[eDebate] w admin did anal w lay+enron
Mon May 29 15:23:10 CDT 2006
George W. Bush and Kenneth Lay
????By Jason Leopold
????t r u t h o u t | Report
????Monday 29 May 2006
????The Bush administration knew Enron was on a collision course two months
before the high-flying energy company collapsed in a wave of accounting
scandals that wiped out $60 billion in shareholder value and left thousands
of company employees penniless.
????It was August 15, 2001, when Enron lobbyist Pat Shortridge met with
then-White House Economic Adviser Robert McNally, one day after Jeff
Skilling made a stunning announcement that he was stepping down as president
????Shortridge confided in McNally that Enron was headed for a financial
meltdown - one that could very well cripple the country's energy markets -
and urged the White House economic adviser to alert President Bush about the
company's financial problems so he could help put together a federal
bailout, according to thousands of pages of documents about the meeting
released by the government's Enron Task Force.
????It certainly made sense for Enron to seek help from the White House. In
August of 2001, Ken Lay was still known as "Kenny Boy" to President Bush, a
nickname Bush bestowed upon him when the two men were up and comers in the
Texas energy and political industries respectively.
????When Bush announced his intention to run for president, Enron and its
employees gave more than $1 million to Bush's 2000 election campaign, the
Republican Party and the Bush Inaugural, and Bush aides used the Enron
corporate jet during the post-election fracas in Florida.
????With Thursday's guilty verdicts against Lay and Skilling on numerous
counts of accounting fraud, conspiracy, and dozens of other charges, perhaps
Enron should be remembered as - in addition to a symbol of greed - the first
in what has become a long list of scandals that can be directly linked to
the White House.
????Back in 2002, White House spokeswoman Anne Womack pointed out that the
McNally/Shortridge meeting was acknowledged by the White House on May 22,
2002, in documents released to reporters and Senator Joe Lieberman, D-Conn.
????In those documents, it was noted that "Mr. McNally met with Mr.
Shortridge and another individual who was not from Enron." Asked whether
Enron's future had been discussed, Womack said, "If the meeting was about
that, I would assume there wouldn't be anyone else there besides Mr. McNally
and Mr. Shortridge."
????To this day, no one knows exactly what happened after the meeting
between Shortridge and McNally in the summer of 2001. President Bush has
never answered questions about what he knew and when he knew it and whether
he took steps to save the company's long-time employees from losing their
????One thing is for certain, however: once Enron's accounting machinations
became public in October 2001, the Bush administration wasted no time in
covering up its close ties with the energy company.
????In late 2001, Alberto Gonzales, who at the time was Bush's chief
counsel, refused to comment on the substance of the August 15, 2001, meeting
between McNally and Shortridge in which McNally was tipped off to Enron's
????Gonzales said there was no known instance of Enron asking the White
House for help prior to its bankruptcy proceedings. But according to Enron's
December 2001 bankruptcy filing the company did just that.
????According to those documents, Lay called Treasury Secretary Paul O'Neill
on October 28 to advise him that Enron was heading toward bankruptcy. The
following day, Lay asked Commerce Secretary Don Evans for help in heading
off a downgrading of Enron's credit rating by Wall Street credit rating
agencies that would push the company into bankruptcy.
????A week later, former Enron president Greg Whalley called then-Treasury
Under Secretary Peter Fisher six to eight times, seeking help in getting
banks to lend more money to Enron.
????The White House also announced in January 2002 that Lawrence B. Lindsey,
who headed Bush's National Economic Council, had directed a review in
October - before the calls received by O'Neill and Evans - to see whether an
Enron collapse could have a strong impact on the American economy. That
admission prompted critics of the administration to sound several alarms.
????As Jennifer Palmieri, a spokeswoman for the Democratic National
Committee, said at the time, "It shows once again that the administration
did a lot of thinking about the fact that the company was going to collapse
but they did absolutely nothing to make sure that 50,000 Enron employees
would not lose their life savings."
????It also drew closer attention to the intensely close ties between Enron
and the Bush administration. Lindsey had been a paid consultant for Enron,
receiving $50,000 in 2000.
????And he was just one of several top White House and Republican Party
officials who have had close Enron ties, including Robert Zoellick, former
United States trade representative, who sat on an Enron advisory board in
2000; Karl Rove, senior White House political strategist, who held more than
1,000 Enron shares before selling them in June 2001; and Marc Racicot,
onetime chairman of the Republican National Committee, who worked as an
Enron lobbyist last year.
????When the White House finally complied with a subpoena in May of 2002 and
released thousands of pages of documents about its contacts with Enron, it
revealed that the company wielded enormous power and influence at the
highest levels of government. One such document was a January 8, 2001,
letter written to Bush's personnel director, Clay Johnson, recommending
seven candidates to the Federal Energy Regulatory Commission. Two of the
candidates Lay recommended, Pat Wood and Nora Brownell, were appointed to
FERC by Bush; Wood was appointed chairman.
????When Wood left his post as chairman of FERC in 2005, Bush appointed
Joseph Kelliher, a former policy adviser with the Department of Energy and a
member of Vice President Cheney's energy task force, to head up FERC, the
agency that controls the country's natural gas industry, hydroelectric
projects, electric utilities, and oil pipelines and has played a critical
role in the deregulation of those industries.
????However, what's most troubling about Kelliher's appointment to head
FERC, a role in which his main priority will now be to protect consumers
from the manipulative tactics of the very industry he enjoys a cozy
relationship with, is the relentless lobbying of bigwigs in the energy
industry in early 2001, as a member of Vice President Dick Cheney's energy
task force, to help write President Bush's National Energy Policy in a way
that would be financially beneficial to energy corporations - at the expense
????The lengths to which Kelliher went to solicit key players in the energy
industry to help write the National Energy Policy became apparent in 2003
when Judicial Watch, a bipartisan watchdog group that sued Vice President
Dick Cheney to gain access to Cheney's list of industry insiders who
participated in secret meetings with Cheney's energy task force, won a legal
battle that forced the White House to release several hundred pages of task
force related documents.
????One such document, a March 10, 2001, email to energy lobbyist Dana
Contratto, was damning - in it, Kelliher asked Contratto, if he were "King"
or "Il Duce," "what would you include in a national energy policy,
especially with respect to natural gas issues?"
????On another occasion, Kelliher sought out Stephen Craig Sayle, an Enron
lobbyist, to make similar recommendations. Sayle, former counsel for the
House Commerce Committee, sent Kelliher Enron's "dream list," including a
recommendation that the administration commit to market-based emissions
trading, which was also used in administration's National Energy Policy.
????Sayle wrote to Kelliher that "a multi-pollutant regulatory strategy
should be estimated for the power generation sector including: Gradually
phased in [mercury, nitrogen oxides and sulfur dioxide emissions]
reductions; Reform/replacement of NSR; Use of market-based/emission trading
programs; Inclusion of both existing and new plants and equal treatment for
both. The last bullet is the critical one to ensure that: a) we encourage
the new generation that is required b) we ensure that the new technologies
developed through DOE programs can come into the market."
????"Obviously, this is a dream list," Sayle said in the March 23, 2001,
email he sent to Kelliher. "Not all will be done. But perhaps some of these
ideas could be floated and adopted."
????Sayle also provided Kelliher with a PowerPoint presentation on behalf of
his other energy clients in the so-called Clean Power Group, a consortium
made up of a handful of the country's biggest energy companies, including
NiSource Inc., Calpine Corp., Trigen Energy Corp., and El Paso Corp, whose
mission, according to the group's web site, is to "streamline requirements
under the Clean Air Act for electric generating facilities while at the same
time making major reductions in air emissions."
????The PowerPoint presentation, "A Comprehensive Multi-Pollutant Emission
Control Strategy for Power Generation," summarized the Clean Power Group's
support of a "cap and trade" method in addressing emissions of mercury,
nitrogen oxides and sulfur dioxide from power plants, but included a
proposal for a voluntary cap on carbon dioxide. The Clean Power Group stood
to benefit from the initiative it urged Kelliher to get the White House to
adopt - the companies could release more emissions under its proposed plan
than under the more restrictive rules the Clinton administration had put in
????After receiving Sayle's email and supporting material, Kelliher
recommended that President Bush "direct the Administrator of the
Environmental Protection Agency (EPA) to propose multi-pollutant legislation
that would establish a flexible, market-based program to significantly
reduce and cap emissions; provide regulatory certainty to allow utilities to
make modifications to their plants without fear of new litigation; provide
market based incentives, such as emissions-trading credits to help achieve
the required reductions," all of which was approved by the president and
eventually incorporated into the National Energy Policy.
????In fact, President Bush's "Clear Skies" initiative consists of many of
the bullet points laid out months earlier in Sayle's email to Kelliher.
????In addition to Kelliher's correspondence with Sayle, he also met with
oil and gas industry lobbyists, who helped write executive orders that
Kelliher passed on directly to the White House. Two months later, the
president issued executive orders nearly identical to those Kelliher
received from the lobbyists months earlier.
????But perhaps the most egregious of crimes involving Enron and the Bush
administration is how the White House turned a blind eye to the Enron's
manipulation to the California electricity market, which ignited a crisis in
2000 that resulted in several days of rolling blackouts.
????On May 29, 2001, when the energy crisis reached its peak, Governor Gray
Davis met with Bush at the Century Plaza Hotel in West Los Angeles, and
pleaded with him to enact much-needed price controls on electricity sold in
the state, which had skyrocketed to more than $200 per megawatt-hour.
????Davis asked Bush for federal assistance, such as imposing federally
mandated price caps, to rein in soaring energy prices. But Bush refused,
saying California legislators had designed an electricity market that left
too many regulatory restrictions in place and that it was that which had
caused electricity prices in the state to skyrocket.
????It was up to the governor to fix the problem, Bush said, adding that the
crisis had nothing to do with energy companies' manipulating the market.
????But Bush's response, in hindsight, appeared to be part of a coordinated
effort launched by Lay to have Davis shoulder the blame for the crisis,
which ultimately led to an unprecedented recall of the governor and
Republican-funded attack ads on Davis's handling of the energy crisis.
????A couple of weeks before the Davis and Bush meeting, the PBS news
program Frontline interviewed Cheney. Cheney was asked by a correspondent
from Frontline whether energy companies were acting like a cartel and using
manipulative tactics to cause electricity prices to spike in California.
????"No," Cheney said. "The problem you had in California was caused by a
combination of things - an unwise regulatory scheme, because they didn't
really deregulate. Now they're trapped from unwise regulatory schemes, plus
not having addressed the supply side of the issue. They've obviously created
major problems for themselves and bankrupted PG&E in the process."
????In April 2001, a month before the Frontline interview and Bush's meeting
with Davis, Cheney, who chaired Bush's energy task force, met with Lay to
discuss Bush's National Energy Policy.
????Lay recommended some energy policy initiatives that would financially
benefit his company, and gave Cheney a memo that included eight
recommendations for the energy policy. Of the eight, seven were included in
the energy policy's final draft. The energy policy was released in late May
2001, after the meeting between Bush and Davis, and after Cheney's Frontline
????What many people have failed to realize is that Davis was right in his
assessment that energy companies, including Enron, were manipulating the
state's wholesale power market. To this day, neither Cheney nor Bush has
acknowledged that they got it wrong and that their inaction helped fuel the
California energy crisis.
????Jason Leopold spent two years covering California's electricity crisis
as Los Angeles bureau chief of Dow Jones Newswires. Jason has spent the last
year cultivating sources close to the CIA leak investigation, and is a
regular contributor to t r u t h o u t. He is the author of the new book
NEWS JUNKIE. Visit www.newsjunkiebook.com for a preview.
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