For a Generous Donor and Bush, the Support Is a Two-Way Street
By RICHARD A. OPPEL Jr.
ALLAS, June 29 -- In October 1997, George W. Bush placed a call to his friend Tom Ridge, the Republican governor of Pennsylvania, to vouch for the Enron Corporation, the giant Houston energy and trading company that, at the time, was battling to sell electricity in Pennsylvania.
Mr. Bush made the call at the request of Kenneth L. Lay, the chairman and chief executive of Enron.
"I called George W. to kind of tell him what was going on," Mr. Lay said. "And I said that it would be very helpful to Enron, which is obviously a large company in the state of Texas, if he could just call the governor and tell him this is a serious company, this is a professional company, a good company."
After a nasty regulatory fight, Enron cracked into Pennsylvania's market. And in the ensuing years, the Texas energy company has seen its influence widen nationally and internationally. Along the way, Enron and its executives have been Mr. Bush's most generous contributors, giving more to his various campaigns -- over $550,000 -- than any other source.
The relationship between Mr. Bush and Mr. Lay is close, and old: the two men got to know each other in the 1980's, when Mr. Lay was a big political supporter of Governor Bush's father, former President George Bush. It is the sort of friendship where the governor takes the time to write a joshing birthday note to Mr. Lay: "One of the sad things about old friends is that they seem to be getting older -- just like you! 55 years old. Wow! That is really old."
Mr. Bush, 53, listens closely to what Mr. Lay, now 58, and others at Enron have to say about important policy matters. As governor, Mr. Bush has been a supporter of the legislative initiatives that have been most important to Enron, including deregulating electric utilities, easing the tax burden on capital-intensive companies, and passing laws meant to curb large jury awards in civil cases. On all of them, Mr. Bush received advice from top Enron executives, sometimes soliciting it.
Many of the issues important to Enron, particularly tort reform, were also important to other Texas businesses. And Governor Bush, a spokesman said, has gone to bat for other companies, too, never making unusual overtures for Enron or pushing for legislation specifically tailored to benefit the company.
In Washington, Enron lobbies on an even wider array of issues, including federal regulation of the nation's electric-power grid (Enron wants rules making it easier to trade and transmit electricity); support for the Overseas Private Investment Corporation, a federal agency that finances and insures many of Enron's overseas projects; free trade around the globe, which helps Enron's far-flung energy businesses; and limiting the regulation of derivatives transactions between private parties, a huge and growing part of Enron's business. Enron lobbies on so many issues in Congress that it takes 26 pages for it to list them all on federal disclosure forms.
Tom Smith, director of the Texas office of Public Citizen, the group founded by Ralph Nader, who is himself a presidential candidate, said: "Enron's investment in the Bush gubernatorial campaigns have paid off in policies beneficial to them. And that's why they're investing so heavily in the presidential campaign."
Aides say it is not unusual for Governor Bush to lend his name to a Texas company's efforts outside the state, as he did for Enron in Pennsylvania. In the past, for example, he has contacted foreign leaders considering whether to buy military aircraft from Texas companies.
Enron officials reject the notion that their donations are meant to influence legislation, and they note that, in aggregate, their most significant legislative opponents, electric utilities, give far more money to federal candidates.
"When I make contributions to a candidate, it is not for some special favor, it's not even for access -- although I'll be the first to admit it probably helps access," Mr. Lay said in an interview at Enron's 50-story headquarters in downtown Houston. "It is because I'm supporting candidates I strongly believe in personally."
Mr. Lay added, "I'm not doing this now because I want to be an ambassador or cabinet officer or want any specific thing done if he gets elected."
He also said Enron does not seek legislation that benefits only the company. "When we go in and lobby for things like Nafta, or like W.T.O. status for China," he said, referring to the World Trade Organization, "or electric deregulation, we're basically doing it because we think it's right."
In the presidential race alone, Enron and its executives have given Mr. Bush about $105,000, making Enron the ninth largest donor to the Bush campaign so far, according to the Center for Responsive Politics. And that does not include the unlimited donations to the Republican Party, known as soft money.
Mr. Lay has donated $326,000 to Republican Party committees over the past three years - including $250,000 in April. (Enron has also contributed soft money to Democrats, and Mr. Lay has golfed with President Clinton). Enron's president, Jeffrey K. Skilling, has donated an additional $50,000 to the Republicans, according to Federal Election Commission records.
Mr. Lay is also one of the "Pioneers," Bush supporters who pledge to collect at least $100,000 in direct contributions. As part of that role, he sent a letter last year to several hundred people, many of them Enron executives, urging them to make the maximum contribution to Mr. Bush's campaign. "In no way is this a condition of employment or continued employment at Enron," the letter said.
In the following three months, Enron executives kicked in more than $50,000.
Mr. Bush declined to comment for this article. A campaign spokesman, Dan Bartlett, said Mr. Bush and Mr. Lay have been close friends for many years.
"The fact that he heads this company is secondary to their personal relationship," Mr. Bartlett said. "One issue that you could say that Enron has played a key role in shaping the debate is deregulation. Governor Bush does share in their philosophy of competition in the marketplace."
Under the direction of Mr. Lay, the son of a preacher and farm-machinery salesman from Missouri, Enron is now widely regarded as one of the toughest and most innovative companies in the nation. It is a fearsome competitor in the huge market for the trading of electricity, energy commodities and derivatives contracts linked to energy prices -- a business that it helped create.
In addition, Enron, with $40.1 billion in sales last year, builds and operates power plants around the world, including in Poland and Turkey. A huge project in the Indian state of Maharashtra a few years ago became one of the most controversial issues for the Indian government.
Enron still runs the second-largest natural gas pipeline network in the United States. And it dazzled Wall Street in January when it unveiled its latest venture, the trading of bandwidth needed for high-speed data communications.
Enron officials say some of the company's foreign projects may not be insurable without the backing of the Overseas Private Investment Corporation, which limits risk to United States companies investing abroad. O.P.I.C. provided financing or insurance coverage worth almost $300 million for Enron's foreign projects just last year, according to government records.
Enron officials have in the past asked Mr. Bush to help lobby lawmakers to appropriate funds for O.P.I.C., as well as for the Export-Import Bank, another federal agency that aids American companies abroad.
In one such letter, obtained by The New York Times under Texas open records laws, Mr. Lay asked Mr. Bush in March 1997 to contact every member of the Texas delegation to explain how "these export credit agencies of the United States are critical to U. S. developers like Enron, who are pursuing international projects in developing countries."
Mr. Lay's request was to be "handled" by the state-federal relations office, a lobbying office the state of Texas maintains in Washington, according to a note written on the letter by a Bush staffer. But according to Mr. Bartlett, the Bush spokesman, Bush officials have not lobbied on behalf of either agency.
In Washington, the most important issue to Enron is legislation that would require the nation's electric grid to transmit power in a more uniform and free-flowing manner.
In Texas, Mr. Bush has always been an advocate of electric utility deregulation, but his support did not always fall Enron's way. Late in the 1997 legislative session, after Mr. Bush's attempts at sweeping tax reform failed, he tried to push through a last-minute deregulation bill. To succeed, the bill needed support from the state's big utilities, but Enron officials felt the bill was weighted so far in favor of the utilities that they could not endorse it. The bill ultimately failed. In 1999, Texas lawmakers passed a deregulation bill that Mr. Lay said is probably the best in the nation.
As part of a group of large energy and manufacturing companies, Enron lobbied during the 1997 Texas legislative session for lower property taxes. Before the session began, Mr. Bush appointed a 17-member committee to study the issue, including Richard Kinder, who was then Enron's president, on the panel. The proposal Mr. Bush introduced would have resulted in $9 million in annual tax savings to Enron. But the Bush plan had little legislative support, and it soon died.
Enron has also sought Mr. Bush's help on narrower issues. In November 1998, the chairman of Enron Oil & Gas, which at the time was majority-owned by Enron but is now a separate public company called EOG Resources, complained to Mr. Bush that the state comptroller was improperly assessing the company about $415,000 in crude-oil production taxes. The chairman, Forrest E. Hoglund, who has also been a Bush donor and who has since retired, wrote to Mr. Bush: "We need to have this handled before there is a big industry backlash. Sorry to bother you with it."
The case is still pending, according to officials at the Comptroller's Office. Mr. Bartlett, the Bush spokesman, said the Enron Oil and Gas complaint, and similar letters from four other companies, had been routed to Albert Hawkins, Mr. Bush's budget director. One of Mr. Hawkins' staffers called the Comptroller's Office to inquire about its methodology, but did not suggest rescinding or easing the action against Enron Oil and Gas, Mr. Bartlett said.
Long before Mr. Bush's inauguration in 1995, Enron had built relationships with both the Bush family and officials from the Bush administration. In addition to Mr. Lay being a big fund-raiser and supporter of the former president, Enron and its affiliates later hired a number of high-level Bush officials, including former Secretary of State James Baker 3d and former Commerce Secretary Robert Mosbacher.
Governor Bush has even been accused of working on Enron's behalf. Rodolfo Terragno, a senior Argentine official, has told several publications that in 1988, he received a call from Mr. Bush asking him to award a pipeline contract to Enron.
Mr. Terragno, who is currently the Argentine cabinet chief, declined requests for an interview. But in a statement sent by e-mail, he said he now is not sure if the call came from Governor Bush or from one of his brothers, Neil Bush. Bush officials say no one from the family ever lobbied for Enron or spoke to Mr. Terragno about the project.
Says Mr. Lay, "No member of the Bush family has ever been on the Enron payroll."
-- Cherri (jessam5@home.com), January 11, 2002