- The Washington Times - Saturday, January 12, 2002

The president of Enron Corp. asked a top Treasury official last year to intervene with bankers with whom the company was negotiating for a credit extension to avoid bankruptcy.
The disclosure yesterday was the first indication that the energy firm had sought the direct intervention of administration officials as it faced collapse.
Enron President Lawrence "Greg" Whalley telephoned Treasury's undersecretary for domestic finance, Peter Fisher, six or eight times in late October and early November, Treasury spokeswoman Michele Davis said yesterday. Enron Chairman Kenneth L. Lay called Alan Greenspan, chairman of the Federal Reserve, and other administration officials before the company's Dec. 2 bankruptcy.
"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," said Miss Davis.
Mr. Fisher "inferred he was being asked to encourage the banks to extend credit," Miss Davis said. "He made no such calls."
The Bush administration said no government action was taken in response to the calls.
White House spokesman Ari Fleischer yesterday said the collapse of the company, one of President Bush's biggest political contributors, "needs to be fully investigated to determine if there was any criminal wrongdoing by Enron."
But he disputed suggestions that the expanding inquiries could harm the president politically. "This dog won't hunt. That's a reference to the politics of it," Mr. Fleischer said.
Revelations about Enron's dealings with Bush administration officials have raised questions about conflicts of interest. The Justice Department, the Securities and Exchange Commission, and five congressional committees are investigating the company.
In one inquiry, Senate investigators yesterday finished issuing 51 subpoenas for documents from Enron's current and former directors and senior managers and from its auditing firm, Arthur Andersen LLP. The big accounting firm disclosed Thursday that its employees had destroyed a "significant" number of documents related to Enron.
The White House has ordered federal agencies that might have had dealings with Enron to find any contacts between Enron and government officials. White House officials say they expect Enron made repeated requests of the government to help its financial situation, and they want the information out as quickly as possible to curb political fallout.
Mr. Lay made calls to Treasury Secretary Paul O'Neill and Commerce Secretary Donald L. Evans about the company's financial woes. Mr. Lay told Mr. Evans that he would welcome any support in helping the company deal with a bond-rating firm that was considering downgrading Enron, administration officials said.
Enron said Mr. Lay also called Mr. Greenspan.
The Treasury Department yesterday evening also disclosed that former Treasury Secretary Robert Rubin, a Democrat and chairman of the executive committee of financial giant Citigroup, had sought Mr. Fisher's intervention on behalf 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," Miss Davis said. "Fisher responded that he didn't think it advisable to make such a call."
Mr. Bush has pledged to pursue aggressively the investigation into whether the company defrauded investors, including 401(k) plan holders, by concealing vital information about its finances.
"Ken Lay is a supporter," the president said. "But what anybody's going to find is that 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. O'Neill said yesterday: "On first blush, it looks like Enron operated within the rules and regulations with regard to how they managed their 401(k) plan, and if they did, then we need to look and see if there are appropriate changes we could make." He was interviewed on ABC's "Good Morning America."
Mr. Lay denied that he sought help from administration officials. Enron said Mr. Lay's calls to Mr. O'Neill, Mr. Evans and Mr. Greenspan were simply to give them a "heads-up" about Enron's problems.
Dave Skidmore, a spokesman for the Federal Reserve, said Mr. Lay contacted Mr. Greenspan on Oct. 26, and "the chairman did nothing in response to the call."
"It would have been inappropriate," he said.
Mr. Lay also first reached out to Mr. Evans on Oct. 26. The two eventually spoke three days later. The first of Mr. Lay's two conversations with Mr. O'Neill was Sunday, Oct. 28.
"It is now clear the White House had knowledge that Enron was likely to collapse but did nothing to try to protect innocent employees and shareholders who ultimately lost their life savings," said Rep. Henry A. Waxman, California Democrat.
At the Securities and Exchange Commission, already investigating Andersen's auditing work for Enron, Enforcement Director Stephen Cutler said destruction of documents was "an extremely serious matter" but would not deter the SEC from pursuing its probe.
Andersen said it didn't know whether its directive to preserve documents demanded by government investigators was violated.
As for the company's contacts last fall, administration officials said Mr. Lay told Mr. Evans on Oct. 29 that he would welcome any support to help the company deal with a bond-rating firm that was considering downgrading Enron.
Separately yesterday, 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 disqualified himself from the investigation.

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