President Bush yesterday decried the “awful bankruptcy” of Enron Corp. and ordered a review of pension disclosure laws to help protect the life savings of workers at other troubled firms.
The new probe was announced as Attorney General John Ashcroft and his chief of staff recused themselves from a separate criminal investigation of Enron by the Justice Department. Mr. Ashcroft, along with the president and many lawmakers of both parties, has received campaign contributions from Enron.
Mr. Bush expressed concern for Enron employees “who put their life savings aside and, for whatever reason, based upon some rule or regulation, got trapped in this awful bankruptcy and have lost life savings.”
The president’s comments came just hours before Arthur Andersen LLP, which audited the failed firm’s books, revealed that it had destroyed a “significant but undetermined” number of Enron-related documents. In a statement, the firm said the destruction took place before the Securities and Exchange Commission had subpoenaed them.
Andersen asked former U.S. Sen. John C. Danforth “to conduct an immediate and comprehensive review of Andersen’s records management policy.”
Mr. Bush ordered Treasury Secretary Paul H. O’Neill, Labor Secretary Elaine Chao and Commerce Secretary Donald L. Evans to convene a working group that will recommend reforms on pension rules.
“This administration will fully investigate issues, such as the Enron bankruptcy, to make sure we can learn from the past and make sure that workers are protected,” Mr. Bush said as he met with his economic team in the Oval Office.
Although Enron’s chairman, Kenneth L. Lay, called Mr. O’Neill and Mr. Evans just before the energy company’s collapse late last year, the Cabinet officials decided against government intervention, according to White House Press Secretary Ari Fleischer.
Mr. Bush, who learned of these conversations yesterday, said he has not spoken with Mr. Lay since the spring.
Yesterday’s review was the latest of numerous investigations the administration is conducting into Enron’s bankruptcy, which wiped out millions in employee savings.
The Justice Department announced its criminal probe Wednesday. Civil investigations were initiated earlier by the Labor Department and the Securities and Exchange Commission.
Republicans hope the administration’s aggressive stance toward Enron will inoculate the president against Democratic charges that the White House somehow shares culpability in the scandal. The party’s strategy is to disclose as much information as possible itself in an effort to undercut Democratic comparisons to the scandal over Whitewater, a failed real estate venture in which President Clinton was accused of stonewalling investigators.
Former Clinton special counsel Lanny Davis said he saw no similarities to Whitewater, telling the Associated Press that investigators should “go after the serious stuff,” including why Enron managers unloaded their stock at its peak price while preventing their workers from selling while its value collapsed from $80 a share to less than $1.
Mr. Fleischer discouraged “comparisons to the way business used to be done in the White House.” He added: “We do our business a little differently.”
Still, Congress yesterday announced the fifth separate investigation by committees and subcommittees into Enron’s collapse. Mr. Fleischer, aware that some Democrats are eager to publicly explore links between Enron and the White House, warned against a “fishing expedition” and suggested Democrats deserve equal scrutiny.
“If this were to become what people have become so used to in watching Washington, which is a politically charged, politically motivated effort to blame one party or to look only at one party, when clearly Enron is a corporation that has given hundreds of thousands of dollars to both parties, then I think people would think that the Congress is not on the right path,” Mr. Fleischer said.
He added: “If you’re going to go down this road, I think it’s also fair to say: Who in the entire town had any contact with Enron or phone calls?”
Administration officials said that if Mr. Bush or his Cabinet secretaries had intervened to bail out Enron, there might have been a case for conflict of interest. But the administration rejected Mr. Lay’s overtures for a bailout like the one the Clinton administration gave to a hedge fund facing bankruptcy, Long Term Capital Management.
Mr. Lay, a golfing partner of Mr. Clinton, made the comparison during his phone call to Mr. O’Neill in October, arguing the collapse of Enron would hurt markets as significantly as the collapse of Long Term. Mr. O’Neill then told Treasury Undersecretary Peter Fisher to evaluate the comparison.
“The Department of Treasury was advised that it was not apt as a result of Secretary Fisher’s review,” said Mr. Fleischer. “The appropriate step was not to intervene or take any action.”
Still, reporters yesterday peppered Mr. Fleischer with questions about Enron and its outreach to the Bush team during a White House press briefing that was reminiscent of the scandal-plagued Clinton administration.
“I haven’t heard anything in here from anybody suggesting wrongdoing,” said Mr. Fleischer. “You’ve only said ‘contact,’ ‘communication,’ as if there is something wrong inherently with contact and communication. And there is not.”
One reporter asked whether it was a conflict of interest for Mr. Ashcroft, who once received $25,000 in political donations from Mr. Lay, to investigate Enron. Hours later, Mr. Ashcroft and his chief of staff, David Ayres, recused themselves from the case, leaving the probe to career prosecutors in the Justice Department.
In the interim, the Democrat-controlled Senate Energy Committee announced it would hold a hearing on whether the Houston-based firm’s collapse should lead to changes in federal energy policy.
Although Mr. Lay has met with Vice President Richard B. Cheney to discuss energy policy, he has not met with the president.
“I have never discussed with Mr. Lay the financial problems of the company,” Mr. Bush said yesterday.
“He was a supporter of Ann Richards in my run in 1994, and she had named him the head of the Governor’s Business Council, and I decided to leave him in place just for the sake of continuity,” he added. “And that’s when I first got to know Ken and worked with Ken. And he supported my candidacy.”
Jerry Seper contributed to this report.