WASHINGTON – The ties that bind are creating a real problem for the Bush administration in its investigation of the financial collapse of energy giant Enron.
Congressional Democrats looking for a smoking gun say it appears no one on the Bush team is clear of a relationship with the Houston-based company and they want every administration player to respond to questions about every contact they have ever had.
To start with, Democrats want to know whether it is inappropriate for Bush's chief economic adviser to have been paid $50,000 to conduct a review of Enron's financial condition since he served on Enron's advisory board back in 2000 before Bush became president.
The administration admitted Wednesday that while two Cabinet officials refused Enron's plea for intervention in the face of imminent financial collapse, Council of Economic Advisers head Lawrence Lindsey did look into the potential impact of an Enron bankruptcy on the nation's economy, a move that White House spokesman Ari Fleischer said was necessary.
"On the broader [question] of whether Enron's collapse has broader implications for the economy, I think if the administration didn't look at that you would be asking why didn't the administration look at that. Of course they should look at that, and they did," Fleischer said.
Lindsey has said that at the time he consulted for Enron, he only gave advice on macroeconomic issues and never looked at the books. But Rep. Henry Waxman, D-Calif., ranking member on the House Government Reform Committee, has written Lindsey, asking if his relationship made it inappropriate for him to conduct the review.
"I would like to know whether your participation in discussions about Enron may have created a conflict of interest or an appearance of a conflict of interest," Waxman wrote in a letter Wednesday.
Waxman also wrote a letter to Vice President Dick Cheney on Wednesday. In it he accused Cheney's energy policy task force of creating a benefit to Enron, the nation's seventh-largest company before its downfall after attempts to negotiate a more than $8 billion buyout by rival Dynegy collapsed.
"In total, there are at least 17 policies in the White House energy plan that were advocated by Enron or that benefited Enron," Waxman wrote. "The policies in the White House energy plan do not benefit Enron exclusively. And some may have independent merit. Nonetheless, it seems clear that there is no company in the country that stood to gain as much from the White House plan as Enron."
Fleischer responded Thursday that "the allegation by Congressman Waxman that anything was put in that plan for political purposes is, of itself, a partisan waste of taxpayer money."
While the Bush administration says no improper actions were taken on behalf of Enron, in fact that no actions were taken at all, Democrats are raising more and more questions about the administration's relationship to Enron and possible conflicts of interest.
Among the latest: A senior Democrat on the House Judiciary Committee wants Deputy Attorney General Larry Thompson to recuse himself from the Justice Department's investigation — the same way Attorney General John Ashcroft did last week — because Thompson worked at a law firm that represented Enron.
Rep. John Conyers, D-Mich., ranking member of the committee, wrote: "You clearly had a professional relationship with Enron and may need to recuse yourself from the investigation. At the very least, there is the appearance of a conflict of interest and you should consider a recusal."
Though the entire Houston office of the Department of Justice has also recused itself, Thompson, assigned to head up the department's probe of Enron, said he never handled any Enron-related issues and therefore sees no conflict of interest.
"I never have represented that company. With respect to my involvement in the case, we have consulted with Department of Justice ethics officials, and I have heard nothing that would cause me to discharge my responsibilities as the deputy attorney general," he said.
Meanwhile, a similar controversy is brewing over the head of the Securities and Exchange Commission, which is also investigating Enron and its auditor Arthur Andersen. Democratic Sens. John Corzine of New Jersey and Byron Dorgan of North Dakota say SEC Chairman Harvey Pitt should recuse himself because he represented five accounting firms, including Andersen. The White House dismissed the suggestion.
"The president has full faith and confidence that Mr. Pitt, as well as all members of his administration, will do the right things for the right reasons and will comply with all ethics provisions," Fleischer said.
Pitt is currently working on a plan for policing auditors in an effort to shore up confidence in the financial reports of publicly traded companies. The plan necessarily requires input from the top five accounting firms, which are regulated by the SEC.
In fact, the relationship between the accounting firms and the SEC is so thick, two of Bush's pending nominees for vacant seats on the five-member SEC come from the firms. No word yet on whether those nominations will be affected.
Finally, one senator not working for the president is also considering dropping out of the congressional investigations into the company. The wife of Sen. Phil Gramm, R-Texas, one of Capitol Hill's biggest recipients of Enron money, is on Enron's board and is named in a lawsuit by investors against Enron executives and directors.
"He has not seen the scope of the proposed hearings and has yet to make a decision," said Gramm spokesman Larry Neal. Neal said Gramm, who is not running for re-election, has begun returning 2002 campaign cash to contributors.
The Associated Press contributed to this report.