In addition to the financial and criminal issues, the Enron collapse is also turning into an object lesson about how out of control campaign finance is. No company was better able to use money to grease its path than Enron. Over the past 12 years, Enron and its execs pumped $5.8 million into campaign war chests, including donations to 71 current senators and 188 House members. Enron's most prolific year was 2000, when the company and its executives gave $2.4 million to candidates, political action committees, and parties. That includes over $50,000 to Attorney General John Ashcroft for his losing Senate bid, which now forces him to recuse himself from the Justice Dept. investigation of Enron. Most important, Enron and its execs were the top donors to George W. Bush throughout his political career, showering over $700,000 on everything from his gubernatorial campaign to his Presidential inaugural gala.
Bush Administration officials rightly say Enron's contributions did not prompt any government intervention as it hurtled toward bankruptcy. Enron, however, was certainly able to buy access. Vice-President Dick Cheney and his top aides met with Enron execs six times in the past year as they developed the Administration's energy policy. Enron also threw its political weight around in Congress to avoid federal oversight of its energy-trading business. Enron's friends weren't all Republicans. In 1996, Enron donated $100,000 to the Democratic National Committee soon after the Clinton Administration helped Enron in a dispute with Indian government officials.
Meanwhile, Enron auditor Andersen and the other large accounting firms also greased the wheels. According to the Center for Responsive Politics, Andersen gave $640,000 in the 1999-2000 election cycle to campaigns. The accounting industry as a whole contributed over $5 million. These money flows likely helped the accountants avoid the tighter regulations favored by former SEC head Arthur Levitt Jr.--regulations that now seem essential.
What can be done? Banning soft money--unregulated contributions for party-building or for issue advertisements--would have reduced by one-third Enron's contributions. A ban would make it harder for the company and its execs to give the huge amounts of money that afforded them nearly unlimited access. Also, Congress should strengthen disclosure laws to give the public more information about lobbyist contacts with elected officials and government staffers. Finally, it's time to ban "bundling," the practice where one exec can collect checks from employees and turn them over to candidates or parties. This gives big corporations an edge in hard-money giving, while exerting unfair pressure on employees to donate.
By itself, campaign finance reform would not have stopped Enron from misleading its investors. Still, Enron's campaign contributions helped it stave off the laws and regulations that might have restrained the energy giant from flying off the precipice.