Politics

Enron Had Cheney's Ear

By CBSNews.com staff CBSNews.com staff

January 8, 2002 / 8:20 PM EST / CBS

Enron Corp. representatives met six times with U.S. Vice President Dick Cheney or his aides on the nation's energy policy, including a discussion in mid-October just before the company's sudden collapse.

In a letter to Congress, vice presidential counsel David Addington disclosed the number of meetings between the White House and the former energy giant whose CEO, Ken Lay, has been among President George W. Bush's top political supporters. The company entered into the largest bankruptcy in U.S. history on Dec. 2.

Rep. Henry Waxman, a California Democrat, released the White House's Jan. 3 letter on Tuesday. He is seeking details of the meetings and information about any telephone calls or e-mails between the vice president's office and Enron.

"Mr. Addington's letter is a recognition that Congress and the public have a legitimate interest in learning about contacts between Enron executives and the White House," Waxman said in a letter to Cheney.

For the past nine months, Cheney had refused to tell congressional Democrats Waxman and Rep. John Dingell of Michigan which power industry executives and lobbyists met with Cheney and his energy task force. The task force last May recommended expanded oil and gas drilling on public land and a rejuvenated nuclear power system.

The task force went out of existence Sept. 30.

"An employee of the vice president's staff ... met on Oct. 10, 2001, with Enron representatives and reports that they discussed energy policy matters and did not discuss information concerning the financial position of the Enron Corp.," the letter from Cheney's counsel said.

On Oct. 16, Enron announced huge losses, the first in a series of admissions that eventually drove down the price of the company's stock to less than a dollar a share.

Thousands of Enron employees have lost their jobs and much of their retirement savings in the collapse.

Addington said Enron's financial condition wasn't discussed at any of the earlier five meetings.

"These meetings began on Feb. 22, just over a month after the start of the Bush administration," Waxman said. "They ended on Oct. 10, just six days before Enron announced the $1.2 billion in reduction in shareholder equity." Waxman urged an accounting of the contacts between Enron and other White House officials in addition to the energy task force.

The White House letter says the other meetings between Cheney's aides and Enron officials occurred on March 7, April 9 and Aug. 7. The April 9 meeting was with two dozen representatives of utilities, including Enron. The Aug. 7 meeting was with officials of an Enron German subsidiary.

Addington said that in their private meeting in April, Lay and Cheney discussed "energy policy matters, including the energy crisis in California."

In his reply to Cheney, Waxman noted that the day after the Lay-Cheney meeting, the vice president told a reporter he opposed the imposition of federal price caps on wholesale energy sales in Calfornia -- something that, Waxman observed, Enron also strongly opposed.

The White House disclosures about Enron were prompted by a Dec. 4 letter from Waxman.

Enron spokesman Vance Meyer said the company has always acknowledged discussions with the vice president and his staff and that Enron, like other companies, has meetings with any number of policy-makers during the normal course of business. Asked about the administration's decision to identify the Enron meetings, White House spokeswoman Claire Buchan said that "we always cooperate with members of Congress provided they are not getting into open-ended investigations and fishing expeditions."

Enron sought protection from its creditors in bankruptcy court Dec. 2 amid revelations that questionable partnerships had helped keep billions of dollars in debt off its books. The company acknowledged it overstated profits for four years.

One official on the Cheney energy task force, Lawrence Lindsay, served on an Enron advisory board in 2000, and Bush political adviser Karl Rove sold stock in the company in June.

Lindsay received $50,000 from Enron, according to his financial disclosure form.

Rove owned $68,000 worth of Enron stock when he spoke to Lay about a prospective appointee to the Federal Energy Regulatory Commission.

The Center for Public Integrity says that Bush received $146,500 from Enron executives during his two races for Texas governor, with Lay responsible for $122,500 of the total. Enron directors and employees have given $623,000 to Bush during his political career, the center adds. Lay was one of Bush's "Pioneers" who raised at least $100,000 for the candidate during the presidential campaign. Lay contributed to the Florida recount and gave $100,000 to the Bush Inaugural.