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News analysis: Enron saga could sully White House

SHARE News analysis: Enron saga could sully White House

WASHINGTON — The rapidly exploding Enron saga presents all the elements of earlier Washington scandals, including carefully phrased denials and accusations of improper influence. And in a matter of hours on Thursday, it sent the White House into a full-scale effort to contain the potential damage to President Bush at a time when he wants to focus on the war on terrorism and the flagging economy.

The White House spent much of the day trying to distance the president from a torrent of bad news about the fall of the Houston energy conglomerate.


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Enron

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Although no one has suggested that Bush has done anything wrong, the connections between his presidency and Enron are uncomfortably close. The company's chairman, Kenneth L. Lay, has been a close friend of Bush for many years, and Lay and other Enron executives have contributed more to Bush over his political career than anyone else — an amount exceeding $550,000.

Those connections were made vividly clear on Thursday when the White House disclosed that Lay sought government aid last fall from Treasury Secretary Paul O'Neill and from Bush's best friend and presidential campaign chairman, Commerce Secretary Donald L. Evans.

The day began with Bush expressing sympathy for Enron employees whose retirement accounts were wiped out by the collapse of the company's stock, and ended with calls from Congress for a criminal investigation of the company's auditors for destroying documents.

Throughout the day, White House officials denied that Bush had been aware of the company's precarious finances or had ever been asked to come to Enron's rescue.

But on Capitol Hill, Democrats were already beginning to ask of the president, "What did he know and when did he know it?" And questions were being raised about whether the criminal inquiry should be led by a special counsel rather than by the Justice Department, because Attorney General John Ashcroft received $57,499 in campaign contributions from Enron and Lay, according to the Center for Responsive Politics.

Ashcroft, as well as his chief of staff, recused themselves from the criminal investigation that will attempt to determine whether the company or its executives committed fraud before Enron went bankrupt. But critics still questioned whether the department, which includes many other political appointees, could independently investigate the company. Just as Enron's collapse was stunning because it occurred so quickly and so completely, the latest disclosures have reawakened Washington's now-familiar scandal machinery, which had remained practically dormant since Sept. 11. Washington may once again face months, if not years, of yet another investigation of the White House featuring the volatile mix of money, influence, access and politics.

All the elements of a classic political scandal are here: A Texas corporation, led by Bush's most generous campaign contributor, files the largest bankruptcy petition in American history. A handful of Enron executives are able to sell $1 billion worth of the company's stock before its collapse, but thousands of employees are barred from selling, losing their life's savings and their retirement accounts.

And just this week, the White House disclosed that Enron executives, and its chairman, had meetings and discussions with Cabinet members, White House officials and Vice President Dick Cheney before and during the corporation's implosion.

On top of everything else, the accounting firm that audited Enron's books, Arthur Andersen LLP, disclosed on Thursday that a "significant but undetermined" number of documents related to the company had been destroyed.

"This is the perfect storm," said Phil Schiliro, the press secretary for Rep. Henry A. Waxman, D-Calif. "It's the biggest bankruptcy in American corporate history — a bankruptcy where a small number of executives enriched themselves to the tune of hundreds of millions of dollars while thousands of employees were left with worthless stock. And in 2001, Enron is the most influential company in Washington. When you piece it all together, there are many questions that need to be answered."

Bush said on Thursday that he had never discussed Enron's financial woes with Lay, who has supported Bush politically since his unsuccessful campaign for Congress in 1978. Bush said he last saw Lay in Texas at an April 30 fund-raiser for former first lady Barbara Bush's literacy foundation. At the time, Enron's share price was nearly $60 a share; its closing price on Thursday was 67 cents per share.

Both Republicans and Democrats on Capitol Hill have pledged to work together to get to the bottom of the matter. But some Democratic officials expressed glee that questions about White House influence-peddling seemed to be emerging as a major political story of 2002.

"If their goal was to give this story a head of steam, they have succeeded," Jennifer Palmieri, the press secretary of the Democratic National Committee, said of the White House's handling of the Enron issue. "I think they are very spooked by this."

Five separate congressional committees have sent out subpoenas on the Enron matter. The first of many congressional hearings expected this year is scheduled for Jan. 24 by the Senate Government Affairs Committee, which is chaired by Sen. Joe Lieberman, D-Conn., who may be thinking of running for president in 2004.

Just as the committees and the media are gearing up for what promises to be an inquiry that could last months, if not years, the principals have hired lawyers with golden tongues and lengthy scandal experience.

Among them is Robert S. Bennett, the Washington lawyer who represented President Bill Clinton in the Paula Jones matter. Bennett, who is now Enron's lead Washington lawyer, said on Thursday that he welcomed the criminal inquiry because it would "bring light to the facts." But he also warned that the congressional inquiries could easily degenerate into a "circus atmosphere."