Is The Enron Scandal Over?–It’s Up to Joe Lieberman UPDATED

Is The Enron Scandal Over?–It’s Up to Joe Lieberman UPDATED

Is The Enron Scandal Over?–It’s Up to Joe Lieberman UPDATED


Is the Enron scandal over?

It doesn’t dominate the Sunday talk shows. It doesn’t overwhel…



Is the Enron scandal over?

It doesn’t dominate the Sunday talk shows. It doesn’t overwhelm White House press briefings. There is news about indictments of the accountants and continuing coverage of which Enron exec knew what when. But the political dimension of the scandal has slipped from view–though that could be changing.

Capitol Hill investigations so far have focused on the business shenanigans of Enron, not the firm’s wide-ranging attempts to obtain political influence in the Bush II and Clinton administrations. Republicans who have repeatedly proclaimed Enron is not a “political scandal” have been winning the battle of late. But a new skirmish on this front is about to break out. As The Hill newspaper has reported, Senator Joseph Lieberman, who chairs the Senate governmental affairs committee, has been preparing to subpoena Enron officials for information regarding their dealings with Bush and Clinton administrations. The subpoenas would cover communications between the firm and government officials dating back to 1992.

Republicans are resisting, and Senator Fred Thompson, the ranking GOPer on the committee, reportedly wants to keep current Bush officials out of the scope of the subpoenas. Thompson, according to The Hill, also is reluctant to back subpoenaing Wendy Gramm, the wife of Republican Senator Phil Gramm. In 1993, Wendy Gramm was chief of the Commodity Futures Trading Commission and she helped set a policy that exempted financial instruments traded by Enron from federal regulation; six weeks afterward, she quit the CFTC and became an Enron director.

The fight over the subpoenas to date has been a quiet affair, but it could spill over to talk-show and finger-pointing circles–and could juice up the Enron scandal. Imagine Bush being asked if he has any objection to Congress issuing subpoenas to examine the contacts between Enron and his administration. A tussle over subpoenas would certainly be welcomed by Democratic activists desperately yearning for ways to make Enron stick to Bush.

It’s no secret many Democrats are worried they have little ammunition to hurl at the high-in-the-polls president–especially as the 2002 congressional elections approach and the commander-in-chief takes to the road to help out GOP candidates. When the Enron scandal broke, some Dems regarded it as a magic-bullet that could be aimed at W (metaphorically, of course). In January, Clinton-bud James Carville and consultants Bob Shrum and Stanley Greenberg disseminated a memo that proclaimed, “Enron has the potential to shape the entire political environment for 2002, impact other issues and reduce confidence in the Bush administration and the Republicans.” The “entire political environment”? What were they thinking? Did they forget about the war? Moreover, considering that many Democrats, including Lieberman, have sopped up their own share of Enron money (less so than GOPers, but still in significant amounts) and that Democrats have too often happily allied themselves with screw-the-consumer-or-investor-or-worker corporations on various issues (telecom reform, accounting rules, securities law, bankruptcy reform), the party does not have the moral standing to take a clean shot at the Enron-GOP connection, whatever it may be.

One Democrat who does possess the chutzpah and history to decry Enron’s intercourse with the Republicans (and the Democrats) is Representative Henry Waxman, a reform-minded and feisty lawmaker from Los Angeles. But his efforts were shot down recently by his longtime nemesis. On March 14, Representative Dan Burton, chairman of the House government reform committee, officially rejected a request from Waxman, the committee’s ranking Democrat, for an inquiry into “Enron’s political activities and influence.” Burton’s decision came as no surprise. Burton has enthusiastically delved into such subjects as the death of Vince Foster (he reportedly recreated the Foster shooting in his own backyard by shooting a .38 caliber gun into a pumpkin) and the horrendous last-minute pardon Bill Clinton issued to fugitive financier Marc Rich, yet the wheeling-dealing of Enron did not light his fire.

“While there certainly are issues related to Enron that merit Congressional scrutiny,” Burton wrote, “it is not my intention at this time to involve the Government Reform Committee in these matters. His excuse: “there are already 10 Congressional Committees investigating Enron.”

In his letter to Burton, Waxman noted that Enron “succeeded–in both the Bush and Clinton Administrations–in having policies [it] sought endorsed.” The question is, were any of these successes underwritten by the millions of dollars Enron contributed to both Republicans and Democrats? For Burton’s edification, Waxman listed the episodes that warrant scrutiny.

* Bush’s energy plan contained policies, including deregulation initiatives, that benefited Enron.

* Vice President Dick Cheney called The Los Angeles Times last April to express opposition to electricity price caps– a day after he met with Enron chief Ken Lay and discussed Enron’s opposition to price caps.

* The Bush White House helped Enron settle a dispute with the government of India over the sale of power plant in Dabhol, India.

* Enron lobbied for a repeal of the corporate alternative minimum tax, and the Bush administration endorsed legislation that contained such a provision.

* Lay met with a White House official to discuss appointments to the Federal Energy Regulatory Commission, which oversees some Enron business activity.

* Bush administration opposition to an effort to increase the disclosure of offshore financial transactions aided Enron, which shielded deals and avoided tax liability by using more than 800 offshore subsidiaries.

* In April 1996, FERC issued orders that helped Enron compete in the electricity market.

* In 1997, Lay and other energy officials met with Clinton and lobbied for an international agreement that would establish a trading system for greenhouse gas emissions. The Clinton administration subsequently supported this concept.

* In December 2000, Congress passed legislation that exempted energy derivative contracts from the oversight of the Commodity Futures Trading Commission. As The Wall Street Journal reported, congressional staff referred to the provision as the “Enron point.”

Waxman’s letter to Burton did leave out another subject worthy of scrutiny: Enron’s success during the Clinton years in winning highly coveted spots on U.S. trade missions and favorable decisions from the U.S. Overseas Private Investment Corporation and the Export-Import Bank. Waxman also did not refer to Enron’s possible use of Republican lobbyists to curry favor with the Bush crowd. One Enron hire–its retention of former Christian Coalition chief Ralph Reed–has raised the question of whether the firm improperly assisted the Bush presidential campaign by placing Reed (whose support the campaign wanted) on the Enron payroll.

There is, of yet, little firm evidence Enron did anything illegal as it worked the political system. (Proof, remember, comes from probes.) Congressional investigations, though, need not be confined to criminal matters. How a sleazy company endeavored legally to obtain preferential treatment from the government is a topic worth inquiry. As Waxman noted, “Given the extraordinary success Enron had in influencing policy, it seems appropriate to learn as much as we can how the company operated and whether any wrongdoing occurred.”

That’s not going to happen in the Republican-controlled House. Which leaves Lieberman as the last hope of Enron-wishful Democrats. How hard will Lieberman press for these subpoenas? How far will his committee go in investigating the political ties of Enron? Without a push now from the Senate Dems, a Hill Democratic aide says, “Enron fades here, unless there are new dramatic revelations regarding the [secret Enron] partnerships.”

Is Enron a live political scandal? It is up to Lieberman to decide that question.


On March 21, Lieberman announced that he and Thompson had reached an agreement on issuing a number of subpoenas that will seek information about “Enron’s communications with the White House or other federal agencies.” The subpoenas will request information from January 1992 through the end of last year. In a statement, Lieberman noted, “We are trying to be as thorough as we can, to turn over every stone we can turn over to understand what government agencies knew about Enron’s practices and whether there was anything they could have, or should have done to prevent the company’s collapse, and to make sure something like this never happens again.”

Lieberman’s remark made it seem he is focusing on the question of whether the federal government could have acted to stop the collapse of Enron. His statement did not note these subpoenas could also produce information showing if and how Enron tried to use its political influence to win favorable policies and decisions from the Bush and Clinton administrations. Is Lieberman sidestepping this delicate matter–or being rhetorically restrained for strategic purposes?

A spokesperson for the committee maintains that Lieberman and Thompson did not clash over the subpoenas and that the subpoenas were negotiated without much trouble. The list of past and present Enron officials receiving subpoenas does include Wendy Gramm.

Lieberman said he expects the committee to issue the subpoenas within the next few days.

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