Enron chief sought aid of Cabinet

Top U.S. officials declined to intervene to help energy firm

Auditors destroyed data

Bush faces queries

Ashcroft recuses himself from probes

January 11, 2002|By David L. Greene | David L. Greene,SUN NATIONAL STAFF

WASHINGTON - The chairman of Enron Corp. alerted the White House that the energy company was near collapse last fall, but Bush administration officials decided intervention was inappropriate, the White House said yesterday. Enron soon declared bankruptcy, swallowing millions of dollars in employee and stockholder money.

President Bush faced a swirl of questions yesterday about the access that company executives enjoyed at the White House and about what senior administration officials did or did not do in the weeks before Enron's demise.

"What anybody's going to find is that this administration will fully investigate issues such as the Enron bankruptcy to make sure we can learn from the past and make sure that workers are protected," Bush said at the White House.

Meanwhile, the accounting firm Arthur Andersen, which audited Enron's books, disclosed that it destroyed a "significant" number of documents related to Enron in recent months.

And in yet another development, Attorney General John Ashcroft recused himself from all investigations into the company because top Enron executives donated to his failed Senate re-election campaign in 2000.

The Justice Department, which has launched an inquiry into Enron, said in a statement that Ashcroft "has not been involved in any aspect of initiating or conducting any investigation involving Enron."

Bush said he "never discussed" the Houston-based energy company's financial woes with the company's chairman, Kenneth L. Lay, who is a close friend of the president's family and who has been a major donor to Bush's political campaigns. Bush said the last time he saw Lay was at a literacy event in Texas last spring.

But the White House disclosed that in October, with Enron nearing its demise, Lay reached out to two Bush Cabinet members: Treasury Secretary Paul H. O'Neill and Commerce Secretary Donald L. Evans. Ari Fleischer, Bush's spokesman, said O'Neill and Evans decided then that any government intervention would not be appropriate.

Not until yesterday, Fleischer said, did the president learn that his two Cabinet officials had spoken with Enron officials last fall about the company's precarious condition.

The spokesman insisted that the contact between Lay and the Cabinet officials was not improper.

"Communication is not a wrongdoing," Fleischer said. "What took place here was, they received phone calls and took no action. The charge has been: Did the government take any action? And the answer from these two officials is no."

But one Democrat said last night that the Bush administration should have acted in some way to protect Enron workers and investors once it became aware of the company's troubles, and before it collapsed.

"It is now clear the White House had knowledge that Enron was likely to collapse but did nothing to try to protect innocent employees and shareholders who ultimately lost their life savings," said Rep. Henry A. Waxman of California, the top Democrat on the House Government Reform Committee.

The White House reply

Seeking to focus on the future, Bush said he wants to ensure that the Enron debacle, which robbed employees of retirement money that was invested entirely in company stock, is never repeated.

Bush said he had asked O'Neill, Evans and Labor Secretary Elaine L. Chao to create a working group to study pension law and recommend ways to "make sure that people are not exposed to losing their life savings as a result of a bankruptcy, for example."

The president also ordered a review of corporate disclosure rules and regulations. Many Enron investors say they were financially scarred because the company did not fully acknowledge the depth of its financial woes in the months leading to the largest corporate bankruptcy in U.S. history.

"There have been a wave of bankruptcies that have caused many workers to lose their pensions," the president said. "And that's deeply troubling to me."

With some Democrats eager to scrutinize Bush's ties to Enron, White House officials were gearing up to prevent Enron from becoming a distracting political scandal of the sort that bedeviled President Bill Clinton.

"It's appropriate to take a look into what led to the bankruptcy of Enron and whether or not anything was done wrong in the process," Fleischer said.

"But if that's a politically charged or politically motivated effort, then I think the American people are going to say that this is just another fishing expedition, another endless investigation, the type that they've soured on over the last many years."

Asked whether Bush would support hiring an independent counsel to investigate the matter, Fleischer said no.

Documents destroyed

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