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Enron's network of influence

Print edition : Feb 16, 2002 T+T-

DURING his 15-year tenure at Enron, Chief Executive Officer Kenneth Lay cultivated a set of allies, lobbyists and friends in high places across the United States. Enron's political action committee and its executives contributed nearly $114,000 to George W. Bush's 2000 presidential campaign, putting Lay and Enron among Bush's biggest supporters.

According to a recent report, as many as 35 officials in the Bush administration have held Enron stock at one time or another. However, Enron's political connections were truly bipartisan - it was well connected with powerful Democrats as well. Indeed, so extensive have Enron's connections been that virtually none of the several key congressional committees probing the affair would be able to summon a majority if Enron-tainted representatives were to be excluded from them.

Noted economist Paul Krugman, who has evoked images of American-style crony capitalism in the wake of Enron's stunning collapse, is said to have received $50,000 in 1999 for being a consultant to Enron. Here are a few of Enron's important connections:

Wendy Gramm: A member of the Enron board's audit committee. In the aftermath of the collapse she would have to explain how the firm's network of subsidiaries and private partnerships with some of its own executives were used to remove debt from its balance sheet. Wendy Gramm headed the Commodities Futures Trading Commission (CFTC), which regulates commodity futures and options markets in oil, natural gas, and a range of financial instruments.

Ron Brown: Commerce Secretary during President Clinton's first term, Brown took Lay on his 1995 tour of India. During the 1991-92 election cycle, Enron gave nearly $30,000 to Democratic Party committees while Brown served as the chairman of the Democratic National Committee. Enron gave $42,000 to the Democratic Party in the 1993-94 election cycle.

Thomas White: Now Secretary of the Army at the Pentagon, White served as Enron's vice-president and owned up to $100 million in company stock, which he sold in 2001 as required by federal ethics rules. Democrats are seeking information on whether White has had any contact with Enron executives after becoming Army Secretary.

Robert Rubin: Treasury Secretary in the Clinton Administration, Rubin, one of Enron's prime lenders, is now a senior executive at Citigroup. Rubin called Treasury Under-Secretary Peter Fisher during the run-up to the Enron collapse, suggesting that Fisher ask credit-rating agencies such as Moody's if they could avoid downgrading Enron's debt. Fisher refused to do that.

Karl Rove: The President's political adviser, Rove owned more than $100,000 worth of Enron stock, which he sold in 2001 as required by federal ethics rules. He had conferred by phone with Enron CEO Lay on energy policy and the appointment of an Enron-backed candidate to the Federal Energy Regulatory Commission (FERC).

Elizabeth Moler: Second-ranking official in the Energy Department and former head of the FERC in the Clinton Administration, Moler became a lobbyist for Enron in 1999.

Marc Racicot: Former governor of Montana who became a Bush advisor in the 2000 presidential campaign and then moved to Washington to lobby for clients, including Enron. Racicot recently announced he would cease lobbying while serving as the new chairman of the Republican National Committee.

Linda Robertson: A top Clinton administration Treasury Department official, Robertson became Enron's chief lobbyist in Washington.

Don Evans: On October 29, Lay called his "friend", Commerce Secretary Don Evans, to see if Evans might put in a good word on Enron's behalf with credit-rating agencies such as Standard & Poor's. Evans listened, but declined to intercede. On October 25, two credit-rating firms, Fitch and Standard & Poor's, had downgraded Enron or put it on watch list for possible downgrade.

John Ashcroft: Attorney General in the Bush Administration. Enron's political action committee and its executives donated $57,499 to Ashcroft's campaign during his unsuccessful bid for re-election to the Senate in 2000. Ashcroft and his chief of staff David Ayres have recused themselves from taking any part in the Department of Justice investigation of possible fraud by the company and its executives.

Former President George H.W. Bush: The 41st president and the father of the 43rd, Bush knew Lay from Lay's work as co-chairman of the 1992 Republican National Convention host committee in Houston. Lay and Enron also contributed $13,000 to the elder Bush's 1992 presidential campaign.

Vice-President Dick Cheney: Bush appointed Cheney to head his Energy Policy Task Force in 2001. Cheney met Lay to discuss energy policy, and Enron executives met members of the task force six times.

President George W. Bush: As a presidential candidate, Bush received nearly $114,000 in contributions from Enron and its employees, making the company one of his top financial backers. Enron and its executives also chipped in $200,000 to help pay for the Bush inaugural festivities in January 2001.

Treasury Secretary Paul O'Neill: Lay telephoned O'Neill on October 28 and November 8, 2001, to tell him that Enron was headed for bankruptcy and apparently to warn O'Neill that Enron's collapse could have a dire effect on the entire U.S. financial system. O'Neill took no action to help the company, according to White House spokesman Ari Fleischer.

Lawrence Lindsey: Now President Bush's chief economic adviser, Lindsey once served as a consultant to Enron, getting paid $50,000 a year for his work.

Robert Zoellick: U.S. Trade Representative Robert Zoellick, responsible for U.S. inputs in the General Agreement on Trade in Services at the World Trade Organisation, has reportedly been the recipient of a $50,000 "advisory fee" from Enron.

James Baker: Former U.S. Secretary of State, Baker is on Enron's payroll as an adviser on overseas projects and international negotiations.

Robert Mosbacher: Former Secretary of Commerce, Mosbacher is an adviser on overseas projects and international negotiations.

Enron's Board includes Charles Walker, former U.S. Deputy Treasury Secretary; John Wakwham, former British Secretary of State for Energy, who specialises in providing advice on European businesses; and Frank Wisner, former U.S. Ambassador to India.