WASHINGTON — Transformed in just one day from the nation's biggest bankruptcy to a major political controversy, some of the players in the Enron affair are already giving conflicting versions of who said what to whom.
Did Enron's Ken Lay ask for help or didn't he when he called Commerce Secretary Don Evans, Treasury Secretary Paul O'Neill and Fed Chairman Alan Greenspan in a four-day span in late October?
If Lay didn't ask for anything, why did he call?
"To give them a heads-up about the situation at Enron," company spokesman Mark Palmer said.
"At no time did he ask for any assistance from the government nor did he intend to leave any impression that he was asking for assistance," said Palmer.
Evans's memory of his Oct. 29 phone call is that Lay said "I would appreciate any support you could give."
"I did nothing" and the decision to do nothing "was a no-brainer," Evans said in a brief interview Thursday with The Associated Press.
O'Neill insists Lay didn't ask for anything, but the context of their conversation is intriguing because the two men discussed another financial disaster in which Greenspan's intervention was very much in evidence, the near-failure in 1998 of a Connecticut-based hedge fund, Long Term Capital Management.
Greenspan's spokesman, Dave Skidmore, declined to say whether Lay asked for anything.
Evans said the context for the call from Lay was the ongoing review of Enron's financial status by Moody's, the bond-rating firm.
A severe lowering of Houston-based Enron's bond rating would mean that $3.9 billion in company debt would come due. Enron would have to pay what it owed in cash if it could not pay in stock, which was plummeting in value.
Palmer, the Enron spokesman, says he doesn't know whether the Moody's review was the subject of the Lay-Evans conversation but that the company was concerned because the bond-rating firm was taking a long time "and we were wanting a decision."
In the end, Moody's dropped Enron's rating, creating still more trouble for the world's largest energy trader as it headed toward collapse. The company went to bankruptcy court on Dec. 2.
Lay spoke to Evans the day after a Sunday, Oct. 28, phone call with O'Neill and a phone call the previous Friday with Greenspan.
"The chairman did nothing in response to the call. It would have been inappropriate," said Skidmore, the Greenspan spokesman.
Skidmore refused to discuss the contents of the Greenspan call, but in one of Lay's two conversations with O'Neill, the discussion turned to the case of the Connecticut hedge fund that had been in danger of failure until Greenspan and other Federal Reserve officials pressured several large financial institutions to bail it out.
Fed officials feared severe harm to the country's financial system if Long Term Capital Management had been allowed to crumble. It nearly tanked during the Asian financial crisis in the fall of 1998.
O'Neill "expressed his concern about the experience that Long Term Capital went through when Long Term Capital went bankrupt," said White House spokesman Ari Fleischer.
In an interview with CNBC, O'Neill said that after one of their conversations, "I subsequently asked the undersecretary of the Treasury to speak with the Enron people, which he did, so we could satisfy ourselves that the Enron affairs were not going to have a negative impact on the U.S. capital markets."
So why did Lay make the flurry of calls if he didn't want anything?
He "just felt an obligation to give them information important to the markets and perhaps to the government," said Palmer.
While the information may have been important, the only action resulting from it appears to have been a decision by the two Cabinet secretaries not to tell President Bush. With Lay at the helm, Enron and its executives had been George W. Bush's most generous campaign donors over the course of two Texas governor's races and the presidential campaign.
When did Bush find out of the conversations between Lay, Evans and O'Neill?
"This morning," Fleischer said Thursday.