Treasury Rebuffed Enron's Pleas

The Treasury Department disclosed Friday that Energy giant Enron Corp. asked the Bush administration to intervene with banks as it was hurtling toward bankruptcy last year.

Enron President Lawrence "Greg" Whalley called Treasury Undersecretary Peter Fisher "six to eight times" in late October and early November, said department spokeswoman Michele Davis.

It was the first indication that the energy-trading firm, which has ties to many top Bush administration officials, had asked for government intervention as it faced collapse.

"As Enron's negotiations with its bankers for an extension of credit neared a decision point, the president of Enron asked Undersecretary Fisher to call the banks," Davis said.

Fisher "inferred he was being asked to encourage the banks to extend credit. He made no such calls," she said.

More Information
• Related: Enron Contributions 1989-2001

Emphasizing that it wasn't only Bush administration officials who were close to Enron, the Treasury Department also disclosed Friday evening that former Treasury Secretary Robert Rubin, a Democrat, had sought Fisher's intervention on behalf of Enron.

Rubin, now chairman of the executive committee of financial giant Citigroup, called Fisher on Nov. 8, at a time that rating agencies were poised to downgrade their opinions on the financial status of Enron.

"Rubin asked Fisher what he thought of the idea of Fisher placing a call to rating agencies to encourage them to work with Enron's bankers to see if there was an alternative to an immediate downgrade," said Davis.

"Fisher responded that he didn't think it advisable to make such a call," said the Treasury spokeswoman. Rubin said he thought that was a reasonable position. Fisher made no such call."

Citigroup Inc., the nation's largest bank, is among a group of banks that lent hundreds of millions of dollars to Enron, hoping to keep it going so earlier loans would be repaid. Citigroup was said to be owed about $800 million.

The Treasury Department's announcement followed disclosures that Enron Chairman Kenneth Lay, one of Bush's biggest political contributors, had called Treasury Secretary Paul O'Neill, Commerce Secretary Don Evans and Federal Reserve Chairman Alan Greenspan in the days leading up to the biggest bankruptcy filing in U.S. history last fall.

Also, Energy Secretary Spencer Abraham called the Enron chairman on Nov. 2 "to ask about the situation after he read news reports about the company's financial problems," said Jeanne Lopatto, a department spokeswoman.

"Mr. Lay didn't make any requests, nor did the secretary offer any assistance," Lopatto said. She added that since last April Enron had made five written requests for meetings between its senior officials and Abraham, and all were declined.

Thousands of workers were laid off and many saw their retirement nest eggs vanish when Enron stock plunged in advance of the Dec. 2 bankruptcy filing of the nation's seventh largest company.

Democrats are emphasizing the close ties between Enron and administration officials and the impact of the failure on Enron employees.

The White House has denied that any government aid was ever extended to the beleaguered company and also rejected suggestions that the controversy could hound President Bush for months or longer.

"This dog won't hunt. That's a reference to the politics of it," said presidential spokesman Ari Fleischer.

"This needs to be fully investigated to determine if there was any criminal wrongdoing by Enron," said Fleischer. He said the president also is pressing for a review of rules governing 401(k) retirement plans like those at Enron.

"If anybody else wants to focus on politics, that's their prerogative. But the president's focus is on getting to the bottom of this fully," Fleischer said aboard Air Force One on a presidential trip to Pennsylvania.

Separately on Friday, the Justice Department said Joshua Hochberg, head of the department's fraud section, would be named acting U.S. attorney for the Enron case and a federal white collar crime prosecutor from San Francisco, Leslie Caldwell, would direct a national task force investigating the company.

Attorney General John Ashcroft, who received campaign contributions from Enron executives when he was running for re-election to the Senate in 2000, has recused himself from the investigation.

Meanwhile, senior Bush adviser Karl Rove offered his view of the relationship between Bush and Lay. "The president knows him. He is a friend. But the idea that he is a friend in the sense that this is a guy who's a close intimate is just ludicrous," Rove said in an interview with The Associated Press.

When Bush was the governor of Texas, Lay was chairman of the governor's business council. "They had quarterly meetings and he'd come in and talk to the then-governor about what it was they hoped to achieve at the meeting and they'd go over the agenda," Rove said.

Bush has described Lay as "a supporter." He said he saw Lay twice last year, but that they did not discuss Enron's finances.

Separately, O'Neill said that Lay's call to him in October was to "give me a heads up" rather than to ask for specific government help.

"It's the kind of thing I would expect any big company executive to do if they understood how the government works and that the Treasury Department has some responsibility to make sure the world capital markets are not unsettled by events that are going on in the private sector," O'Neill told ABC's Good Morning America.

Meanwhile, investigators for the Senate Governmental Affairs permanent subcommittee on investigations modified its subpoena to the accounting firm that audited Enron's books, Arthur Andersen LLP, to include all documents related to the destruction of Enron records.

The auditing firm said Thursday that its employees had destroyed a "significant but undetermined" number of Enron financial documents.

The Senate panel, conducting one of five congressional inquiries, had issued 51 subpoenas as of Friday.

Rep. Henry Waxman of California, senior Democrat on the House Government Reform Committee, wrote to O'Neill and Evans requesting information on their contacts with Enron and demanding to know "why the administration apparently did nothing to mitigate the harm of the Enron bankruptcy to thousands of its employees and shareholders."

The collapse is also being investigated by the Justice and Labor departments and the Securities and Exchange Commission.

Meanwhile, an Army spokesman said Friday that Army Secretary Thomas White — who was Enron's vice chairman before his Pentagon appointment — has not talked with company officials since he took office last May 31. "That's a part of his past now," said the spokesman, Col. Jim Allen. "He's had no contact with Enron in a business sense."

White's financial disclosure reports, written last year before the worst of Enron's stock crash, valued his company stock and options at between $50 million and $100 million. White has sold all of his Enron stock to comply with federal ethics rules.

Senate Minority leader Trent Lott, R-Miss., who accepted a $1,000 contribution from Enron's chairman for his 2000 re-election campaign, said he never met Lay so far as he knows and never discussed financial issues with Enron officials. "I never quite understood what Enron did," he said in an interview in Jackson, Miss. "I thought they were sort of a pipeline."

"There are those in Washington who are always looking for the downside," Lott said. "There are a lot of people who would like to see this be a problem for President Bush and Vice President Cheney. I don't know any of the details but I feel confident that there's not going to be any major problems there."

The Associated Press contributed to this report.