Commentary
Enron, Integrity, Reader Feedback, and Clearing Up a Few Misconceptions

By Bill Allison

The depth and breadth of the Enron scandal is reaching a magnitude that makes it almost impossible to keep all the players straight without a scorecard. In short order, the seventh largest company in America, which was a top career patron of the President, a donor to 71 members of the Senate and 187 members of the House, which lavished a small fortune in soft money on both political parties, has collapsed in one of the most breathtaking examples of corporate skullduggery in the history of American business.

For years, the Houston-based natural gas pipeline company, energy trader, and commodity broker misstated its true financial position by hiding losses in "off balance sheet" partnerships. The black hole of debt lurking beneath the glittering surface of the company's financial statements may be as large as $5 billion, and even that may be an understatement.

If our reader feedback is any indication, few reports we've done have struck as much of a chord with our readers as the handful of Enron-related reports we've posted over the past few weeks. The response has been split pretty evenly between praise and criticism. We certainly appreciate the former. As to the latter, many have written thoughtful critiques, which are always welcome.

However, I have noted some readers have misconceptions about what the Center for Public Integrity is and what it does, which is the source of some concern. I've tried to reply personally to as many of you as possible, but given the overwhelming interest in our reports, I haven't been able to keep up with the torrent of feedback. So, with your indulgence, I'll try to address here some of the more common complaints.

Probably the single most frustrating charge is that our reports on Enron have been partisan. First, the Center is and always has been non-partisan. We're not allied with any political party, and we never advocate any particular legislation or reform. The Center researches everything from U.S. policy in Latin America to the composition of state ethics commissions, and we release our findings to the general public. The vast majority of our studies are long, meticulously researched reports. Sometimes we look at a particular industry's campaign contributions and lobbying, as we did with the meat industry in Safety Last, the airline industry in In the Unlikely Event, and media corporations in Off the Record. Occasionally, when we have information about a particular topic, we release a shorter report. Such was the case when we broke the story that President Bill Clinton was renting out the Lincoln Bedroom to campaign contributors (yes, that was us). And such is the case with our reports on Enron, a company we've followed for quite a few years.

A little history may be in order. Enron first appeared in a Center report in 1995, when we noted that the company, after making large soft money contributions to the Democrat National Committee, had gotten seats on then-Commerce Secretary Ron Brown's trade missions to Russia and India. Of course, Enron's executives got more than a window seat. They also landed a contract to build a power plant in India.

Our initial report on Brown and Enron is still in our online archives here. In the inaugural edition of The Buying of the President in 1996, we elaborated on the Enron/Ron Brown/Bill Clinton connection; we also noted the links between Republican Senator Phil Gramm and the company. In The Buying of the Congress in 1998, we described the company's ties to Republican Tom DeLay, the House Majority Whip who, between 1987 and 1996, had no donor more generous than Enron. In 2001, John Dunbar and Robert Moore wrote a lengthy piece on The Public i chronicling the campaign contributions that paved the way to California's electric utility deregulation debacle; Enron, one of the biggest beneficiaries of the scheme, was one of the top donors to politicians in both parties (who, it should be remembered, passed California's deregulation legislation unanimously).

So, contrary to many of you who accused us of being anti-Bush because we only explored the links between Enron and his campaigns and administration, the fact of the matter is that the Center has documented the relationships between Enron and politicians and officials from both parties. And, over the years, we've looked at far more than Enron. Time and again, we've found that the money special interests give does make a difference. The average American can't get the secretaries of Treasury and Commerce on the phone if his employer is going out of business, or laying him off. He doesn't get invited on trade missions to India. He doesn't have the opportunity to persuade a presidential candidate to call for capping carbon emissions during his campaign.

And that, to answer another frequent complaint, shows the extent to which campaign contributions drive public policy. Many critics wrote to say that Enron's largesse was meaningless because there is no connection between Enron giving and Bush policies. Here's one. During the summer of 2000, according to The Washington Times, Kenneth Lay, the Enron CEO, arranged a meeting between then-Governor Bush and Fred Krupp, executive director of Environmental Defense, which advocated a market-based system that would limit the amount of carbon greenhouse gases, believed by many experts to cause global warming, that power plants could emit. Krupp persuaded Bush to sign on to the caps, which led to Bush's campaign pledge to limit carbon emissions. (Bush later broke that pledge, although his administration's energy plan does contain a proposal for a market-based system to reduce carbon emissions, but without the caps envisioned by Lay.)

Lay's concern wasn't first and foremost for the environment. Again, according to The Washington Times, Lay saw limiting carbon emissions, which are produced in far greater quantities by coal plants than by the natural gas that was central to Enron's business, as a profit opportunity. In 1997, Lay even lobbied Clinton and Vice President Al Gore in the White House for the caps. A December 1997 Enron memo cited by the paper said Lay's preferred, market-based method of reducing greenhouse gases would be "good for Enron stock!!"

The memo went on to say that the Kyoto treaty, "would do more to promote Enron's business than will almost any other regulatory initiative outside of restructuring the energy and natural gas industries in Europe and the United States."

If Enron and Lay's support for the Kyoto treaty is understandable as self-interest, Bush's embrace of it in the campaign is less so. Bush, after all, came from the petroleum industry, which would have been adversely affected by the policy he promised to adopt. His environmental record in Texas wasn't exactly pristine, nor has he distinguished himself in this area in the White House. Yet he publicly promised to reduce carbon emissions. While one can argue that he certainly didn't keep the promise he made to Enron, it was the lobbying of other interests, as we pointed out in this report, that helped change his mind.

And, of course, there are other interests out there. Our friends over at the Center for Responsive Politics have a list of the biggest campaign contributors in the 2000 election cycle. Enron's more than $2.4 million in contributions, split 72 percent to 28 percent between Republicans and Democrats, respectively, earned it a rank of 36 on the list. In other words, there were 35 donors that lavished even more money on candidates.

Corporations and labor unions give millions to candidates from both political parties. We do our best to track them. According to CRP, the top giver in the 2000 cycle was a union, the American Federation of State, County and Municipal Employees, or AFSCME, which gave overwhelmingly to Democrats. Indeed, we found that through June 1999, AFSCME was the top soft money donor to the Democratic Party, having given some $3.6 million. Our executive director and founder, Charles Lewis, dissected AFSCME in The Buying of the President 2000 and online here.

The point I'm trying to make is that integrity is not a zero-sum game. Just because we point out contributions and conflicts of one party doesn't mean we regard the other as being pure as driven snow. Both political parties are supported financially by special interests with their own narrow agendas. We do our best to find out who these interests are, to whom they're giving money, what they're lobbying for, and what it means to the average citizen when they get their way in Washington and in state capitals around the country.

Bill Allison is the Managing Editor of the Center for Public Integrity. To write a letter to the editor for publication, send to letters@publicintegrity.org. Please include a daytime telephone number.

-- Cherri (jessam5@home.com), January 28, 2002

I guess what he is trying to say is "Two Wrongs Don't Make A Right"

Or how can you complain about the things Clinton did and turn around and make excuses for and ignore the what Bush does?

-- Cherri (jessam5@home.com), January 28, 2002.

Cherri,

Not sure whom you mean by "you," but I can tell you how I feel about this -- same as I did with Clinton. You show me a smoking gun, you show me evidence of actual wrongdoing, and I'll call for that person to be prosecuted to the fullest extent of the law.

Innuendo, supposition, guilt-by-association and guesses are the fodder of conspiracy theorists, not legal proceedings. Just as the Republicans mounted the Whitewater investigation as a 100% pure political exercise to damage Bill Clinton's popularity, the Democrats are trying to flog this pale horse into a mighty steed to do the same to Bush.

Problem is, as the Republicans found out when they kept going after Clinton, the skeletons in one's own closet become liabilities.

And there's another way to look at this: you point out (here and in other threads) that the Republicans took more money from Enron than the Democrats. OK, granted. What I'm concerned with are the favors given *in return for* that money. Therefore, given -- as this very article has pointed out -- that Clinton and Co. basically gave India to Enron for far less money, all that has proven to me is that, not only were THEY whores too, same as the Republicans, they were stupid whores to boot. They should have held out for more money. :)

repeat: :)

Incidentally, the latest CNN/Gallup/USAToday poll shows some interesting numbers. It turns out that most Americans feel that the Democrats in Congress are far more guilty than the Bush administration of doling out favors for contributions.

And Drudge, that redoubtable wacko, is saying that Terry MacCauliffe, head of the DNC, has been found to have some large skeletons in HIS closet, too. Imagine that!

Now: the moral of this story is that we really, really, really need campaign finance reform. We also need to investigate Enron and punish ANYONE who broke the law -- from Bush on down. But partisan manuevers intended solely to damage Bush's popularity are a complete waste of taxpayer money and time.

(I wonder if this goes on, if a few years from now, someone will say, "wow, this thing has cost SEVENTY MILLION DOLLARS and has uncovered NO hard evidence of wrongdoing" -- same as Clinton's supporters did?)

Maybe. But I won't be watching, not as long as there's college ball on the telly. FAR more interesting.

-- Stephen M. Poole (smpoole7@bellsouth.net), January 28, 2002.

By the way ... my almost-parenthetical mention of that poll has a moral, too.

If the Democrats aren't VERY careful, this thing is going to blow up in their faces, same as the Lewinsky thing did for Gingrich and a whole bunch of Republicans.

Therefore, I view this as an intelligence test. If they continue to pursue it, start looking for self-inflicted holes to begin appearing in their feet.

-- Stephen M. Poole (smpoole7@bellsouth.net), January 28, 2002.

One more by the way (this IS my first post here in a few days; then I'm back to work!).

For what it's worth, Drudge has posted the particulars.

Instead of focusing on Bush, you'd do better to start asking just how many politicos are going to be damaged by the collapse of the stock market. This particular Web apparently is spun widely, deeply and stickily.

(Is that a word?[g])

-- Stephen M. Poole (smpoole7@bellsouth.net), January 28, 2002.

"Instead of focusing on Bush"

???

Are you kidding?!!!

We love it when Bush is in hot water! We have almost 3 years of bashing left, if he lasts that long. Don't be such a party pooper Poole!

-- LOL (get with the program @ you. numbskull), January 28, 2002.

I pretty much agree with Stephen on his posts above.

-- Peter Errington (petere7@starpower.net), January 28, 2002.