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Enron: The Bush Administration's First Scandal

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Jury selection in the long-awaited criminal trial of former Enron chairman Kenneth Lay and company president Jeffrey Skilling is expected to start Monday morning in a Houston courtroom.

For many people familiar with the high-flying energy company's meteoric rise and sudden downfall four years ago, Enron and the company's crooked "E" logo have come to represent corporate greed, corruption and excess.

But more important, Enron should be symbolic for something else: it was the first in a long list of corporate scandals involving the Bush administration and numerous members of Congress.

Back in August 2001, just two months before Enron imploded in a wave of accounting scandals in which thousands of employees lost their jobs and their pensions, and which wiped out $60 billion in shareholder value, an Enron lobbyist tipped off the Bush administration about the company's impending financial problems.

A former Enron executive who was then under congressional investigation in relation to the company's collapse explained at the time how Skilling's abrupt resignation from the company raised red flags within Enron and worried insiders.

Enron's ties to Washington lawmakers were stronger than disgraced lobbyist Jack Abramoff's. There was a time when Ken Lay, known as "Kenny Boy" to Bush, could pick up the phone and speak with the president, Vice President Dick Cheney or any number of senior administration officials.

The two months prior to Enron's downfall was one of those times.

On August 15, 2001, one day after Skilling resigned from the company, Lay sent Enron lobbyist Pat Shortridge to meet with White House economic advisor Robert McNally. Shortridge warned McNally that Skilling's resignation could lead to a fiscal crisis that could possibly cripple the country's energy markets, a former Enron executive told this reporter three years ago.
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"It was very well known that Enron faced a financial meltdown," the former executive said at the time, and when interviewed again for this story last week the executive repeated those remarks. "The day that Jeff resigned, our stock plummeted. We knew it wouldn't rally. What we didn't know was how the financial problems at Enron would impact the energy markets in the US. That's why Pat met with Mr. McNally."

The White House acknowledged that the meeting between Shortridge and McNally took place in documents released to reporters and Sen. Joe Lieberman, D-Conn., chair of the Senate Governmental Affairs Committee, which in 2002 investigated the fall of Enron. The documents noted that "Mr. McNally met with Mr. Shortridge and another individual who was not from Enron."

When asked whether Enron's future had been discussed, White House spokeswoman Anne Womack said at the time that "if the meeting was about that, I would assume there wouldn't be anyone else there besides Mr. McNally and Mr. Shortridge."

What's troubling about the meeting between Shortridge and McNally is the fact that the White House was tipped off to Enron's financial troubles months before it had previously acknowledged them and well in advance of the warning letter former Enron executive Sherron Watkins delivered to Lay, in which she said that the firm's Byzantine partnerships could destroy the company.

As with the 9/11 attacks, one question that is still left unanswered in the Enron debacle is: What did President Bush know, and when did he know it?
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In May 2002, the White House complied with a subpoena and turned over more than 2,000 pages of documents pertaining to Bush administration contacts with Enron to various Senate and Congressional committees investigating Enron's demise.

What the documents revealed was the close relationship that Enron enjoyed with the White House and how the company was able to influence President Bush's political agenda by recommending people to various posts within the administration.

Buried deep within the pages of those documents was a letter Lay sent January 8, 2001, 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. Another document revealed Lay calling the White House incessantly for help.

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Jason Leopold is Deputy Managing Editor of Truthout.org and the founding editor of the online investigative news magazine The Public Record, http://www.pubrecord.org. He is the author of the National Bestseller, "News Junkie," a memoir. Visit (more...)
 

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