Two Cabinet members said yesterday they did not and did not have to inform President Bush about Enron Corp. chairman’s appeals for help last fall, before the collapse of the energy-trading giant.
Treasury Secretary Paul H. O’Neill and Commerce Secretary Donald L. Evans, who both appeared on yesterday’s political talk shows, said they didn’t find anything new or unusual in telephone conversations each of them had with Enron Chairman Kenneth L. Lay in October and November.
As a result, they said they didn’t think it necessary to alert Mr. Bush or Enron shareholders and employees.
In the context of what was going on elsewhere in the country America’s war against terrorism, the aftermath of September 11, the economic-stimulus package a four-minute telephone conversation coming from a big corporation didn’t seem unusual at the time, Mr. O’Neill said.
“Do I run across the street every time I’ve had a telephone call with the finance minister in Argentina and tell the president? Absolutely not. Why would I do that?” Mr. O’Neill said in an interview with ABC’s “This Week.” “I’m a big boy. I’ve got responsibility and I’m not going to spend endless hours running across the street telling the president about telephone calls.”
Mr. Evans said the information disclosed in the conversations he had with Mr. Lay didn’t suggest that the Houston-based company was headed toward bankruptcy. Mr. Evans said one of Mr. Lay’s telephone calls to him was about credit agencies reviewing Enron.
“At that time, everything he told me was already in the public domain,” Mr. Evans said on NBC’s “Meet the Press.” “The public knew about it. The shareholders knew about it. Wall Street knew about it. I didn’t feel like I was privy to any information that was suggesting to me the company was going to collapse.
“When I was talking to Ken, I wasn’t thinking about bankruptcy,” Mr. Evans added. “I was thinking maybe their credit rating would be dropped some but it wasn’t the crisis yet that ensued some 30 days later.”
Last week, the Justice Department began a criminal investigation into accusations that Enron executives improperly shielded investors from financial losses and blocked employees from selling billions of dollars’ worth of plummeting stocks. As a result, tens of thousands of employees lost their pensions and life savings.
Several congressional committees are investigating what political favors Enron sought from the Bush administration, although there is no evidence yet the company actually got any, and what steps the administration could have taken to avert the collapse or to protect investors.
Sen. Joseph R. Biden Jr., Delaware Democrat, said on “Meet the Press” that Enron’s collapse could be “devastating” politically if it were found that the Bush administration tried to help the troubled firm as a favor for the financial contributions made to the Bush campaign.
Enron had been a major contributor to U.S. politicians, Republicans and Democrats. Nearly half of the current House and almost three-quarters of the Senate has received Enron contributions, according to campaign-finance watchdog groups.
“This is of gigantic consequence,” Mr. Biden said. “This is not like if this happened 20 years ago. So many average Americans own stock.”
Speaking on “Fox News Sunday,” Mr. O’Neill said yesterday he wasn’t surprised by the collapse of Enron’s stock value, which he described as capitalism at work. Companies, not the government, are responsible for their actions, so it was up to Enron to tell its shareholders and employees of its troubles, Mr. O’Neill said.
“Companies come and go,” Mr. O’Neill said. “Part of the genius of capitalism is, people get to make good decisions or bad decisions, and they get to pay the consequence or to enjoy the fruits of their decisions. That’s the way the system works.”
Mr. O’Neill’s comments drew criticism from lawmakers from both parties who said this was not capitalism as it should be.
Sen. John McCain, Arizona Republican, and Sen. Joseph I. Lieberman, Connecticut Democrat, said on the CBS show “Face the Nation” that the government has regulatory agencies to curb potential abuses of the capitalist system.
“This is not a totally laissez-faire country,” Mr. McCain said. “We care about our citizens, and the regulatory agencies and oversight agencies must be held accountable. So the government does have a role to protect innocent people.”
Mr. Lieberman, whose Governmental Affairs Committee is leading Senate investigations into Enron, agreed: “Those statements are outrageous. I hope that they sound more cold-blooded than [Mr. ONeill] means them to be. Those are statements that might have been made by the secretary of the Treasury in the 18th century, but not in the 21st century.”
More importantly, Mr. Lieberman said an Oct. 12 internal Arthur Andersen LLP memo, directing workers to destroy all audit documents on Enron raises “very serious questions” about whether obstruction of justice occurred.
The contents of the memo are disclosed in the issue of Time magazine that goes on sale today.
“The memo was not just a routine clear-your-files memo,” Mr. Lieberman said in the interview. “It was specifically on Enron. And it came at a time when people inside, including the executives of Arthur Andersen and Enron, knew that Enron was in real trouble and that the roof was about to collapse on them, and it was about to be a corporate scandal.
“If this memo was what it looks like, I’m afraid that the folks at Arthur Andersen could be on the other end of an indictment before this is over,” the Connecticut Democrat said.