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Administration Playing Hide-and-Seek in Enron Case?

Aired January 28, 2002 - 19:30   ET



DICK CHENEY, VICE PRESIDENT OF THE UNITED STATES: It's a classic sort of feeding frenzy in Washington. Nobody has got a charge to make. Nobody did anything wrong.


ROBERT NOVAK, CO-HOST: Tonight: If no one did anything wrong, why won't Dick Cheney release notes from his closed-door energy meeting? And are accountants accountable for the collapse of Enron? We will talk to Arthur Andersen's attorney.

ANNOUNCER: Live from Washington: CROSSFIRE. On the left, Bill Press; on the right, Robert Novak. In the CROSSFIRE: Democratic Senator Dick Durbin of Illinois and Republican Senator Mitch McConnell from Kentucky; and later, Arthur Andersen attorney Stan Brand.

NOVAK: Good evening. Welcome to CROSSFIRE.

No deal has been cut between Congress and the White House. And that sets the stage for what could be the political trial of the century, the 21st century, anyway.

On television yesterday and today, Vice President Cheney said absolutely no to longstanding congressional demands to release information about his energy task force's secret talks with oil executives. In the White House Rose Garden today, President Bush said the same thing: no. That raises the prospect that Comptroller General David Walker, who heads the investigative branch of Congress, will go to court to force the release of the information.

Why is this confrontation necessary? Do the president and vice president have something to hide? Are they just being stubborn or are they protecting the power of the presidency?

Bill Press.

BILL PRESS, CO-HOST: Let me ask you, Senator McConnell -- the vice president met with various groups to put together a national energy policy, an energy policy that including lots of tax benefits for big energy companies, lots of changes in regulation to benefit new energy companies, big energy companies. But he won't tell us the names of the people that he met with, how many times he met with them or what they discussed. What does Dick Cheney have to hide? Why is he stonewalling?

SEN. MITCH MCCONNELL (R), KENTUCKY: Well, this is also the energy policy that adopted 11 of the 12 recommendations of the Sierra Club. There were a lot of different groups.

PRESS: Fine. Put it out there.

MCCONNELL: It's my turn to answer.

There were a lot of different groups that were consulted with by this task force, which was made of government employees. What is really amusing here -- this is the height of hypocrisy -- Congress exempted itself from the law that the GAO is seeking to enforce to try to get deliberative -- information about deliberations. The Freedom of Information Act, which allows a citizen to try to get information about the government, we also exempted ourselves from that.

So let me just give you the picture. Had we not done that, I wonder how my colleague Dick might have liked it if the GAO or a citizen could find out how many times he talked to Handgun Control, or whether or not he ever received a legislative proposal from Handgun Control, or whether or not there were any e-mails? Now, this is height of hypocrisy, Bill.

Let me just sum it up by saying this: It's important for us in our roles in the Congress and for the administration in its role to be able to have deliberations, to be able to consult with people, without thinking the next day somebody is going to try to get all of your private discussions.

PRESS: Well, with all due respect, Senator, I really don't care, for the moment, how you run your business over in the Senate. I think you should have the same rule that I think should apply to the White House and I think does apply. I'm speaking as a member of the public. If they are meeting to make public policy, I believe that I, as a voter and a member of the public, have a right to know whom they are meeting with.

And I think you are just avoiding the real reason.


PRESS: And the American people know -- if I may finish now -- what the real reason is.

MCCONNELL: I don't...

PRESS: The real reason is in one word. It's Enron, Senator.

Let me show you -- this morning, it was in "The New York Times," the latest "New York Times"/CBS poll. When it comes to Enron, the Bush administration is -- 67 percent of the American people -- add 58 and 9 -- say that they're mostly telling the truth but hiding something, or that they're mostly lying.

The American people know Dick Cheney just doesn't want to us know what kind of influence, how big an influence Enron had over that energy policy. That is it, isn't it?

MCCONNELL: No, it isn't. It's a broader issue of whether or not you can have deliberations, not only with your staff, but by anybody else that you want to get input from, without having those communications made public, handed over to the press or to the Congress or anyone else. And Enron didn't get everything it wanted. There were a lot of other companies that were in there elbowing, too. They were the seventh largest company in the world. This was an energy policy. Of course you would talk to them. You would be fools not to.

NOVAK: Senator Durbin, anybody who has been watching me on television the last couple of weeks knows I think that the president and the vice president ought to turn this information over. I think it's silly not to. But tonight, I'm like a lawyer for the administration. I'm going to at least present their view, not very well.

So I'm going to have Dick Cheney, who had an interview today with CNN's John King, give a position. And I want you to react to it.


CHENEY: It's my judgment -- and the president shares this view -- that if we start down that road, we are setting a terrible precedent. We are saying the vice president cannot have confidential meetings, that I can't meet anybody without telling Henry Waxman I met with them.


NOVAK: What do you say to that?

SEN. DICK DURBIN (D), ILLINOIS: That's not what it is about. He was named by the president to chair the energy task force to write this new energy policy. This is not whether Vice President Cheney is having a personal meeting in his office.

The question is: Who does he sit down with? If he sits down with the Sierra Club and he sits down with Enron, let's give full disclosure on this. But if you take a look, this all started long before the Enron stock was really in trouble. It was probably at $50 when Henry Waxman sent the first letter saying: We want to know all the people you met with.

And David Walker, who is certainly not a Democrat, was a Republican...

NOVAK: He's the comptroller general.

DURBIN: That's right -- who has been given this responsibility, says the law is clear. When it comes to vice president's responsibility in formulating policy, he has an obligation to disclose. And, Bob, I'll bet you a Chicago pizza that within six weeks, maybe eight weeks at the most, it will be disclosed, because the pain administration is going through on the speculation about what happened may be a lot worse than the actual event.

NOVAK: I want to move on to something that the vice president told John King that I do agree with. And let's listen to that.


CHENEY: Enron I'm sure got some things they agreed with are in the report, but there were things they didn't get. They wanted us to support the Kyoto treaty. We didn't support the Kyoto treat. We said no. They wanted mandatory carbon dioxide emissions. We said no. It was bad policy. If we thought it was bad policy for the country, we didn't do it.


NOVAK: I had in my column a couple weeks ago that Enron was trying to make a cash cow out of the Kyoto treaty by trading in these carbon dioxide credits. And, gee, no Democrats -- and they didn't get that. The administration cut them off at the knees. So the idea that Enron could get anything they wanted out of this administration is not true. That was their big cash cow, Kyoto. And they got defeated on that. Isn't that right?

DURBIN: The strongest possible argument for disclosure: If in fact the Bush administration treated Enron in an even-handed way and said no in some instances, yes in others, and they want to stand up and make that case, so be it. But the fact that they are just selectively telling us where they disagreed with Enron raises a lot of questions about: Where did you agree with them?

It really raises a lot of suspicions about this whole process.

PRESS: Senator McConnell, here's what gets me. It's, this is so familiar, deja vu all over again.

Eight years ago, there's another task force, another White House task force. This happened to be on health care. This happened to be led by the first lady, Hillary Rodham Clinton. And, wrongly -- and I said so at the time -- they would not reveal all the people that they were meeting with and who was there and all that kind of stuff. And the Republicans especially went nuclear.

Let me just show you a couple of quick quotes. Here is your colleague, Senator Grassley: "President Clinton was supposed to be Mr. Town Hall, yet his health care task force is surrounded by secrecy."

Here's Congressman Istook at the time. He's complaining about a "great amount of secrecy attempting to hide from the American people the interests that were involved in promoting the health care plan that the administration is sponsoring."

My question is: Why the double-standard? And when was what wrong for Hillary become OK for Dick Cheney?

MCCONNELL: They shouldn't have called it a task force, because it was simply an organization of internal government employees. The Clinton task force had a lot of outsiders on it. It was an entirely different animal.

And with regard to how many times the vice president met with Enron, I think he said that sometime back, said he met with them six times.

PRESS: Well, who else did he meet with? Who else did he meet with?

MCCONNELL: And, also, the Sierra Club got a bigger percentage of what they wanted than Enron got of what it wanted.

PRESS: Well, put it out there.

MCCONNELL: The energy plan is out there, Bill.


MCCONNELL: ... one hundred and fifty-seven proposals. The energy plan is out there.

NOVAK: Senator Durbin, I firmly believe there is no problem that we have in this country that can't be blamed and should be blamed on Bill Clinton.


DURBIN: I'm glad you are off Jimmy Carter.

NOVAK: But as a matter of fact, Senator, don't take it from me. Let's listen to a non-Republican, a defense attorney, Roy Black, and see what he says.


ROY BLACK, CRIMINAL DEFENSE ATTORNEY: The problem here is that, in a couple years, Ken Starr eviscerated the attorney-client privilege and executive privilege as it applies to (VIDEO GAP)


NOVAK: The fact of the matter is that Clinton claimed the executive privilege. And Ken Starr, as a good lawyer, eviscerated it.

DURBIN: Do I remember my favorite investigative journalist, Bob Novak, and others preying on the information, who slept in the Lincoln Bedroom and had an omelet with the first couple in the morning after? We have got to know these special interests by names because they were close to the centers of power in America.

And now when it comes to actually writing energy policy, there are those who are saying: Wait a minute. We don't want you to know who came in the room, sat down and put their proposals on the table.

NOVAK: But what I'm saying is that Clinton did such a bad job on claiming executive privilege that nobody can claim it anymore. DURBIN: Well, frankly, I'm not surprised. I thought you would defend him, but I'm not surprised that you are attacking former President Clinton.


PRESS: No, it was Ken Starr's fault, is what Roy Black said.

Gentlemen, when the report comes out and the list comes out, we will have you back and we'll talk about it. Thank you very much for joining us, Senator McConnell, Senator Durbin.

And when we come back: Accounting firm Arthur Andersen is in so much trouble, they have hired a new hotshot Washington lawyer to defend them. Did Andersen do wrong? Can Andersen survive? Stan Brand steps into the CROSSFIRE next.


PRESS: Now CROSSFIRE round two: When Enron collapsed, so did the reputation of its accounting firm, Arthur Andersen, accused now of helping block reforms of the accounting industry, of cooking the books to hide Enron's financial difficulties and of shredding key documents. Now facing multiple congressional investigations and possible criminal charges, Andersen has turned to a Washington pro, attorney Stan Brand, to restore its good name. Can he?

Let's find out -- Bob.

NOVAK: Mr. Brand, we had a wonderful example of the corporate world last week, where David Duncan, the Andersen auditor handling Enron, was pointed at by his former colleagues as saying: It's him. He's the guy who did it.

Now, take a look at that port fellow. You can look at him right on the screen there. He looks like he is about to have a nervous breakdown. He is scared to death. He is a scared bunny. Is that credibility that all these big powerful Andersen -- look at him -- look how sad he is -- that all these Andersen executives were in the clear? And aren't they just trying to make a scapegoat out of this poor fellow?

STAN BRAND, ARTHUR ANDERSEN ATTORNEY: Well, Bob, he is a senior partner, an engagement partner in charge of this account.

When Andersen found out about this, they hired a prominent New York law firm to investigate. And the facts led them to the conclusion that he was responsible for having been involved in a massive shredding of documents. Any company that didn't take care of that kind of a situation by disciplining an employee would be in even greater difficulty.

And so the fact that Enron -- that Andersen stepped up to the plate on this, and has stepped up to the plate on each and every investigation, each and every hearing, has provided full corporation to all the government agencies looking into this, hardly suggests that they are looking for a scapegoat.

NOVAK: Congressman Jim Greenwood of Pennsylvania, who was presiding over that hearing, came up with one of the great comments I have heard in my 45 years of watching congressional hearings. And in talking to Mr. Duncan -- Mr. Duncan took the Fifth Amendment, but this is what Congressman, Chairman Greenwood said to him.

And let's listen to it.


REP. JAMES GREENWOOD (R), PENNSYLVANIA: Mr. Duncan, Enron robbed the bank. Arthur Andersen provided the getaway car. And they say you were at the wheel.



NOVAK: Now, isn't that what the situation is? Do you expect us to believe that this guy, on his own, shredded the documents when he didn't think he was doing exactly what his bosses wanted? He was just the driver of the getaway car. He wasn't the planner of the heist.

BRAND: Well, that's a very dramatic characterization of it, except it's a little bit premature at this point to suggest who did what. We are at the very beginning stages of looking into those issues. I think it's premature to suggest that anybody else at Arthur Andersen was involved. In fact, in that entire hearing, there wasn't really any evidence suggesting that any other person, any higher-up, had either instructed Mr. Duncan or been in consultation with him over that issue.

PRESS: Stan...

BRAND: And so, until that occurs, I think it's very premature to start assessing blame and deciding what the facts are. We don't have the facts yet.

PRESS: Stan, I believe that what Andersen is accused of doing with the other accounting firms is worse then what Enron is accused of doing, because I was living under this myth that the accounting firms were there to protect people like us, like investors. And it seems to me, the core the problem here, getting away from the people to the policy, is that, if you look at Andersen last year, they made $25 million auditing Enron's books, but they made $27 million serving as consultants to Enron.

They got even more money by helping them with their business. That's the conflict that Arthur Levitt tried to get the Congress to change. It never happened. Don't you realize -- or are you willing to admit now, speaking for Andersen, that that dual role for accounting firms is wrong and must be changed?

BRAND: Well, first, on the numbers, they didn't make all that money off consulting. There were tax returns prepared. There were registration


PRESS: Well, other work, let's say.

BRAND: Other work, not consulting. Consulting was actually a very small part of that.

Joe Berardino, the CEO of Arthur Andersen, has said changes need to be made. And Andersen will be part of those changes and part of the reforms. And if that's ultimately where it leads, then Andersen will be part of that change and part of that reform.

PRESS: Fifty-three million dollars the five accounting firms gave members of Congress since 1990. Andersen alone gave money to 94 out of 100 United States senators. The reason that rule wasn't changed is because Andersen and other companies bought off the Congress, didn't they?

BRAND: Well, I mean, look, they weren't the only ones involved in this issue. Andersen is perfectly capable and willing to step up to the plate for the portion of this that is the accounting responsibility. But there were law firms. There were investment banks. There were analysts involved in structuring and designing these things. This is not just an accounting issue. This is much broader.

NOVAK: Mr. Brand, you really didn't answer Bill's question. I usually think his questions don't deserve an answer, but this one did.


NOVAK: What are the accounting firms -- I didn't know accounting firms were so political. What are they doing pouring all this money? What's the agenda that you have to give all these people money? And don't tell me it's ideological, because one of the big beneficiaries of the accounting companies was the left-wing Democratic senator from New York, Chuck Schumer.

BRAND: Well, Bob, you know. Everybody who has interests in Congress makes political contributions. The accounting industry, much less Arthur Andersen, isn't alone in that. The trial lawyers do it. The health care industry does it. The defense contractors do it. They are not alone in participating in the political system. I don't see why that has anything to do with what has occurred in this case.


PRESS: Stan, we are just out of time. After this has happened on top of Sunbeam, on top of Waste Management, why should anybody trust Arthur Andersen to do their books?

BRAND: Because they got 85,000 employee who, day in, day out, are hard-working people, professionals. They're very competent. They have stepped up to the plate to find out, get to the bottom of this. And when they do, they are going to turn this over to the government and all these agencies.

NOVAK: Stan Brand, thank you very much for coming back. We appreciate it.

In case you missed some bizarre twist in the news, Bill and I will be back to fill you in on how Attorney General John Ashcroft is banning R-rated -- that's R-rated statues from the Justice Department -- and other strange stories next on CROSSFIRE.


NOVAK: Welcome back.

In case you missed these wonderful stories, here they are: Two statues in the Great Hall of the Justice Department portray women with -- shock -- bare breasts. They have been there nearly 70 years. But Attorney General John Ashcroft is about to cover them with $8,000 worth of drapes. I wonder if John will drape the National Art Gallery next.

PRESS: Here is another one. "Wall Street Journal" columnist Peggy Noonan is the fourth journalist now to admit that she, too, took money from Enron. That raises the question: Can journalists condemn politicians from taking money Enron money when they did the same thing themselves? Answer: no.

NOVAK: Following the model of Adolf Hitler and Joseph Stalin, the New Jersey State Department of Education is rewriting history. George Washington, Thomas Jefferson and Benjamin Franklin have been eliminated from the state's teaching of history. So have the Pilgrims and the word "war." Is New Jersey educating a state filled with ignoramuses?

PRESS: New Jersey again?

And, in California, former President Clinton is back, big time, holding fund-raisers in the Golden State this week for Senator Barbara Boxer and Governor Gray Davis. You wonder why? With the country stuck in a recession, eight years of Clinton prosperity are looking better and better.

NOVAK: Thanks for the editorial.

At Saturday night's exclusive Alfalfa Club dinner, where speakers are supposed to be funny, President Bush cracked: "A year ago, I couldn't have told you that Mullah Omar was the head of Afghanistan. I bet that sucker wishes I hadn't found out." Laughter turned to applause and then to a standing ovation, the first ever for an Alfalfa Club joke.

PRESS: And one more Bushism this weekend. Meeting a West Virginia lawmaker last week who has twin boys, the president joked to him -- quote -- "I've been to war. I've raised twins. If I had a choice, I'd rather go to war." First daughters Jenna and Barbara, it sounds like you better call home.

NOVAK: No, I wonder if there something in that New Jersey water. We had the -- how many governors did they have in one week?

PRESS: Five, five.

NOVAK: Five governors. And now they -- oh, you probably approve of getting rid of the founding fathers, because, somehow or other, they were not politically correct.

PRESS: How wacky do you think I am, Bob?

NOVAK: Very.


PRESS: Well, guess what? You are wrong on that one. I don't understand it. What is there to be ashamed of with George Washington, Thomas Jefferson? I don't get it. I don't get it. Wacky as hell. I think they just ought to put them back in the books. Put war back in the books and whatever else they took out of the books.

And how long, Bob, before they release the Enron papers?

NOVAK: Oh, I didn't know we were talking about that. They are going to have to do it. And they would have been better off to do it before.

And George Bush has really turned into an attractive personality, hasn't he, yes or no?

PRESS: Bob, not all the time.


PRESS: From the left, I'm Bill Press. We would like to hear from you, your comments. Send us your e-mail to

NOVAK: From the right, I'm Robert Novak.

We will be back tomorrow night with a special edition of CROSSFIRE just before the State of the Union address by the very attractive George W. Bush. Good night.





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