matrix, which compared the cost of a proposed regulation versus the cost of lobbying. The idea was simple enough -- if a change was to cost more than lobbying, it was worth mobilizing its army of lobbyists -- but the company's aggressive lobbying grew annoying on the Hill and to its own employees, who were pressured to make contributions and to be assertive. The White House has spun Enron as a business scandal that is not its problem. But given the company's massive donations, top-level alumni in the administration and history of aggressive lobbying, the White House will never be able to fully extricate itself from the company's problems.

BUSH:
In January, when confronted by the media about his relationship with Ken Lay, President Bush‚s made the oleaginous assertion that the Enron CEO "was a supporter of Ann Richards in my run in 1994." Although Richards received $12,500 from Enron sources in the gubernatorial race, Bush neglected to mention that he received $146,500 from Enron to oppose Richards, including $47,500 from Lay and his wife.

The longtime Lay association with the Bushes dates back to at least 1980, when Lay first contributed to the senior Bush's presidential campaign. Lay's support was passed from father to son, and he became a top donor to and fundraiser for then-Governor Bush.

Before Bush even assumed office in Texas, the Nation reports that he was the company‚s bag man for a pipeline privatization deal in Argentina in 1988.

With Lay's ongoing, substantial support came access to Bush, in both the Governor's Mansion and the White House.

In Texas, Lay used his access to lobby for utility deregulation, tort reform and corporate tax reductions, all policies that Bush supported. To move the deregulation agenda forward, Lay endorsed 32-year-old Pat Wood for the Texas Public Utility Commission, who Bush appointed and then promoted, after just four months, to chairman.

Soon after inauguration, and following years of almost monthly correspondence between the two, Bush invited Lay, who he nicknamed "Kenny Boy," to meet with him at the White House. Lay used his access to pass a list of recommendations for FERC appointments to Clay Johnson, Bush's personnel director. Bush acted on some of Lay's recommendations, promoting Lay's previous choice for PUC chairman, Pat Wood, to the FERC chairmanship, and installing Nora Brownell as a commissioner. Lay also met with Cheney, and other Enron executives had five meetings with the White House energy task force.

CHENEY:
Although the White House is keeping the details of its energy task force locked away from public view, it did admit that Cheney met in April 2001 with Enron CEO Ken Lay to discuss the White House energy policy. The White House also conceded that members of Cheney's energy task force met with Enron representatives five times from February to October 2001. If the vice president and his task force met with any other companies or environmentalists as frequently, he's not saying.

Also in April, Lay sent a memo to Cheney, listing eight priorities for the administration's energy policy. Cheney's staff said that only two of the eight Enron recommendations were used. Representative Henry Waxman disputed that claim, saying, "Notwithstanding statements from the vice president's staff, a careful analysis shows that seven of eight points mentioned in the memo are included in the White House energy proposal. It is clear Enron had a very strong influence on the White House energy plan."

Cheney, past chairman and CEO of Texas-based energy company Halliburton, is no stranger to Enron, and he calls Lay a friend.

The friendship no doubt prompted the vice president to intercede to help Enron's pullout from an ill-advised Indian power plant investment. Once Enron decided to cut its losses on the project, Lay demanded the Indian government buy the plant for $2.3 billion, threatening U.S. sanctions against India if it didn't pay up. Lay's threat hit a raw nerve in India, which was working to have the U.S. lift existing sanctions imposed in retribution for nuclear testing.

Cheney brought up the Enron buyout in a meeting with India's Congress Party leader in June 2001, which is also the last time Cheney said he talked to Lay. Originally, Enron was on the agenda for a November Bush meeting with Indian Prime Minister Vajpayee, but by then lobbying for Enron was taboo. The administration pursued the Enron buyout before and after the company crashed.

Secretary of State Colin Powell had raised the Enron issue with his Indian counterpart during an April meeting, saying, "failure to resolve the matter could have a serious deterrent effect on other investors." Undersecretary of State Alan Larson raised the issue at least twice, in October 2001 and again in January 2002, after the company filed bankruptcy.

In July 2001, while in India, Christina Rocca, assistant secretary of state for South Asian affairs, told officials that India's problems with attracting investment could be summed up with a five-letter word, "Enron." Echoing Powell's message, she said that until the Enron dispute was settled, there would be "a dark cloud over India's investment climate."

Representative Waxman has asked Cheney to explain why the only apparent change the White House made to the energy task force report was to add a recommendation to promote oil and gas production in India. Waxman also raised the charge that the investment recommendation was preconditioned on India meeting Enron's buyout demands.

THOMAS WHITE:
Cashing out with at least $25 million worth of Enron stock, and a promise of more in stock options and bonuses in the future, Thomas White resigned his $5.5 million a year salary, plus bonus, as vice chairman of Enron's energy services division and accepted a Bush appointment as secretary of the Army.

After 11 years managing Enron's energy contracts, White is now responsible for more than 1 million soldiers and civilian employees and an annual budget of approximately $70 billion. During his May 2001 Senate confirmation hearing, White listed four objectives: to invest in people, to assure readiness, to transform the entire Army and to adopt sound business practices.

Within weeks of his confirmation, White added another objective: privatizing the Army's energy supply. White wanted privatization to move faster, saying, "I see no reason whatsoever why the Army is in the energy business."

White's job at Enron was to win energy supply contracts, including at military bases. Since Congress first allowed privatization in 1997, only one base has contracted out for all its energy needs, and the contract went to White's Enron division.

The Enron energy unit White ran was an integral part of the broader scheme to hide Enron's unstable structure; company officials used dubious accounting for the unit's books to claim a profit and predict rising stock prices for Enron. So while the unit "was losing money on almost all the deals they had booked," according to a former employee, Enron claimed the unit was making a profit. The unit's losses could be over $500 million, but the company claimed a profit by counting future projected earnings as current income. The employee said the scheme was "common knowledge" and the unit's employees "joked" about it.

Enron management pushed the energy division to bring in new contracts to bolster claims of growth. To get contracts, the unit routinely made huge payments to new clients, taking losses in cash to gain contracts. In one case, the unit paid Eli Lilly and Co. $50 million upon signing a $1.3 billion contract in February 2001.

Separate from the improper accounting and questionable contracts, White was responsible for reducing clients‚ energy use, but the unit apparently never actually came close to delivering the promised cost-savings. One former executive who worked with White told the Washington Post that "so many big deals were being booked, but no one really made sense of the physical execution." The former Enron executive, who asked not to be named, said White didn't take delivering on the contracts seriously and that "Tom White ran around, shook hands, met high-level clients and just kind of coasted." Army Secretary White denies knowledge of any problems or irregularities with his Enron division.

If White didn't know anything about the division's troubles, Treasury Secretary Paul O'Neill might have some questions for him. "If you get paid the big bucks, you should know," O'Neill said at a February 2002 U.S. Chamber of Commerce event. "It's not okay to say, 'I wasn't trained in this' or 'I wasn't trained in that' or 'I relied on somebody else.' Responsibility and accountability, at the end of the day, means no excuses."

Between May 2001 and January 2002, White had seven meetings and 22 phone calls with Enron employees, including CEO Ken Lay. White says that he was never asked to intervene with the Bush administration on the company's behalf and that he did not do so.