Enron Courted Lawmakers
And Profits Equally
From Op-Ed
By Dan Morgan & Juliet Eilperin

During the administration of the first President George Bush, a new party fundraiser named Kenneth Lay was invited to spend the night at the White House. The sleepover was an early coup for the chairman of Enron Corp. and a harbinger of things to come.
Over the following decade, Lay and Enron poured millions of dollars into US politics, cultivating unequaled access and using the entree to lobby Congress, the White House and regulatory agencies for action that was critical to the energy company's spectacular growth. With Enron's sudden bankruptcy, public attention has turned not only to the financial practices that brought the company down, but its far-flung political operations .
Some Democrats in Congress are spoiling for an opportunity to use Lay and Enron to embarrass the Republican Party, which received most of the company's largess over the years. They want to look into such things as Enron's relationship with Phil Gramm, a Republican from Texas, ranking minority member on the Senate Banking Committee and chairman of the committee at a time when his wife, Wendy Gramm, was serving on Enron's board. Last year, Gramm's committee approved legislation that included a key provision exempting parts of Enron's massive energy trading operation from federal oversight.
''I think the Enron story is going to turn out to be an enormous political story,'' said Democrat Representative Henry Waxman, ranking minority member on the House Energy and Commerce Committee. Lay's ties to the White House and GOP leaders were so multilayered that Republicans are likely to be reluctant to pursue them, he added.
Enron also cultivated relationships with Democrats, however. Lay played golf in Colorado with President Bill Clinton, and Enron gave hundreds of thousands of dollars to Democratic campaign committees and Democrats in the House and Senate, including Senator Charles Schumer and Representative Martin Frost, the ranking minority member on the House Rules Committee.
Advocates of campaign finance reform say the Enron case vividly illustrates the ties between politics and big money, though it's unclear that the company's political operations were radically different from others for whom political contributions have become a routine cost of doing business. ''There are aspects of (the Enron case) that remind us of the savings and loan scandal, in the sense that a powerful institution used big money to buy influence and protect itself while ordinary citizens ended up losing their life savings,'' said Fred Wertheimer, president of Democracy 21, a Washington interest group.
Enron's ties to Republicans and the present Bush administration were especially close. Lay raised large sums for George W. Bush's campaign. Enron, Lay and its employees have contributed $572,350 to him over his career, far more than any other company, according to the Center for Public Integrity in Washington. Several top administration officials have been Enron advisers or stockholders.
Enron, Lay and other senior executives contributed $1.7 million in soft-money donations to politicians in the 2000 election cycle, two-thirds of it to Republicans, according to the Center for Responsive Politics.
What was unique about Enron was a brash and sometimes counterproductive political style. In October 1999, for example, Jeffrey Skilling, then Enron's president, expressed his displeasure at Representative Joe Barton's position on a deregulation bill pending in the energy subcommittee Barton chairs. The meeting grew ''heated and awful,'' said one person who was present, until Barton, a Republican from Texas, a usually mild-mannered man who keeps a Bible on his desk, exploded.
''Jeffrey Skilling, I may not have your millions of dollars, but I am not an idiot,'' one witness recalled Barton saying. The meeting ended without Enron getting the changes it wanted. ''Skilling did not get Washington,'' the source added. ''In their lobbying, they acted like the 800-pound gorilla they were,'' said Christopher Horner, a lawyer who briefly directed Enron's government relations in 1997.
ALMOST from its start in 1985 as a gas pipeline company, Enron needed help in Washington, and it got it in a series of actions by Congress and the Federal Energy Regulatory Commission (FERC) that undermined the traditional monopoly of utility companies over power plants and transmission lines.
Enron lobbied for several of the initial actions that set the stage for the era of a deregulated wholesale electricity market. It supported the 1992 Energy Policy Act, which opened the utility companies' wires to electricity merchants such as Enron. It also worked with the Commodity Futures Trading Commission - then chaired by Wendy Gramm - for a regulatory exemption for futures trading in energy derivatives, which later became Enron's most lucrative business. Soon after Gramm stepped down in 1993, she was appointed to Enron's board.
That same year, Lay served as chairman of the committee organising the Republican National Convention in Houston. Enron made a major contribution to a ''street fair'' in honour of Senator John Breaux, a Democrat and a key energy policymaker, at the party's convention. Key orders by FERC in 1996 also supported Enron's transformation into a trader of gas, electricity and more exotic products, such as telecommunications services and sulphur-dioxide emissions credits.
The new rules ensured that Enron and other merchant companies could buy electricity from independent power plants and sell it to distant customers, using transmission lines borrowed from utility companies.
Even Enron's harshest critics credit Lay with putting new issues-such as electricity deregulation-on the Washington agenda. Lay, a PhD in economics, became ''the ambassador'' for deregulation, one former employee said. Enron's agenda was opposed by coal-burning utilities which viewed the emerging wholesale electricity market as a threat to their turf. Many of these had impressive funding and connections of their own.
But with the explosive growth of Enron and the GOP takeover of Congress in 1995, the company's soft-money donations - unregulated, unlimited gifts to political parties and organisations - went from about $136,000 in the 1993-94 election cycle, to $687,000 in 1996 and $1.7 million in 2000, according to the Center for Responsive Politics.
But Enron often found Washington slow and unreliable. The company placed a substantial bet on federal support for limits on the greenhouse gases causing global warming. Enron officials hoped to exploit a new market in industry for carbon-emissions credits. Lay joined the Union of Concerned Scientists and environmental groups in calling for curbs on carbon in the atmosphere. The Clinton administration was supportive, but this year the Bush administration reneged on a pledge to impose limits on greenhouse gas emissions from coal-burning power plants.
A multimillion-dollar lobbying campaign in Congress to secure legislation requiring states to institute retail electricity deregulation fared even worse. Enron hired former NY Representative Bill Paxon to run Americans for Affordable Electricity which commissioned studies and recruited business support for deregulation. But the legislation never made it out of a congressional subcommittee.
Enron's political pragmatism was demonstrated in the 1998 New York Senate election, when it dropped its support of the Republican incumbent, Alfonse D'Amato, after Democrat Schumer endorsed Enron's goal of wholesale deregulation, sources said. Lay reciprocated by hosting several fundraisers for Schumer, and Enron's political action committee contributed $7,500 to his campaign.
The company's lobbying team expanded along with its political spending. It outgrew the two-person operation and began to reflect Enron's interest in everything from pipeline safety to derivatives trading. By last year, its lobbying expenses exceeded $2 million a year.
The hazards of Enron's efforts to connect with both parties were evident last year, when shortly before the November election, the company picked a Clinton administration Treasury official, Linda Robertson, to run its Washington office. DeLay, whose campaign and related funds had received more than $100,000 from Enron and Lay, briefly ''excommunicated'' Enron, a House source said. Robertson was not invited to a series of meetings of electricity lobbyists held in DeLay's office last July.
Enron had more success when Congress overwhelmingly approved legislation last year containing a provision precluding the Commodity Futures Trading Commission (CFTC) from regulating Enron's trading in energy derivatives. These instruments are traded largely between electricity dealers and big wholesale consumers which use them to hedge against price swings that could adversely affect businesses. The exemption was not supported by a Clinton administration working group.
Since the departure of Wendy Gramm, some in the agency had lobbied for tighter control over the exploding energy derivatives market. The legislation passed through the Senate Banking Committee, then chaired by Phil Gramm, who has received $97,350 from Enron employees and its political action committee sine 1989.
Ironically, since Enron's fall, both FERC and Congress seem to be moving in the direction of the deregulated markets Lay and Enron lobbyists had pushed for.
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