Enron Is a Cancer on the Presidency

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Published on Wednesday, January 2, 2002 in the Los Angeles Times

Enron Is a Cancer on the Presidency

by Robert Scheer

Finally, a reporter had the temerity to question Bush on Friday regarding the ignominious collapse of Enron Corp. run by Kenneth L. Lay, a Bush family intimate and top campaign contributor. Bush expressed concern "for the citizens of Houston who worked for Enron who lost life savings" and added: "It's very important for us to fully understand the 'whys' of Enron."

Sure is, but did Bush never ask "Kenny Boy"--his nickname for Enron's chairman--what was going on?

After all, not only was Kenny Boy one of Bush's major contributors, but it was Lay and Enron that Bush turned to for critical advice on how to further exploit U.S. natural resources. The media, which had hounded Bill Clinton on his Whitewater connections, have allowed Bush to maintain the fiction that his--and his father's--administration had nothing to do with the debacle that is Enron.

Given the intense interest in the list of those who slept over in the Clinton White House, it's odd that no attention has been paid to Kenny Boy's sleepover in the early years of the senior Bush's White House.

Those early Bush years were crucial for Enron, beginning with the passage of the 1992 Energy Policy Act, which forced the established utility companies to carry Enron's electricity sales on their wires.

At the same time, Wendy Gramm, who served under the elder Bush as chair of the Commodity Futures Trading Commission, allowed for an exemption in the trading of energy derivatives, which, as the Washington Post reported, "later became Enron's most lucrative business."

Once that was accomplished, Gramm, wife of Texas GOP Sen. Phil Gramm, resigned from her government post to take a position on the Enron board. As one of the members of the board's audit committee, she now is expected to be a key figure in the lawsuits and federal investigation revolving around Enron's collapse. Recently, the chief executive of Arthur Andersen, Enron's outside auditor, told a congressional committee that the accounting firm had warned the Enron audit committee of what he termed "possible illegal acts within the company."

Wendy Gramm is also mentioned in a bank lawsuit alleging insider trading as having sold $276,912 in Enron stock in November 1998. Her response is that she sold the stock to avoid the appearance of a conflict of interest, given that her husband was chairman of the Senate Banking Committee.

Yet she was still very much on the Enron board and being rewarded with future stock options when her husband last year pushed through legislation that exempted key elements of Enron's energy business from oversight by the federal government. Phil Gramm had obtained $97,350 in political contributions from Enron over the years, so perhaps he was acting on his own instincts and not his wife's urgings. The exemption was passed over the objection of the Clinton administration.

Wendy Gramm also directs the regulatory studies program at George Mason University, which has received $50,000 from Enron since 1996. Her academic institute is highly influential in arguing for deregulation, conveniently joining her corporate and academic interests.

Unfortunately for true-believer deregulators, the Enron collapse shreds their panacea. Surely no one, least of all Wendy Gramm, who has said she was kept unaware of the company's chicanery in hiding debt and conducting secret private deals to the detriment of stockholders, could argue today with a straight face that Enron was in need of less government oversight.

The fact is that there would be no Enron as we know it were it not for Republican-engineered changes in government regulation that permitted Enron its meteoric growth.

It's true that the corporation had its allies among the Democrats; campaign finance corruption and influence peddling are generally a cover-all-your-bets bipartisan activity. But in this case, the amounts given to Democrats were puny and late, and there's no doubt that Enron rode to power primarily on the strength of Lay's influence with the Bush family. This fact is not mitigated by Enron now hiring Clinton's former lawyer and various top Democratic lobbying groups, except to note that these hired guns have no shame.

The Bush family ties to Kenny Boy Lay are just too intimate and lucrative to ignore.

There also are at least four Enron consultants and executives who hold high positions within the Bush White House, and some of them may be drawn into the investigations that cannot be avoided, despite the distractions of the war on terror.

As John Dean once famously said of the Nixon administration, there is a cancer growing on the presidency, but in this case it's name is Enron, and it won't go away by being ignored.

Copyright 2001 Los Angeles Times


-- Cherri (jessam5@home.com), January 04, 2002


My guess, Cherri, is that this will all be ignored. Afterall, the WSJ is STILL blaming the regulators.

Crooked as the day is long

-- Anita (Anita_S3@hotmail.com), January 04, 2002.

Thanks Cherri and Anita for my morning chuckle. The article comparing this to Whitewater and Watergate... stop you're killing me. Oh that's right, Bush made a million on his little $1K ten month investment in Enron. I just know he did but I can't find the evidence right now.

I especially love this one from the article, "Senators Corzine and Boxer propose a 20 percent limit for any one stock in 401(k) plans" What?! The congress is going to tell me what I can and can't do with my investments? I'd like to see how far this stupid proposal goes.

Look Enron did some stupid shit with their company, no doubt about that, but being stupid is *not* against the law. The amount of $ claimed as insider trading (Wendy Gramm is also mentioned in a bank lawsuit alleging insider trading as having sold $276,912 in Enron stock in November 1998...which has received $50,000 from Enron since 1996) please I can't stop laughing.

-- Maria (anon@ymous.com), January 04, 2002.

More about Robert Scheer

-- (Robert Scheer is @ cancer on.the ass of journalism), January 04, 2002.

To some degree, I agree with the tone of Maria's statement; if not all of the content.

When James Carville said "it is the economy stupid", WH already knew that. It is just that he thought of the economy as the wealthy friends that he dined with. It will be interesting if his son, minus H, makes the same mistake. ;o)))

Best Wishes,,,,


-- Z1X4Y7 (Z1X4Y7@aol.com), January 04, 2002.

Wow. I can believe that Maria is dumb enough to believe what she just wrote, but there's no way a self-proclaimed genius like Z could be that naive. Amazing. I think the radiation from sitting at the computer so much lately is starting to fry his brain.

-- (egghead Z suffering from @ the. Maria Syndrome), January 04, 2002.

Thursday January 10 6:09 PM ET

Enron Called Bush Cabinet Officers Before Bankruptcy

By Arshad Mohammed

WASHINGTON (Reuters) - The collapse of Enron Corp. entangled the Bush administration on Thursday as the White House said two Cabinet officers were warned of its looming bankruptcy and Attorney General John Ashcroft (news - web sites) recused himself from the criminal investigation into the company.

Trying to inoculate himself from the political fallout, President Bush (news - web sites) ordered a review headed by Treasury Secretary Paul O'Neill of U.S. pension and corporate disclosure rules to avoid a repeat of the energy trading firm's collapse, in which thousands of employees lost their pension savings.

In a series of stunning disclosures that followed Wednesday's announcement of a criminal probe into Enron, the energy firm's auditor, Andersen, said its employees had destroyed documents related to the former energy giant's balance sheet.

Bush's team has close ties to Enron and its chairman, Kenneth Lay, a major Bush campaign contributor who last autumn called O'Neill and Commerce Secretary Don Evans, Bush's 2000 campaign manager, to warn them of the impending bankruptcy.

The White House said O'Neill and Evans opted to do nothing about Lay's calls, which appeared to hint at the possibility of a private bailout like the one orchestrated by the New York Federal Reserve (news - web sites) in 1998 for hedge fund Long Term Capital Management.

A senior U.S. official, however, said that Lay ``did not ask for anything'' in the telephone calls.

The Justice Department (news - web sites) on Wednesday announced it had opened a criminal investigation into the energy trading company, whose December bankruptcy threw thousands out of work, devastated investors and wiped out the pension plans of many employees when its stock price plunged.

Ashcroft removed himself from the investigation, which is expected to focus on whether the firm misled investors about its accounts, because Enron gave him political contributions for his run for a U.S. Senate in his home state of Missouri.


Anderson, the Big Five accounting firm that served as the company's auditor, on Thursday said its employees had deleted documents related to its review of the company's finances and congressional sources said thousands were destroyed.

Rep. Henry Waxman (news), a California Democrat who has already been seeking information about contacts between the White House and Enron, questioned whether the Bush administration could have done more to help the company and its employees.

``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,'' he said in a statement. ``I am deeply troubled that the White House stood by and let this happen to thousands of families.''

Bush, who worked in the oil industry and has known Enron's chairman since he was governor of Texas, appeared to distance himself from Lay, saying he never discussed Enron's financial difficulties with him and last met the executive last spring.

``I have never discussed with Mr. Lay the financial problems of the company,'' Bush said, adding that the last time he had seen Lay was last spring at a literacy fund-raising event organized by his mother, former first lady Barbara Bush.


White House spokesman Ari Fleischer (news - web sites) disclosed on Thursday that Lay telephoned O'Neill and Evans last autumn saying his company might not be able to meet its obligations.

Fleischer said Lay suggested the possibility of using the case of Long Term Capital Management (LTCM), a hedge fund which benefited from a private bailout orchestrated by the New York Federal Reserve in September 1998, as model for his company.

After studying the matter and concluding that Enron's problems would not have the kind of systemic effects on the economy that were feared in LTCM's case, O'Neill and Evans decided against taking any action.

``They both agreed no action should be taken to intervene,'' Fleischer said, adding that Bush was not informed of the decision but believes O'Neill and Evans acted ``wisely.''

At his daily briefing, the spokesman fended off questions about why Bush was not informed of the decision, the propriety and timing of Enron contacting top government officials about its problems, and whether Evans and O'Neill acted properly.

``Communication is not a wrong-doing. What took place here was they received phone calls and took no action,'' Fleischer said. ``The charge has been did the government take any action, and the answer from these two officials is no.''

Treasury spokeswoman Michele Davis said Lay called O'Neill on Oct. 28 and Nov. 8 -- after Enron's key Oct. 16 disclosure that it was taking huge charges related to its partnerships, which provided the first hint of its spectacular unraveling.

Speaking to reporters after meeting with economic advisers on Thursday, Bush placed the emphasis on workers and investors who suffered as a result of Enron's troubles and ordered two reviews to recommend how to better protect them in the future.

He said the first review, by the Treasury, Commerce and Labor departments, would analyze pension and 401(k) rules and recommend ways to reform them so that ``people are not exposed to losing their life savings as a result of a bankruptcy.''

The review of disclosure rules would be conducted by the Presidential Working Group on Financial Markets, which includes the Treasury Department (news - web sites), Securities and Exchange Commission (news - web sites), Federal Reserve and Commodity Futures Trading Commission.

Once the world's largest energy trader, Enron slid in mere weeks last year from Wall Street stardom to the largest bankruptcy filing in U.S. history on Dec. 2. Its downfall, after withdrawal of a rescue takeover bid by rival Dynegy Inc., threw thousands out of work and hammered investors.

The episode sapped the life savings of many Enron employees who held large amounts of company stock in their 401(k) retirement plans, while top executives allegedly pocketed fat profits by selling before a plunge in Enron's share price.

``I have great concerns for ... (those) 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,'' Bush told reporters at the White House, saying the groups would take a ``good hard look'' at the matter.

-- (as the @ scandal. unfolds), January 10, 2002.

I must admit that I have less factual information than you folks seem to have. Based on what I have at the moment, it doesn't seem to me that this will be directly tied to the P or the VP [I could be wrong]. It does seem that it can be tied to a philosophy which will not be good for the Republican party in the 02 elections. I guess we will see.

Best Wishes,,,,,


-- Z1X4Y7 (Z1X4Y7@aol.com), January 10, 2002.

Could this be why they still are keeping Cheney in an undisclosed safe place?

-- SteveOH (thegoofycat@hotmail.com), January 10, 2002.

No, Cheney is hiding in a bunker deep underground because he is afraid that all of the cell phones and satellite transmissions bouncing around up here might knock his pacemaker out of commission and send him on his final vacation.

He wants to make sure he gets at least one more crack at Saddam Hussein before he croaks, so that at least someone might remember him for something besides being a fatass cranky old Ebeneezer Scrooge money-sucking bastard.

I heard that when he does get off his fat ass and come out of hiding for a rare visit to the White House, they take him in a specially designed car which is impenetrable by electronic transmissions, then they make everyone within a mile radius of the White House turn off their cell phones until he goes back into his hole.

-- (dickhead@hole.mole), January 10, 2002.

Thursday January 10 8:51 PM ET

Enron Auditor Says Documents Gone

By MARCY GORDON, AP Business Writer

WASHINGTON (AP) - The firm that audited the books of collapsed Enron Corp., Arthur Andersen LLP, disclosed Thursday that its employees had destroyed a ``significant'' number of documents related to Enron. Andersen said it didn't know whether its directive to preserve documents demanded by government investigators was violated.

Federal law enforcement agencies and congressional investigators are seeking the documents as part of their inquiries into the failure of the giant energy-trading company, which left countless investors burned and employees out of work with billions of dollars of losses in their Enron-heavy retirement accounts.

Rep. Billy Tauzin, R-La., whose House Energy and Commerce Committee is among the agencies and panels investigating, called the destruction of documents ``a deeply troubling development.''

``Anyone who destroyed records simply out of stupidity should be fired. Anyone who destroyed records to try and subvert our investigation should be prosecuted,'' Tauzin said.

Ken Johnson, a spokesman for Tauzin, said Andersen officials told committee investigators Thursday that thousands of documents had been destroyed.

Houston-based Enron entered last month into the largest corporate bankruptcy in U.S. history.

Andersen's startling revelation added a new twist to the Enron drama and raised fresh questions about the role of the big accounting firm, already under public scrutiny, whose legal obligation is to blow the whistle if it detects fraud at a company it audits.

At the Securities and Exchange Commission (news - web sites), which is investigating Andersen's auditing work for Enron, Enforcement Director Stephen M. Cutler said destruction of documents ``is obviously an extremely serious matter.''

``Documents are an essential ingredient in our investigations,'' he said. ``The destruction of documents by Arthur Andersen will not deter us from pursuit of our investigation and will be included within the scope of our investigation.''

The SEC is scrutinizing questionable partnerships Enron used to keep some $500 million in debt off its books and allow company executives to profit from the arrangements.

Andersen, one of the Big Five accounting firms, said in a statement that in recent months, electronic files and other documents related to its auditing of Enron had been destroyed or deleted.

Later in the day, Andersen released another statement saying documents were discarded in the months before the SEC issued a subpoena to the accounting firm as part of its investigation, which began in October. Andersen said in response to the subpoena, it issued a directive to employees to preserve documents but said that it has not been able to determine whether that instruction was violated.

On the other hand, Chicago-based Andersen said its company policy ``required in certain circumstances the destruction of certain types of documents.''

However, the firm said, millions of documents related to Enron still exist, and it has managed to retrieve some of the deleted electronic files. Andersen said it is continuing retrieval efforts through electronic backup files, ``and is continuing in its efforts to fully learn and understand all the facts related to this issue.''

Andersen has asked John Danforth, the former Missouri attorney general and U.S. senator, ``to conduct an immediate and comprehensive review of Andersen's records management policy and to recommend improvements.''

Danforth, whom President Bush (news - web sites) appointed last fall as special envoy to Sudan, didn't immediately return a telephone call seeking comment.

The surprise announcement by Andersen came in a day punctuated by revelations from members of the Bush administration concerning Enron.

The White House disclosed that Enron Chairman Kenneth L. Lay reached out to two of President Bush's Cabinet officers when the energy company was collapsing. Attorney General John Ashcroft (news - web sites), who received campaign contributions from Enron executives during his failed 2000 senatorial bid, said he will recuse himself from the criminal investigation of Enron being conducted by the Justice Department (news - web sites).

Andersen said that in recent months, people in the firm involved with the Enron auditing ``disposed of a significant but undetermined number of electronic and paper documents and correspondence.''

-- (dirty@rotten.scoundrels), January 10, 2002.

Just the fact that Enron even called Bush tells you a lot about how these Repugliscums work. They wanted Bush to return the favor of contributing to his campaign by giving them a big chunk of taxpayer dough to restore their credit. It would appear at this point that the Bush administration played it smart this time because they knew it was too risky. I'm sure that if it were Dubya's decision he would have fucked the people in favor of his oil buddies, but apparently some much smarter heads prevailed. One thing is for sure, Bush, Cheney, and everyone else on his staff who held stock in Enron definitely benefited from insider information which other stockholders did not get, by being informed of Enron's true financial condition well in advance of their bankruptcy. I think we need a massive probe here, Kenny Starr style.

-- call out the Democractic probing machines (ream @ 'em. good), January 10, 2002.

http://www.nydailynews.com/2002-01-09/News_and_Views/Opinion/a-137617. asp



Wednesday, January 09, 2002

Biz School Blindness
Sank Enron


Harvard Business School: It's called the West Point of capitalism. In fact, the school's bottom-line-only philosophy has had a poisonous effect on American business practices.
The Enron disaster is the most recent — and spectacular — manifestation.

To illustrate my point, let me take you back to a classroom at the school in the late winter of 1978. The course was productions and operation management, taught by Chip Bupp, a thoughtful and serious man.

On this particular day, the case study involved a company that manufactured a product that might be harmful, even fatal, to the consumer. The question was, what should you do, if you were the company's CEO, in such an ambiguous but potentially dangerous situation?

Several students offered suggestions, none of which galvanized the class. Then a hand shot up, and Bupp said, "Jeff, what would you do?"

Jeff, with his thinning blond hair, wire-rim spectacles and slight Southern drawl, was one of the brightest members of the class and a natural leader. When he talked, as the commercial used to say, everyone listened.

"I'd keep making and selling the product," Jeff said. "My job as a businessman is to be a profit center and to maximize return to the shareholders. It's the government's job to step in if a product is dangerous." Several heads nodded.

Neither Jeff nor those who agreed with him seemed to care about the potential effects of their cavalier attitude. What if the product really did harm consumers? How about the company's employees? Were they in danger during the manufacture of the product? What would happen to the company if the CEO's decision was wrong?

Few in the classroom that day dared to raise these questions. At Harvard Business School — and business schools nationwide — you're considered soft, a wuss, if you dwell on morality or scruples.

As the years went by, Jeff had a meteoric career. He became a partner in the McKinsey consulting firm. From there he joined Enron and was soon promoted to president and chief executive officer.

Jeff is Jeffrey Skilling, who resigned under unexplained circumstances in August after only six months on the job.

In two stock sales before and after his departure, he cashed out $30.6 million worth of Enron stock.

Skilling and other senior managers encouraged employees to buy and keep Enron stock, even when things started to sour, while they were hurriedly selling huge blocks of their own stock. And now Enron has collapsed, "the largest bankruptcy case in American history," according to Sen. John McCain (R-Ariz.).

One analyst told CNBC, "It's the biggest insider trading scandal ever." Another observer said, "Enron was run to benefit the top executives. They literally looted the company."

Yet Skilling proclaims total ignorance of any problems. "I had no idea the company was in anything but excellent shape," he has said.

Articles about Skilling written since the demise of his company cite his arrogance and cold-heartedness. But as I witnessed sitting in that Harvard Business School classroom nearly 24 years ago, the seeds of his destruction grew out of a gross misunderstanding about the role of a business leader in our society. In his view, it is to be "a profit center" and to "maximize return for the shareholder," no matter the peril to consumers or employees.

Harvard and other business schools must pay more than lip service to the gross ethical blind spots that the Enron case has exposed. Starting with an admissions policy that selects potential students for ethics and character as well as brains, these institutions need to return to the goal of teaching their students to be good citizens first and moneymakers second.

America can't afford many more Enrons — or Jeffrey Skilling-like CEOs.

LeBoutillier graduated from Harvard Business School in 1979.
He is the author of "Harvard Hates America."

-- Cherri (jessam5@home.com), January 10, 2002.

Gotta tell ya Cherri, I have a real hard time swallowing the idea that a school is somehow responsible for this. I think the individuals involved knew exactly what they were doing, knew it was dishonest, and they did it anyway. I say they should take responsibility for being the filthy rotten cheating Repugliscums that they are, and they should spend life in prison. Better yet, why should we taxpayers have to pay even more to feed them 3 meals a day for life? We should use Dubya's Texas standard for serious criminals, and give them the electric chair.

-- (let@them.fry), January 10, 2002.

"Power Trader Tied to Bush Finds Washington All Ears" Enron, the nation's largest electricity trader, has become close enough to the Bush administration to possibly have influence on federal energy policy."

Curtis Hébert Jr., Washington's top electricity regulator, said he had barely settled into his new job this year when he had an unsettling telephone conversation with Kenneth L. Lay, the head of the nation's largest electricity trader, the Enron Corporation

Mr. Hébert, chairman of the Federal Energy Regulatory Commission, said that Mr. Lay, a close friend of President Bush's, offered him a deal: If he changed his views on electricity deregulation, Enron would continue to support him in his new job.

Mr. Hébert (pronounced A- bear) recalled that Mr. Lay prodded him to back a national push for retail competition in the energy business and a faster pace in opening up access to the electricity transmission grid to companies like Enron.

Mr. Hébert said he refused the offer. "I was offended," he recalled, though he said he knew of Mr. Lay's influence in Washington and thought the refusal could put his job in jeopardy.

Asked about the conversation, Mr. Lay praised Mr. Hébert, but recalled it differently. "I remember him requesting" Enron's support at the White House, he said of Mr. Hébert. Mr. Lay said he had "very possibly" discussed issues relating to the commission's authority over access to the grid.

As to Mr. Hébert's job, Mr. Lay said he told the chairman that "the final decision on this was going to be the president's, certainly not ours."

Though the accounts of the discussion differ, that it took place at all illustrates Enron's considerable influence in Washington, especially at the commission, the agency authorized to ensure fair prices in the nation's wholesale electricity and natural gas markets, Enron's main business.

Mr. Lay has been one of Mr. Bush's largest campaign contributors, and no other energy company gave more money to Republican causes last year than Enron.

And it appears that Mr. Hébert may soon be replaced as the commission's chairman, according to Vice President Dick Cheney, the Bush administration's point man on energy policy.

Mr. Lay has weighed in on candidates for other commission posts, supplying President Bush's chief personnel adviser with a list of preferred candidates. One Florida utility regulator who hoped for but did not receive an appointment as a commissioner said he had been "interviewed" by Mr. Lay.

Mr. Lay also had access to the team writing the White House's energy report, which embraces several initiatives and issues dear to Enron.

The report's recommendations include finding ways to give the federal government more power over electricity transmission networks, a longtime goal of the company that was spelled out in a memorandum Mr. Lay discussed during a 30-minute meeting earlier this spring with Mr. Cheney.

Mr. Cheney's report includes much of what Mr. Lay advocated during their meeting, documents show. Both men deny discussing commission personnel issues during their talk. But Mr. Lay had an unusual opportunity to make his case about candidates in writing and in person to Mr. Bush's personnel adviser, Clay Johnson. And when Mr. Bush picked nominees to fill two vacant Republican slots on the five- member commission, they both had the backing of Enron, as well as other companies.

Mr. Lay is not shy about voicing his opinion or flexing his political muscle. He has transformed the Houston-based Enron from a sleepy natural-gas company into a $100 billion energy giant with global reach, trading electricity in all corners of the world and owning a multibillion- dollar power project in India. He has also led the push to deregulate the nation's electricity markets.

Senior Bush administration officials said they welcomed Mr. Lay's input but did not always embrace it: President Bush backed away from curbing carbon-dioxide emissions, an effort supported by Enron, which had looked to trade emission rights as part of its energy business.

"We'll make decisions based on what we think makes sound public policy," Mr. Cheney said in an interview, not what "Enron thinks."

The Bush-Lay bond traces back to Mr. Bush's father and involves a personal and philosophical affinity. Moreover, Enron and its executives gave $2.4 million to federal candidates in the last election, more than any other energy company. While some of that went to Democrats, 72 percent went to Republicans, according to an analysis of election records by the Center for Responsive Politics, a nonprofit group.

"He's for a lot of things we're for," said Mr. Johnson.

But when it came to deciding on nominees for the commission, Mr. Johnson said that Mr. Lay's views were not that crucial. The two most important advisers, he said, were Andrew Lundquist, the director of Mr. Cheney's energy task force, and Pat Wood 3rd, the head of the Texas public utility commission.

As governor, Mr. Bush named Mr. Wood to the utility commission. This year, when the White House filled the two Republican slots on the federal agency, Mr. Wood was the first choice, Mr. Johnson said.

Consumer advocates and business executives praise Mr. Wood. But Mr. Lay also had a role in promoting him. Shortly after Mr. Bush was elected governor in 1994, Mr. Lay sent him a letter endorsing Mr. Wood as the "best qualified" person for the Texas commission.

In all, there are five seats on the commission, two held by Republicans, two by Democrats and one held by a chairman who serves at the pleasure of the president. Mr. Hébert, who became a commissioner in 1997, was named chairman by Mr. Bush in January.

The Federal Energy Regulatory Commission's mandate to ensure fair prices in wholesale electricity and natural gas markets makes it crucial to sellers like Enron as well as consumers.

The movement toward deregulation sometimes leaves the commission caught in a tug of war: power marketers like Enron are trying to break into markets and grids controlled by old-line utilities, which operate under state regulation. The commission's chairman has considerable latitude in setting its agenda.

As part of its oversight of the wholesale electricity markets, the commission ordered several companies to refund what it considered excessively high prices this year in California. One lesser offender named in the commission's public filings — $3.2 million, of a total of $125 million — was an Enron subsidiary in Oregon.

Enron owns few generating assets, but buys and sells electricity in the market. Many of those transactions resemble the complicated risk-shifting techniques used by Wall Street for financial instruments.

Mr. Hébert, after he became chairman, initiated an examination into the effects those techniques have on the electricity markets. "One of our problems is that we do not have the expertise to truly unravel the complex arbitrage activities of a company like Enron," he said, adding, "we're trying to do it now, and we may have some results soon."

William L. Massey, one of the agency's two Democratic commissioners, said he supported the inquiry but had not been aware of it — an indication of the chairman's ability to set the commission's agenda.

Finally, the commission is trying to speed the pace of electricity deregulation by opening up the nation's transmission grid, much of which is owned by privately owned utilities that enjoy retail monopolies. Some Enron officials say the commission has been moving too slowly to open the grid. They attribute some of the problem to utilities. But they also fault Mr. Hébert.

"Hébert still has undeserved confidence in some of the vertically integrated companies coming to the table and dealing openly" with transmission access issues, said Richard S. Shapiro, an Enron senior vice president.

The utilities, however, maintain that they provide cheap and reliable service for their customers. Washington lobbyists for one Southern utility said that Enron was really interested in focusing on the utility's big-business clients, which under state regulation pay higher rates than residential customers.

Since 1996, about half the states have moved to open their retail markets to competition, and the commission has begun to make it easier for outsiders to use the nation's transmission grid. But the promise of cheaper rates has been largely unfulfilled. So the push for more deregulation, in which Enron has been a leader, has slowed, especially when California's flawed program led to skyrocketing rates and chaotic markets.

Mr. Hébert is a free-market conservative who favors deregulation but also recognizes the importance of state's rights. A former Mississippi regulator, he is a protégé of Trent Lott, the Senate Republican leader from Mississippi. Mr. Hébert said Mr. Lott was instrumental in his nomination to the commission in 1997 by President Clinton.

President Bush elevated Mr. Hébert to chairman on Inauguration Day, a move Mr. Lay said he told the White House he supported.

Mr. Johnson, the White House personnel chief, said that Mr. Lott and Mr. Hébert had both been told that Mr. Hébert could remain chairman at least until the administration's nominees — Mr. Wood and Nora Brownell, a Pennsylvania utility regulator — are confirmed by the full Senate. The Senate energy committee voted earlier this week to approve the two nominees, after a hearing last week indicated strong support.

It is widely expected that President Bush will name Mr. Wood to replace Mr. Hébert as chairman after the Senate acts.

In an interview for a forthcoming episode of "Frontline," the PBS series, Mr. Cheney suggested as much. "Pat Wood's got to be the new chairman of the F.E.R.C., and he'll have to address" various problems in the electricity markets, he said.

Mr. Hébert said that no one had told him he was being replaced. If someone else is named chairman, Mr. Hébert can remain a commissioner until the end of his term, which expires in 2004.

It was a few weeks after President Bush made him chairman that Mr. Hébert said he spoke by telephone with Mr. Lay.

Mr. Lay told him that "he and Enron would like to support me as chairman, but we would have to agree on principles" involving the commission's role in expanding electricity competition, Mr. Hébert said of the conversation.

A senior commission official who was in Mr. Hébert's office during the conversation said Mr. Hébert rebuffed Mr. Lay's offer of a quid pro quo. The official said that he heard Mr. Hébert's side of the conversation and then, after the call ended, learned the rest from him.

Mr. Hébert said that he, too, backed competition but did not think the commission had the legal authority to tell states what to do in this area. Concerning the issue of opening transmission access through the creation of regional networks, Mr. Hebert supports a voluntary process while Enron seeks a faster and more compulsory system.

Mr. Lay said that while he might have discussed issues relating to the commission's authority concerning access to the grid, "there was never any intent" to link that or any other issue to Mr. Hébert's job status.

The commission is a quasijudicial agency, so decision-makers like Mr. Hébert must avoid private discussions about specific matters pending before the commission. Mr. Hébert and Mr. Lay both said that line was not crossed, but Mr. Hébert said he had never had such a blunt talk with an energy-industry executive.

Mr. Lay added that his few recent conversations with Mr. Hébert were nothing special. "We had a lot of access during the Clinton administration," he said.

And he said that while making political contributions "probably helps" to gain access to an official, he made them "because I'm supporting candidates I strongly believe in."

Last June, Enron executives were asked to make voluntary donations to the company's political action committee. The solicitation letter noted that the company faced a range of governmental issues, including electricity deregulation.

This year, some people who sought but did not get nominations to the commission said that Mr. Lay and Enron had had a role in the process.

One was Joe Garcia, a former Florida utilities regulator and prominent Cuban-American activist. He said he had been "interviewed" by a few Enron officials, including Mr. Lay, who he said had not been as "forceful or insistent" as the other Enron officials.

But in their conversation, Mr. Garcia said, Mr. Lay made clear that he would be visiting the White House, adding that "everyone knew of his relationship and his importance."

Mr. Johnson, the White House personnel chief, could not cite another company besides Enron that sent him a list of preferred candidates for the commission, but he remembered hearing the views of Tom Kuhn, who heads the utility industry trade group, the Edison Electric Institute. Mr. Kuhn was a classmate of Mr. Johnson and Mr. Bush at Yale.

As for his conversation with Mr. Garcia, Mr. Lay said he was comfortable with his candidacy but "I'm not sure what I told him about my friends at the White House."

-- Cherri (jessam5@home.com), January 10, 2002.

Top Enron contributions to Senators and Congressperps, 1989-2001 .

-- (Roland@hatemail.com), January 11, 2002.

This needed a bump. Even Daschle received some $.

-- Maria (anon@ymous.com), January 15, 2002.

Receiving contributions is not illegal, it's what happened after that is, like cheating thousands of people out of their life savings.

-- (repugs and enron @ partners. in crime), January 15, 2002.

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