CHAPTER 3
ENRON’S POLITICAL CONTRIBUTIONS
In addition to an embarrassed Bush, the future of numerous GOP House and Senate members was on the line. Several were facing tough campaigns in 2002 and consequently began divesting themselves of Enron contributions. Many looked to credible charitable groups which provided support to displaced Enron employees.
Those severing relations with Enron included Republican Senator Tim Hutchinson and Democratic Senators Jean Carnahan, Max Baucus, and Tim Johnson. Republican Senators Mike Enzi and John Warner also returned Enron contributions -- $3,500 from Enzi and $277 from Warner. GOP Senator Gordon H. Smith said he would give away the $8,100 in Enron donations he had received since 1997. House Minority Speaker Richard Gephardt said the $1,000 that Enron donated to his Democratic Leadership Fund would go to the St. Louis Children’s Hospital. Republican Congressman J. Randy Forbes gave his $1,000 in Enron donations to a charity helping Enron workers. Republican Congresswoman Deborah Pryce turned over all contributions from Enron to “help employees who were adversely affected.” (Washington Post, January 17, 2002)
On the other hand, some prominent lawmakers chose to keep their Enron donations. They included Republican Congressmen Billy Tauzin, chairman of the House Energy and Commerce Committee, which was investigating Enron -- and GOP Majority Whip Tom DeLay. Rejecting Enron’s contributions, they said, would amount to an admission that the money was accepted unethically. (Washington Post, January 17, 2002)
Altogether, Enron and its employees contributed $736,800 to George W.’s political career -- far more than any other corporation. That included the $10,000 chairman Lay and his wife, Linda, donated to the Bush/Cheney 2000 Recount Fund, as well as the $300,000 Enron leaders spent on the Bush/Cheney post-recount-crushing inaugural party. When Enron Field opened in April 2000, Bush and Lay had the best seats in the stadium -- in the Enron box. (The Nation, February 2, 2002)
Bush administration economic advisers Lawrence Lindsey and Robert Zoellick each earned $50,000 a year as Enron advisers. Secretary of the Army Thomas White Jr., a former Enron executive, had to sell $25 million of Enron stock upon assuming his post. In addition, Lay enjoyed a cozy relationship with Commerce Secretary Donald Evans, whose previous job was as the Bush/Cheney campaign tapper of deep pockets. Attorney General John Ashcroft is another who has received Enron cash for past political campaigns, $57,499 to be exact, which is why he has recused himself from investigating. (The Nation, February 2, 2002)
The Center for Public Integrity, a nonpartisan center that studied the finances and affiliations of the top 100 officials in the Bush Administration, revealed that fourteen executive-branch officials disclosed their collective value in Enron stock at from $284,000 to $886,000. Karl Rove alone held stock that was valued somewhere between $100,001 to $250,000. (The Nation, February 2, 2002)
The top 100 Administration officials have the vast majority of their financial holdings invested in the energy sector, some 221 separate investments worth up to $144.6 million. Meanwhile, corporate energy gave 75 percent of its $48.3 million in 1999-2000 campaign contributions to Republicans. Oil and gas gave $13 to candidate Bush for every $1 it gave to candidate Gore. (The Nation, February 2, 2002)
Throughout the 1990s Enron gave $5.8 million to political campaigns, 73 percent of it to Republicans. Among the biggest winners in the Senate have been Texas Republican Senators Phil Gramm ($97,350) and Kay Bailey Hutchison ($99,500). The Gramms also gained personally because Wendy Gramm, Phil’s wife, was hired to the Enron board with significant compensation. With just six days left in her tenure as chair of the Commodity Futures Trading Commission, Gramm rammed through a surprising decision that Enron had asked her for: A surrender of the commission’s authority over regulating energy futures contracts. Five weeks later, after leaving the commission, Gramm was working for Enron. (The Nation, February 2, 2002)
Between 1999 and 2001, Enron spent $4 million lobbying Congress and the White House. Over a decade, Enron and the Arthur Andersen auditing firm had contributed hard money to 51 of the 56 members of the House Energy and Commerce Committee, which began investigating the corporate giant in January 2002. Together, the two companies’ political action committees and employees contributed more than $400,000 to the committee’s members since 1990, Federal Election Commission records showed. (Los Angeles Times, January 18, 2002)
After the conservative United States Supreme Court blocked the Florida recount to assure victory for Bush, Vice President Dick Cheney was chosen to head an ad hoc energy committee which was composed of corporate giants who recommended drilling in Alaska. Lay met with Cheney’s energy group six times. Bush called Pennsylvania Governor Tom Ridge and assured him that Lay -- eager to deregulate Pennsylvania’s electricity market -- was an excellent businessman. (Los Angeles Times, January 15, 2002)
Forty-nine of the 70 members of the House Financial Services Committee, which held the first Enron in January 2002, had taken in a total of $300,000 in contributions from Enron and Arthur Andersen in the last ten years. And two-thirds of the Senate committee that held hearings into Enron and Arthur Andersen shared in a total of more than $70,000 in contributions from the targets of their investigation -- including the committee’s chairman, Joseph Lieberman. (Los Angeles Times, January 18, 2002)
Enron’s influence on the Hill extended beyond the contributions. Several lawmakers or their wives owned stock in Enron or in mutual funds that were heavily invested in Enron. Fifteen members of the Bush administration owned stock in Enron. Several Cabinet members acknowledged contacts from Enron but said they did not tell Bush or take any action. Bush himself denied speaking with “Kenny Boy” -- as he called him -- about the company’s financial problems and said his administration would aggressively investigate the failure of the company. (Los Angeles Times, January 12, 2002)
Republican Tom DeLay, House majority whip whose district is in the Houston suburbs near Enron’s headquarters, received $28,900 in donations from Lay’s firm since 1989. Enron used as lobbyists two influential members of DeLay’s informal kitchen cabinet, Ed Buckham and Karl Gallant. Buckham, a former chief of staff for DeLay, had worked closely on strategy with DeLay’s political action committee, Americans for a Republican Majority. Gallant, who once served as that committee’s director, went on to run the Republican Majority Issues Committee, a group widely considered close to DeLay. (New York Times, January 16, 2002)
According to the Center for Responsive Politics, Enron and its executives made sizable donations to each of the groups. Gallant’s committee included a $50,000 contribution from Lay and a $25,000 contribution from Joseph Sutton, a vice chairman of Enron who left the company in November. Before that year, disclosure was not required for gifts to issues groups. (New York Times, January 16, 2002)
Americans for a Republican Majority received a $10,000 corporate contribution from Enron in 2000 in soft money. The group also received $47,250 in regulated contributions in 1995 through 2000 from Enron, its PAC, or individuals tied to the company. (New York Times, January 16, 2002)
According to Public Citizen, a Washington D.C. watchdog group, Wendy Gramm, chair of the Commodities Futures Trading Commission in the Bush administration, granted an exemption that permitted Enron to begin trading energy derivatives. Gramm then joined the board of directors of Enron and served on its auditors committee. Meanwhile, her husband, Senator Phil Gramm of Texas, began pushing through legislation that further weakened government oversight of Enron’s activities. Both Gramms made or modified government rules in order to allow Enron to conceal its deals from regulators. By then, the Houston-based Enron was a major contributor to Senator Gramm’s campaign.
A day after she initiated action on the exemption, Wendy Gramm resigned from the commission. Enron soon appointed her to its board of directors, where she served on the audit committee which had control of the inner financial workings of the corporation. Enron paid her between $915,000 and $1.85 million in stocks and dividends since 1993, and she received as much as $50,000 in annual salary and $176,000 in attendance fees, according to a report by Public Citizen. In 1998, Wendy Gramm cashed in her Enron stock for $276,912.
Meanwhile, Enron became Senator Gramm’s largest corporate contributor. Public Citizen reported that he received just under $100,000 between 1989 and 2001. In June 2000, Senator Gramm co-sponsored the Commodity Futures Modernization Act, a measure aimed at deregulating certain kinds of futures trading, but not energy futures. That bill never made it to the floor, and thus quietly died. Six months later, on December 15, Gramm co-sponsored a bill with the same name, the Commodity Futures Modernization Act. This legislation deregulated energy futures and, without undergoing the usual committee hearings and preliminary votes, was immediately attached as a rider to an 11,000-page appropriations bill. It passed and was signed into law by President Bill Clinton six days later. (The Village Voice, January 16, 2002)