- WASHINGTON (Reuters) - Enron
Corp. Chairman Kenneth Lay told employees the company's stock was "an
incredible bargain" just weeks before the energy trader imploded,
Reuters learned on Friday, as Democrats attempted to tar Republicans with
guilt by association with Enron in an election year.
- "My personal belief is that Enron stock is an
bargain at current prices and we will look back a couple of years from
now and see the great opportunity that we currently have," Lay wrote
on Sept. 26 on Enron's "ethink" intranet chat site, according
to a transcript obtained by Reuters.
- Enron filed for the biggest bankruptcy in U.S. history
on Dec. 2, wiping out 5,000 jobs and leaving investors -- including many
Enron employees persuaded to stock up on Enron stock for their pension
funds -- holding nearly worthless shares in the once-giant energy
- Adding to the potentially damaging political revelations,
the White House disclosed on Friday that Vice President Dick Cheney
with Indian officials last year as part of an effort to salvage a troubled
Enron power project in India.
- The administration said Cheney's outreach on behalf of
Enron, President Bush's biggest political patron, was justified since the
$2.9 billion Dabhol power project was financed in part through the U.S.
government's Overseas Private Investment Corporation (OPIC).
- OPIC provides "political risk" insurance and
loans to help U.S. companies invest in developing nations.
- Also on Friday, a former Enron executive resigned as
chairman of the Texas Public Utility Commission amid concerns his ties
to the scandal-tainted company could hurt Republican Gov. Rick Perry. Max
Yzaguirre, who held various positions at Enron including head of its
operations, said he was stepping down because of "politically
- Democrats are using close ties between Bush
officials and Enron in an election-year attempt to charge then with guilt
by association in the Enron scandal, but Republican operatives say the
accusations will not stand up.
- COOKING THE BOOKS?
- "People are trying to make that connection,"
Jack Oliver, deputy chairman of the Republican national committee, told
reporters at the party's winter meeting in Austin. "Enron is not a
political issue. Enron is an issue of trying to solve problems so they
never happen again in the future."
- Democrats are seeking to portray the collapse of Enron
as representative of an irresponsible corporate culture closely tied to
Republicans and emblematic of poor financial management echoed in a
federal budget surplus.
- Underscoring the appearance of close ties to Enron, Marc
Racicot, a former Montana governor who lobbied for Enron last year, took
over on Friday as chairman of the Republican National Committee, the
- The Enron debacle, "gives Democrats an important
rhetorical tool," said Democratic party spokeswoman Jennifer
- "Enron is shorthand for what's wrong with the way
Republicans run fiscal policy. They run fiscal policy like they (Enron)
ran their business," she said. "The Bush administration cooks
their books (and) and they don't worry enough about the human side of the
- The debate may be a key issue in the battle for control
of the U.S. Congress in November elections. Democrats hope to win the six
seats needed to capture the House of Representatives and protect their
slim 50-49 hold over the Senate, which has one independent member.
- In a succession of statements in the "ethink"
transcript, Lay reassured Enron workers the Houston-based company was safe
and sound, even as it teetered on the brink of collapse.
- The transcript was provided to Reuters by Eli
who heads a Washington law firm that is suing Enron on behalf of Enron
employees who had 401(k) retirement accounts. He said obtained the
from a fired Enron manager who is now a client and involved in the Enron
- "How he could do this in good conscience is
guess. This is unconscionable," said Gottesdiener. Ethink was a
internal Enron site where employees could ask top executives questions,
said Eric Thode, an Enron spokesman in Houston. Thode said the transcript
was authentic, but declined comment on Lay's remarks.
- LAY CITES ANDERSEN'S OVERSIGHT
- In one passage of the ethink transcript, an Enron
asked Lay about the company's heavy use of special-purpose vehicles (SPVs),
or outside partnerships, in its finances and the role of the company's
long-time auditor, the Big Five accounting firm Arthur Andersen, in
- Lay replied: "In many cases, not only has the local
Arthur Andersen office approved these vehicles, but they have also been
approved at Arthur Andersen's headquarter office from some of the world's
leading experts on these types of financing."
- On Thursday, Enron fired Andersen as its auditor. The
firing came two days after Andersen said it had fired the lead partner
in charge of its Enron audits, whom it said ordered audit-related documents
to be destroyed after learning that they were being sought by federal
- Eight congressional committees, the Justice Department,
the Securities and Exchange Commission and the Labor Department are
Enron and combing mountains of documents.
- The White House on Friday estimated OPIC's exposure to
the Indian power project at $160 million in loans and $180 million in risk
insurance. Separately, the U.S. Export-Import Bank made $300 million in
direct loans to the plant.
- White House spokesman Ari Fleischer said interventions
such as Cheney's were commonplace and noted former President Bill Clinton's
commerce secretaries had made similar appeals on behalf of Dabhol during
various phases of its development.
- In each case, "It was done because they thought
it was in America's national interest to do it," Fleischer
- Lay has close ties with Bush and the Republican party.
The company has been a major supporter of Bush's political career, making
about $623,000 in contributions to his campaigns since 1993. It has made
some $5.8 million in campaign donations since 1989, 73 percent to
- Enron officials had six meetings last year with Vice
President Dick Cheney or his energy policy staff. Bush's top economic
Lawrence Lindsy, has served as a consultant and adviser to Enron, and Enron
officials sought help from the administration as the company's financial
- But the administration rejected Enron's appeals, which
supporters cite as its strongest defense.