WASHINGTON – At last Tuesday’s Enron hearing, Sen. Fritz Hollings, D-S.C., blamed the energy giant’s death spiral on not just a “culture of corporate corruption,” but also “political corruption.”
He’s right, and most Americans agree. According to pollster Scott Rasmussen, 51 percent now say that the Enron debacle is a political scandal.
But then the crusty Commerce Committee chairman pointed his finger one way – at Republicans.
Hollings noted that President Bush appointed Enron people to key regulatory posts, and that Vice President Dick Cheney lobbied California and India on Enron’s behalf.
When a Republican on the panel tried to tie President Clinton to the scandal, Hollings stiffened.
“I don’t know how you get Clinton into it,” he growled.
Here’s how:
In 1994, after meeting with India’s former prime minister, Clinton ordered his energy secretary to take U.S. executives on a trade junket to India. Enron executives got seats on the trip and came back with an agreement to build a huge $3 billion power plant near Bombay.
To help finance the deal, Clinton turned to Arkansas cronies he’d named to the Export-Import Bank board.
One bank board member was Maria Haley, the former governor’s trade contact at the Arkansas Industrial Development Commission. Her ex-husband was convicted in the Whitewater probe. (Haley was replaced on the Ex-Im Bank board by Vanessa Weaver, whose father was a Stephens Inc. executive. She was forced by the Senate Banking Committee to recuse herself from any Lippo Group deals after I exposed her close ties to Lippo crook John Huang in a 1999 Investor’s Business Daily article.)
Ex-Im Bank loaned the Enron-led India project a total of $302 million. The Overseas Private Investment Corp. kicked in another $160 million in loan guarantees, while underwriting the deal with $180 million in political-risk insurance.
The risky deal would never have got off the ground if not for the government (that is, taxpayer) backing. Commercial banks rarely make big loans for long-term projects in unproven, unstable markets like India.
All the while, Clinton shepherded the project through for his golfing partner, Ken Lay, Enron’s CEO at the time. Clinton even penned at least one note with a related article to his former chief of staff, Mack McLarty, to make sure he was up to speed on the project’s development.
McLarty and Clinton’s ambassador to India, Frank Wisner, rode herd on the project until the final contract was inked.
Four days before Phase 2 of the project was finalized in June 1996, Enron gave $100,000 to Clinton’s dirty-money re-election effort. (Millions in illegal foreign cash had to be returned, and several Clinton donors and fund-raisers have since been convicted of fraud.)
What’s more, Lay found jobs for McLarty and Wisner after they left the Clinton administration. He also hired Clinton Treasury official Linda Robertson and his deputy energy secretary, Betsy Moler.
Hollings take note: All these Enron employees and consultants were Democrats, not Republicans – Clintonistas, not Bushies.
Clinton’s sweetheart India deal turned into a costly boondoggle that acted as a drag on Enron’s stock, and even sped the company’s collapse last year, when local Indian officials stopped paying their power bills.
Even after he left the White House, Clinton, who
hosted Enron officials at White House fund-raising
coffees, followed up on Enron’s snake-bitten India
project by lobbying local officials for back payments
during his trip to India last April. Bush, in
contrast, refused to bring up the project during his
visit with India’s leader last year.
Hollings asserted that the Bush administration did favors for Enron, which donated more than $1 million dollars to the Bush campaign.
But there is no evidence to support his charge.
There is, however, clear evidence that the Clinton administration showered Enron with favors. In fact, the sequence of events noted above appears to show a quid pro quo involving Enron donations, giving Lay a much better return on his political investments in Clinton than Bush.
Under Clinton, Enron became one of OPIC’s and Ex-Im Bank’s biggest customers. All told, the two overseas economic-development agencies backed some 18 foreign projects for Enron with a whopping $1.7 billion in loans and insurance.
Lay reportedly even used the Ex-Im Bank’s and OPIC’s backing to persuade Clinton’s SEC chairman, Arthur Levitt, to relax rules on off-shore partnerships.
Under Bush, Enron got not a dime in new funding from these agencies. In fact, last March, Bush proposed slashing funding for the agencies – a major blow to Enron, which was trying to plant itself in a lot of overseas emerging markets.
The Houston-based company didn’t even score any seats on the Commerce Department’s trade trip to Russia last year, the Bush administration’s only trade mission so far.
But it was a regular on Clinton’s shady trade junkets, which documents show were coordinated with the Democratic National Committee. Enron executives landed seats on at least 11 overseas trips sponsored by the Energy and Commerce departments.
Yes, Lay is an equal opportunity crony, who tried to trade on favors with both Republican and Democratic administrations.
But in terms of the fruits of the cronyism, it’s apples and oranges. Lay got more fruit under Clinton – and it turned rotten, as most deals borne of crony capitalism do.
Previous stories:
Huge Clinton loans to Enron expose taxpayers
Clinton ‘sweetheart’ deal sped Enron’s collapse
Enron execs regulars on Clinton trade trips
Did Enron insiders smell trouble in ’98?
