Bush defends Enron secrecy, calling it matter of principle

Congress' request sets up showdown


WASHINGTON - President Bush defended yesterday his refusal to turn over information to Congress about contacts between Enron and the administration's energy task force, saying the request was "an encroachment on the executive branch's ability to conduct business."

"We're not going to let the ability for us to discuss matters between ourselves to become eroded," the president said at a session with reporters yesterday afternoon. "It's not only important for us, for this administration, it's an important principle for future administrations."

The president's comments, which were similar to remarks made over the weekend by Vice President Dick Cheney, makes a constitutional showdown all but inevitable between the White House and the General Accounting Office, an investigative agency of Congress. The accounting office has sought White House records about a series of meetings last spring between the vice president's energy task force and executives from Enron and other companies.

"Once the administration decided to create this task force and put the vice president in charge, we believe that changed the matter to clearly give the Congress and the GAO right of access," said David M. Walker, comptroller general of the United States and head of the accounting agency, in an interview after the president's remarks.

Walker said he would decide by the end of the week whether to sue the administration and suggested that such a move was a near certainty. He said the accounting office was not seeking details such as the minutes of meetings or notes of conversations but wanted to find out "who met with whom, when and about what."

Bush took strong exception to the characterization by some Democratic lawmakers that the proposals recommended by the energy task force in May reflected a "wish list" for Enron.

"Well, Enron went bust," the president said. "Shortly after the report was put out, Enron went broke, and it went broke because, it seems like to me - and we'll wait for the facts to come out - it went broke because there was not full disclosure of finances." Repeating a regular theme of the White House these days, he described Enron's downfall as "a corporate governance issue," and not a political scandal affecting his administration.

Nonetheless, there were signs that Washington remained preoccupied with Enron.

Democratic Sen. Paul S. Sarbanes of Maryland, who heads the banking committee, said he intended to closely question Bush's nominees to the Securities and Exchange Commission about their views on regulating accountants, who played a large role in the Enron debacle. The president has nominated two partners from accounting firms to commission openings.

Congressional investigators picked up the pace of their myriad inquiries.

The Senate Energy and Natural Resources Committee, at a hearing this morning, will examine Enron's role in the California energy crisis and whether energy legislation needs to be strengthened in the wake of the company's collapse.

The committee, the third in Congress this year to study fallout from the company's demise, will also focus on whether enough is being done to ensure the nation is building enough power plants, transmission lines and pipelines for natural gas. The panel will also examine whether more needs to be done to guard against price spikes in wholesale energy markets.

The committee is expected to discuss whether the Federal Energy Regulatory Commission needs additional authority to crack down when prices for electricity or natural gas soar. The FERC, whose new chairman, Patrick Wood III, is scheduled to testify, came under withering criticism a year ago from California officials, who asserted that the agency failed to punish efforts by power generators and traders to drive up electricity prices.

Wood, whom Enron endorsed for the job, has acknowledged recently that his agency has much to learn about deregulated energy markets and that it faces difficult challenges in understanding the operations of some of the companies it regulates.

But the most anticipated appearance will be Monday, when Kenneth Lay, Enron's former chief executive, is set to appear before two committees. Members of his family appeared on television yesterday to discuss the hardships they have suffered in recent months. Lay's wife, Linda, suggested that the family was struggling to avoid bankruptcy, even though Lay had collected more than $300 million since 1989 from Enron.

"Everything we had mostly was in the one stock," she said on NBC's Today show. "Other than the home we live in, everything else is for sale."

In his remarks yesterday, Bush suggested that the company did not get anything from the administration for all of its political contributions.

"There are some on Capitol Hill who want to politicize this issue," he added. "This is not a political issue. It's a business issue. It's a business issue that this nation must deal with. And, you know, Enron had made contributions to a lot of people around Washington, D.C. And if they came to this administration looking for help, they didn't find any."

He also suggested that Enron's collapse, and the loss of billions of dollars in Enron investments by shareholders and employees, may warrant "reform of the pension system."

A group of 400 employees from Enron filed yesterday the latest lawsuit against the company in an effort to regain some of the money they lost in Enron stock held in their 401(k) plans.

And in Chicago yesterday, the chief executive of Arthur Andersen, the accounting firm whose audits of Enron's troubled finances have made it a target of investigators probing the company's collapse, acknowledged that the firm has been losing business because of the affair.

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