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The Washington scandal machine is warming up. With the Justice Dept., the Internal Revenue Service (see BW Online, 1/11/02, "Enron: Now the IRS Joins the Hunt"), the Securities & Exchange Commission, the Labor Dept., and at least six congressional committees already probing Enron's bankruptcy, Democrats are smiling. Some already are talking about the Enron debacle as "Bush's Whitewater."
That's a bit premature. There's no evidence that the President did anything for Enron CEO Kenneth L. Lay, a friend and political benefactor, as the company descended into bankruptcy. Indeed, the first indications are that Treasury Secretary Paul O'Neill and Commerce Secretary Donald Evans declined to take action in October after receiving telephone calls from Lay.
Nevertheless, the President and his top associates have plenty of questions to answer. After all, Enron and its senior execs top the list of major campaign contributors to George W. Bush when he was Texas governor and later when he ran for President. And Evans and O'Neill seemed to go out of their way to keep the President in the dark about the looming storm. Why?
Investigators will have a million questions like that. In the meantime, here are some of the larger queries the President is going to have to answer before the final gavel is pounded:
When did you first learn of Enron's perilous financial straits -- and who told you?
It's significant because Lay called Commerce's Evans and Treasury's O'Neill in October seeking help for the company just before and after analysts downgraded the stock -- and its value plunged. Fleischer says Bush learned of the problems "last fall," possibly from press reports of its bankruptcy. But that filing didn't come until December. If the Cabinet secretaries knew of Enron's serious problems for months before informing the President, there's reason to wonder why they didn't think the news of the biggest potential bankruptcy in U.S. history wasn't sufficiently important to tell the boss.
Did you ever sign off on a decision not to offer any kind of bailout or other federal assistance to Enron?
The Cabinet secretaries have every right to shield the President from a potentially embarrassing situation. But it would say a lot about the way the Bush White House functions that major policy decisions are made without the President's input or knowledge.
When did you last speak to Ken Lay? When did he last try to contact you?
Asked by reporters on Jan. 10 when he last spoke to Lay, Bush answered that he last "saw" Lay last spring at a literacy fund-raiser sponsored by his mother, former First Lady Barbara Bush, in Houston. After eight years of Bill Clinton, reporters are hypercautious about careful choices of Presidential words. The President didn't directly answer the question. It's important to know whether Lay tried to contact the President -- successfully or not -- during his company's rapid decline in the fall.
Do you know if Evans and O'Neill informed anyone in the White House of their calls from Ken Lay?
Fleischer says Bush believes that the Secretaries acted appropriately in not telling the President of their conversations with Lay. "The President is pleased with the actions that his Cabinet Secretaries took," says Fleischer. "He thinks they acted wisely and properly." But was it their duty to inform anyone in the White House about potentially damaging revelations relating to a close Presidential friend and longtime contributor?
Did Evans and O'Neill have a responsibility to protect the pensions of Enron workers by informing the Labor Dept. or SEC that Enron officials might have been stating one thing publicly and another privately about the condition of their company?
The President has expressed his concern for tens of thousands of Enron employees and pensioners who saw their retirement nest eggs destroyed by the company's collapse. It's not very likely, but perhaps the government could have done something to help these victims before they lost everything.
Did Ken Lay ever ask you for anything in Austin or Washington?
The President said on Jan. 10 that he "never discussed with Mr. Lay the financial problems of the company." And there is no evidence that the Administration did anything for Enron as its stock value plummeted. But the congressional committees are sure to review whether Bush over the years adopted any policy proposals sought by Lay or Enron, as governor or as President.
Did any other Cabinet secretaries or federal regulators get calls from Lay or other top Enron execs as the company was hurtling toward bankruptcy?
Fleischer says he's aware of only two Cabinet members who received calls from Lay. It's important to know whether any others -- such as Energy Secretary Spencer Abraham or Interior Secretary Gale Norton -- were asked to help the failing company.
Do you have any second thoughts about the secrecy that shrouded Vice-President Dick Cheney's energy task force last year? Are you concerned about the appearance of special access for a major contributor after the Vice-President acknowledged that he or his aides met six times with Lay before releasing the Administration's energy plan last spring?
There's no evidence that Lay had a role in writing the Bush/Cheney energy proposal that sparked a sharp debate last year. But it's clear that Enron -- and other energy companies -- would have benefited from many of its provisions. The Administration's unwillingness to release many documents relating to the policymaking process have only raised more questions about which corporate contributors played a role in White House energy discussions.
Fleischer says he's getting answers for the press as quickly as the questions are asked. He's going to be even busier than usual in coming weeks. And the sooner the President provides answers, the sooner he puts the Enron mess behind him.
Dunham is a White House correspondent for BusinessWeek's Washington bureau. Follow his views every Monday in Washington Watch, only on BusinessWeek Online Edited by Douglas Harbrecht
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