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What $6 million can buy

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For argument's sake, let's concede the point that everyone in the White House has been at such pains to make: No one in the Bush Administration lifted a finger to save Enron from collapse. But that doesn't mean the $6 million in campaign contributions the company and its executives gave to politicians over the past 12 years should be written off as a bad investment. For most of that time, Enron's Washington friends did pretty much whatever the company wanted.

What Enron wanted most was to be left alone, free of both regulation and scrutiny as it transformed itself from a dowdy natural-gas-pipeline company into a freewheeling energy-and-communications giant. In the early 1990s Enron became a new kind of business, selling not just energy but exotic financial instruments such as energy futures and options. The company moved the heart of its operations from the oil patch to the trading floor--largely free of regulatory baggage, thanks to allies such as Wendy Gramm. In 1993, as chairwoman of the Commodities Futures Trading Commission, Gramm helped design rules that exempted energy trades from government regulation. That meant Enron could operate an online energy market that, unlike traditional stock and commodity exchanges, did not have to disclose the price, volume or terms of the contracts it sold. Gramm left government that year and was given a lucrative spot on the Enron board. She is the wife of Texas Senator Phil Gramm, to whom the company has donated $97,000 since 1989.

There were also times Enron found a little government intervention came in handy. When India delayed approval of Enron's $3 billion power plant in Dabhol in 1996, Clinton White House counselor Mack McLarty instructed the U.S. ambassador in New Delhi to monitor it and gave regular progress reports to Enron chairman Ken Lay. (Four days before the project received its final O.K., Enron gave $100,000 to the Democratic National Committee.) And when Enron was trying to sell its interest in the Indian project, the New York Daily News reported, Vice President Dick Cheney raised the issue in a meeting last June with Indian opposition leader Sonia Gandhi. The White House says he was acting not at Enron's behest but on the need to protect $640 million in federal money.

More often than not, Enron's interests and the agenda of George W. Bush have been happily congruent. Enron has given Bush more than $700,000 in contributions over the years. Lay was disappointed last year when Bush backed away from a global-warming plan that would have been good for the natural-gas business, but Bush sided with the company in refusing to back price caps on California energy, of which Enron was a major supplier. Larry Lindsey, Bush's top economic adviser and a former Enron consultant, has battled on free-market grounds to preserve the kind of overseas tax shelters that hid Enron's true financial condition for so long. And in August Lay's backing helped put his friend Patrick Wood at the head of the Federal Energy Regulatory Commission, replacing a chairman who had opposed Enron's deregulation timetable.

Enron also found plenty to like in the controversial White House energy plan that Cheney produced last year: open access to electric-utility transmission lines, more deregulation initiatives and support for Enron's arcane financial instruments. "There is no company in the country that stood to gain as much from the White House plan as Enron," wrote California Congressman Henry Waxman, a leading Democratic critic, in a letter to Cheney last week. In the recent battle over an economic-stimulus bill, Lay lobbied for--and Bush supported--retroactive corporate tax relief. Enron would have been one of many beneficiaries, reaping a $254 million rebate from the government.

For more than a decade, Enron spent lavishly to untether itself from government oversight. But it became so notorious that it gave up any chance of a political lifeline. Last fall, when the company was begging for rescue, Bush Administration officials say it was unanimously rebuffed. Enron had hired the best lobbyists--powerhouses such as Republican chairman Marc Racicot and Bush adviser Ed Gillespie, who can usually make things happen--but they too are distancing themselves, saying they were kept in the dark about the depth of the company's problems. For the first time, what Enron needs is more than money can buy.



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Cover Date: January 28, 2002

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