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This article forwarded to you by BuzzFlash:
White House: Enron Official Phoned
Thursday January 10 12:57 PM ET
http://dailynews.yahoo.com/h/ap/20020110/ts/enron_inv
estigation_3.html
White House: Enron Official Phoned
By KAREN GULLO, Associated Press Writer
WASHINGTON (AP) - Enron Chairman Kenneth L. Lay
reached out to two of President Bush's Cabinet
officers when the energy company was collapsing, the
White House disclosed Thursday as the Justice
Department opened a criminal investigation of Enron's
bankruptcy.
Bush, who received significant campaign contributions
from Lay and other Enron executives, said he himself
has never discussed Enron's financial problems with
its embattled corporate chairman. The president said
he last saw Lay in Texas at spring fund-raiser for
former first lady Barbara Bush's literacy foundation.
Lay also was among a group of some 20 business
leaders who came to the White House early in the Bush
administration to discuss the state of the economy,
Bush said.
Many Enron employees lost their life savings when the
company filed for bankruptcy Dec. 2.
``What anybody's going to find out is that this
administration will fully investigate issues such as
the Enron bankruptcy, to make sure we can learn from
the past and make sure workers are protected,'' Bush
said.
But Lay did seek the ear of other top-level
administration officials last fall.
According to White House press secretary Ari
Fleischer, Lay telephoned Treasury Secretary Paul
O'Neill amid Enron's collapse ``to advise him about
his concern about the obligations of Enron and
whether they would be able to meet those
obligations.''
Lay also told O'Neill that Enron ``was heading to
bankruptcy,'' Fleischer said.
O'Neill received calls from Lay on Oct. 28 and Nov.
8, said Treasury spokeswoman Michele Davis. It was on
Oct. 16 that Enron made its stunning disclosure of a
$638 million third-quarter loss.
In a separate phone call to Commerce Secretary Don
Evans, Lay similarly worried that the company might
have to default on its obligations. He brought to the
secretary's attention ``that he was having problems
with his bond rating and he was worried about its
impact on the energy sector,'' Fleischer said.
After that conversation, Evans spoke to O'Neill ``and
they both agreed no action should be taken to
intervene with their bond holders,'' Fleischer said.
The spokesman had said Wednesday he did not know of
anyone in the White House who discussed Enron's
financial situation.
Fleischer also brushed aside talk of any conflict in
the Justice Department investigation and said there
was no reason to turn the probe over to a special
counsel.
Lay gave $25,000 to a leadership committee headed by
then-senator and now Attorney General John Ashcroft,
according to the Center for Public Integrity.
An attorney for Enron welcomed Ashcroft's inquiry,
the latest in a series of governmental probes into
the company's demise, saying the investigation would
``bring light to the facts.''
``We want to get to the bottom of this too,'' said
Robert Bennett, a Washington attorney representing
the Houston-based company. ``A lot of decent and
honorable people work at Enron and we should wait
until the facts are out.''
Bush ordered a separate review Thursday of pension
and corporate disclosure rules that could jeopardize
workers' savings. ``There has been a wave of
bankruptcies that have caused many workers to lose
their pensions and that is deeply troubling to me,''
Bush said.
The Justice Department is forming a national task
force to look into the company's dealings. The group
will be headed by lawyers at the department's
criminal division and include prosecutors in Houston,
San Francisco, New York and several other cities,
said a Justice Department official, speaking on
condition of anonymity.
The official declined to say when the investigation
began. Enron faces civil investigations by the Labor
Department and the Securities and Exchange Commission
and subpoenas from congressional committees.
All are looking into the energy trading company's
collapse, the largest bankruptcy filing in U.S.
history.
The failure hit employees and investors hard. Workers
were prohibited from selling company stock from their
Enron-heavy 401(k) retirement accounts as the
company's stock plummeted. Many lost their life's
savings.
Enron executives cashed out more than $1 billion in
stock when it was near its peak.
Former Enron chief executive Jeffrey Skilling, who
left the helm nearly two months before the company's
swift descent, welcomes the investigation, said
spokeswoman Judy Leon. Skilling has said he had no
idea, despite Enron's falling stock values, that the
company was on the brink of failure.
Formed in 1985, Enron had 20,000 employees and was
once the world's top buyer and seller of natural gas
and the largest electricity marketer in the United
States. It also marketed coal, pulp, paper, plastics,
metals and fiber-optic bandwidth.
One likely focus of the Justice Department
investigation is possible fraud based on Enron's
heavy reliance on off-balance-sheet partnerships
which took on Enron debt. The partnerships masked
Enron's financial problems and left its credit
ratings healthy so it could obtain the cash and
credit crucial to running its trading business.
The Houston-based company went bankrupt after its
credit collapsed and its main rival, Dynegy Inc.,
backed out of an $8.4 billion buyout plan late last
year.
Just a year ago, stock of Enron, the nation's largest
buyer and seller of natural gas, traded at $85 per
share. Today it is less than $1.
Lay has close ties to Bush and his father, the former
president. Lay was a top contributor to the younger
Bush's 2000 presidential campaign.
The company played a key role earlier this year when
a White House task force met with business executives
and other interests to fashion a national energy
policy. The task force was headed by Vice President
Dick Cheney.
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http://dailynews.yahoo.com/h/ap/20020110/ts/enron_inv
estigation_3.html
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