Army Chief Faces Enron Questions

Army Secretary Thomas White voiced deep regret Thursday for damage to employees and shareholders in the collapse of Enron Corp., where he served for 11 years as an executive.

But in sometimes testy exchanges with skeptical senators, White repeatedly denied any role in manipulating California electricity prices.

"I am ashamed of what happened to that corporation and the damage that it has done to all of us," White said, testifying voluntarily and under oath before the Senate Commerce Committee.

He told senators he shared their outrage and their desire "to hold people accountable who were responsible for it."

The bankruptcy of the Houston-based energy-trading company was "an absolute terrible tragedy that has occurred," he said.

But White told the panel he was unaware of transactions detailed in a December 2000 Enron memo that spelled out strategies which critics say were meant to improperly take advantage of California's power shortages.

"I can categorically say that it was not ever in the interest of (his division of Enron) to see wholesale energy prices escalate," said White.

At one point, banging his pen on the witness table, White told the committee: "I am responsible for the portion of that company that I ran. ...The deals that we put together, within the accounting structure that was the standard in the industry, I stand behind."

White was vice chairman of an Enron subsidiary called Enron Energy Services, which critics say engaged in questionable electricity trading that helped drive up power prices during the 2000-2001 California power crisis.

"We were not in the California power market for the sake of buying and selling and swapping and trading and whatever else electricity," White said. "We were there to serve retail customers."

Sen. Barbara Boxer, D-Calif., challenged him. "I never saw so many smart people running away from the truth," Boxer said.

"I'm not running from the truth," White retorted. "I'm telling you how it ran."

Boxer pointed to a chart showing the steep climb in the price of California electricity during the crisis. "It went straight up to the sky. And our state almost went bust. So it didn't work out the way you hoped," she said.

Sen. Byron Dorgan, D-N.D., said he found it hard to believe that those in White's division were unaware of what other divisions of Enron were doing in attempting to allegedly manipulate electricity prices.

"It's all part of the Enron Corporation. You're all kissing cousins here," Dorgan said.

Panel members complained that White had made roughly $50 million in salary in his 11 years with Enron, and another $12 million when he sold stock last year, while many employees and shareholders had seen pension plans and investments become worthless.

Sen. John McCain of Arizona, the committee's senior Republican, said the wave of corporate accounting scandals that began with Enron "has shaken the confidence of every American."

"I, like thousands of other people, have been appalled and outraged," White said. But he said that in his early days at Enron, he was proud to work there, and saw no hints of its impending doom. "This was a corporation rated `most innovative in the country' six years in a row by Fortune Magazine," he said.

The committee is looking into White's tenure, particularly during the California energy crisis, and his contacts with officials after he became Army secretary.

After joining the Bush administration in May 2001, White spoke dozens of times to his former colleagues at Enron.

Most of the calls came around the time of Enron's collapse late last year. He has said that no sensitive information was exchanged during the calls and that he was not asked for — and did not offer

Bush administration aid as the company headed toward bankruptcy.

White told the panel that he was "appearing here voluntarily." Asked if he had considered invoking his Fifth Amendment Right to silence, he said he had not.

Since becoming Army Secretary, "I have done everything possible to advance the interests of the country and the Army I love," said White, who had a long Army career before joining Enron.