Enron went to Bush officials for help

By Tom Raum

Associated Press

WASHINGTON – Enron sought the Bush administration’s intervention with banks in an effort late last year to stop the company’s spiral into bankruptcy, the Treasury Department disclosed Friday as the White House worked to control political fallout from a widening investigation.

“This dog won’t hunt. That’s a reference to the politics of it,” said presidential spokesman Ari Fleischer amid the latest information on the collapse of the Houston-based energy conglomerate.

Enron President Lawrence “Greg” Whalley telephoned Treasury’s undersecretary for domestic finance, Peter Fisher, “six to eight times” in late October and early November, said department spokeswoman Michele Davis.

It was the first indication that the energy trading firm, which has ties to many top Bush administration officials, had asked for government intervention as it faced collapse.

“As Enron’s negotiations with its bankers for an extension of credit neared a decision point, the president of Enron asked Undersecretary Fisher to call the banks,” Davis said.

Fisher “inferred he was being asked to encourage the banks to extend credit. He made no such calls,” she said.

The announcement followed disclosures that Enron chairman Kenneth Lay, one of Bush’s biggest political contributors, had called Treasury Secretary Paul O’Neill, Commerce Secretary Don Evans and Federal Reserve Chairman Alan Greenspan in the days leading up to the biggest bankruptcy filing in U.S. history last fall.

Administration officials have denied that any government aid was extended to the beleaguered company.

Democrats, seeing the disclosures as an opportunity to chip away at Bush’s high approval ratings, are emphasizing the close ties between Enron and administration officials and the impact of the failure on Enron employees.

Thousands of workers were laid off and many saw their retirement nest eggs vanish when Enron stock plunged in advance of the Dec. 2 bankruptcy filing of the nation’s seventh-largest company.

White House officials worked Friday to try to limit the damage and to put distance between the president and the Enron chief.

“This needs to be fully investigated to determine if there was any criminal wrongdoing by Enron,” Fleischer said.

He said the president also is pressing for a review of rules governing 401(k) retirement plans such as those at Enron.

“If anybody else wants to focus on politics, that’s their prerogative. But the president’s focus is on getting to the bottom of this fully,” Fleischer said aboard Air Force One on a presidential trip to Pennsylvania.

Meanwhile, senior Bush adviser Karl Rove offered his view of the relationship between Bush and Lay. “The president knows him. He is a friend. But the idea that he is a friend in the sense that this is a guy who’s a close intimate is just ludicrous,” Rove said.

When Bush was the governor of Texas, Lay was chairman of the governor’s business council. “They had quarterly meetings and he’d come in and talk to the then-governor about what it was they hoped to achieve at the meeting and they’d go over the agenda,” Rove said.

Bush has described Lay as “a supporter.” He said he saw Lay twice last year, but they did not discuss Enron’s finances.

In a joint statement, O’Neill, Evans and Labor Secretary Elaine Chao said they were following up on Bush’s directive to review retirement program rules. They said they were directing staff to begin analyzing the effectiveness of measures meant to protect retirement savings.

Separately, O’Neill said that Lay’s call to him in October was to “give me a heads up” rather than to ask for specific government help.

“It’s the kind of thing I would expect any big company executive to do if they understood how the government works and that the Treasury Department has some responsibility to make sure the world capital markets are not unsettled by events that are going on in the private sector,” O’Neill told ABC’s “Good Morning America.”

“I thought it was business as usual,” O’Neill added.

Meanwhile, investigators for the Senate Governmental Affairs permanent subcommittee on investigations modified its subpoena to the accounting firm that audited Enron’s books, Arthur Andersen LLP, to include all documents related to the destruction of Enron records.

The auditing firm said Thursday that its employees had destroyed a “significant but undetermined” number of Enron financial documents.

The Senate panel, conducting one of five congressional inquiries, had issued 51 subpoenas as of Friday. The House Energy and Commerce Committee gave Arthur Andersen until Monday to provide it with all records and files related to the destruction of the Enron documents.

And Rep. Henry Waxman of California, senior Democrat on the House Government Reform Committee, wrote to O’Neill and Evans requesting information on their contacts with Enron and demanding to know “why the administration apparently did nothing to mitigate the harm of the Enron bankruptcy to thousands of its employees and shareholders.”

The collapse is also being investigated by the Justice and Labor departments and the Securities and Exchange Commission.

Meanwhile, an Army spokesman said Friday that Army Secretary Thomas White – who was Enron’s vice chairman before his Pentagon appointment – has not talked with company officials since he took office last May 31. “That’s a part of his past now,” said the spokesman, Col. Jim Allen. “He’s had no contact with Enron in a business sense.”

White’s financial disclosure reports, written last year before the worst of Enron’s stock crash, valued his company stock and options at between $50 million and $100 million. White sold all of his Enron stock to comply with federal ethics rules.

Copyright ©2002 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Local News

Customers enter and exit the Costco on Dec. 2, 2022, in Lake Stevens. (Olivia Vanni / The Herald)
Costco stores could be impacted by looming truck driver strike threat

Truck drivers who deliver groceries and produce to Costco warehouses… Continue reading

Two Washington State ferries pass along the route between Mukilteo and Clinton as scuba divers swim near the shore Sunday, Oct. 22, 2023, in Mukilteo, Washington. (Ryan Berry / The Herald)
Ferry system increases ridership by a half million in 2024

Edmonds-Kingston route remains second-busiest route in the system.

Pharmacist Nisha Mathew prepares a Pfizer COVID booster shot for a patient at Bartell Drugs on Broadway on Saturday, Oct. 1, 2022, in Everett, Washington. (Ryan Berry / The Herald)
Everett lawmakers back universal health care bill, introduced in Olympia

Proponents say providing health care for all is a “fundamental human right.” Opponents worry about the cost of implementing it.

Outside of the updated section of Lake Stevens High School on Thursday, Feb. 27, 2020 in Lake Stevens, Wa. (Olivia Vanni / The Herald)
Lake Stevens, Arlington school measures on Feb. 11 ballot

A bond in Lake Stevens and a levy in Arlington would be used to build new schools.

Lake Stevens Sewer District wastewater treatment plant. (Lake Stevens Sewer District)
Lake Stevens sewer district trial delayed until April

The dispute began in 2021 and centers around when the city can take over the district.

Robin Cain with 50 of her marathon medals hanging on a display board she made with her father on Thursday, Jan. 2, 2025 in Lake Stevens, Washington. (Olivia Vanni / The Herald)
Running a marathon is hard. She ran one in every state.

Robin Cain, of Lake Stevens, is one of only a few thousand people to ever achieve the feat.

People line up to grab food at the Everett Recovery Cafe on Wednesday, Dec. 4, 2024 in Everett, Washington. (Olivia Vanni / The Herald)
Coffee, meals and compassion are free at the Everett Recovery Cafe

The free, membership-based day center offers free coffee and meals and more importantly, camaraderie and recovery support.

Devani Padron, left, Daisy Ramos perform during dance class at Mari's Place Monday afternoon in Everett on July 13, 2016. (Kevin Clark / The Herald)
Mari’s Place helps children build confidence and design a better future

The Everett-based nonprofit offers free and low-cost classes in art, music, theater and dance for children ages 5 to 14.

The Everett Wastewater Treatment Plant along the Snohomish River on Thursday, June 16, 2022 in Everett, Washington. (Olivia Vanni / The Herald)
Everett water, sewer rates could jump 43% by 2028

The rate hikes would pay for improvements to the city’s sewer infrastructure.

The bond funded new track and field at Northshore Middle School on Thursday, Oct. 24, 2024 in Bothell, Washington. (Courtesy of Northshore School District)
Northshore School District bond improvements underway

The $425 million bond is funding new track and field complexes, playgrounds and phase one of two school replacements.

A salmon carcass lays across willow branches in Edgecomb Creek on Thursday, Jan. 30, 2025 in Arlington, Washington. (Olivia Vanni / The Herald)
Tribes: State fish passage projects knock down barriers for local efforts

Court-ordered projects have sparked collaboration for salmon habitat restoration

The Everett Municipal Building on Thursday, Feb. 29, 2024 in Everett, Washington. (Annie Barker / The Herald)
Everett council approves $111 million construction of sewer project

The Port Gardner Storage Facility, in the works for more than a decade, will help prevent overflows of the city sewer system.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.