Bush’s Ties to Enron Chief Attract Growing Scrutiny

To hear Kenneth L. Lay tell it, you’d think he’s just another guy who occasionally hands out free advice to his longtime friend, who now happens to be president.

But the voluminous correspondence between the chairman of Houston-based Enron Corp., a giant energy marketing firm, and President Bush suggests otherwise. The “Dear Ken” and “Dear George” letters reveal long-standing personal and professional relationships that are intimately intertwined.

Over the years, Lay has sent Bush reading material, urged him to attend meetings around the world, recommended people for jobs in Austin, Texas, and thanked him for lobbying a fellow governor on Enron’s behalf. In one postscript, Lay wrote: “George, Linda and I are incredibly proud of you and Laura.”

For his part, Bush updated Lay on his knee surgery while ruing the fact that he had to miss a 10-K race in Austin. When Lay turned 55, Bush sent him a teasing note that said in part: “Wow! That is really old.”

Their mutual affinity is emblematic of the larger ties between Bush and the energy industry. While there are no signs of impropriety or wrongdoing, those connections are coming under growing scrutiny now that Bush has settled in the White House.

Of particular concern to some Californians, Bush repeatedly has refused to intervene more aggressively in the state’s electricity crisis--even as Enron and its subsidiaries have profited handsomely from soaring energy prices.

Moreover, Bush has assembled an administration with unprecedented connections to the energy industry. A former oilman himself, Bush has chosen a vice president, a commerce secretary and a national security advisor with energy industry ties.

“To separate him from that industry is hard to do. There are so many connections,” said Craig McDonald, head of the nonprofit Texans for Public Justice, a political watchdog group. “There’s always been a question of whether the policies he’s pursuing are his or Ken Lay’s. Actually, there is no difference.”

Mark Cooper, research director for the Consumer Federation of America, expressed his concerns as a question: “Now that George Bush is president and faces a broader range of interests, as you must as president, will he listen to other points of view and come up with a compromise answer? We shall see.”

Dan Bartlett, deputy counselor to the president, said that Bush’s connection to the energy industry is an asset. “The American people will appreciate President Bush’s understanding and insight on such a complex issue,” he said. “And he’s making it a priority for this country to have a national energy policy.”

There is no corner of the energy industry that is better connected to Bush than Enron, which has made billions of dollars by matching buyers and sellers of natural gas and electric power. It is, as Fortune magazine put it last year, “far and away the most vigorous agent of change in its industry, fundamentally altering how billions of dollars’ worth of power . . . is bought, moved and sold, everywhere in the nation.”

Amid the escalating energy crisis, Enron’s core business reported income of $777 million in the fourth quarter of 2000--nearly triple that of a year earlier, according to Business Week.

Although many energy executives and companies have given generously to Bush’s political endeavors, Enron and Lay stand out.

Now 58, Lay was a strong backer of the current president’s father, former President Bush. After the elder Bush’s defeat by Bill Clinton in 1992, Enron hired his secretary of State, James A. Baker III, and his Commerce secretary, Robert A. Mosbacher, as consultants.

In Austin, Lay became a patron of George W. Bush and donated more than $500,000 to his campaigns, according to the Center for Public Integrity, a Washington-based watchdog organization.

Lay was also a member of the prestigious governor’s business council, which advised Bush on such matters as deregulating electric utilities, easing the tax burden on businesses and enacting tort reform.

“Mr. Lay offered fantastic advice for us on how we open markets,” recalled Jimmy Glotfelty, a onetime policy aide to then-Gov. Bush.

When Bush first considered a run for the White House, Lay became one of 200 or so “pioneers,” each committed to raise at least $100,000.

During the campaign, Bush repeatedly flew on Enron jets. Enron also contributed $250,000 for the Republican National Convention. During the Florida recount, Lay personally donated the legal limit of $5,000 to the effort and $100,000 to Bush’s inaugural committee.

“I am a strong supporter of the president, as I was with his father. I’ve known him and his family for a long time,” Lay said during a recent meeting with The Times’ editorial board.

But he added: “Probably my influence over the president or my advice to the president is grossly exaggerated.”

Just five days later, Lay was among a small group of business executives having lunch with the president at the White House. At the time, Bush was playing down the need for a federal role in California’s energy problems.

More recently, Lay discussed California’s energy crisis with Energy Secretary Spencer Abraham and Treasury Secretary Paul H. O’Neill. Lay said he warned both Cabinet officers that the crisis would have “serious [national] implications” and that “the federal government needs to . . . at least have some contingency plans.”

Bush soon showed far more interest in the crisis. “We have an issue in America right now called energy,” he said during an appearance Tuesday to tout his tax cut plan.

Enron’s Oval Office connection is not the only one it enjoys in the Bush administration.

Until they accepted job offers from the new president, Lawrence B. Lindsey, now the White House economic advisor, and Robert B. Zoellick, the U.S. trade representative, served on Enron’s advisory board.

But nothing can top the bond between Lay and Bush, as illustrated by their letters and notes, obtained by The Times under the Texas Open Records Act.

On Oct. 17, 1997, Lay thanked then-Gov. Bush for calling Pennsylvania Gov. Thomas J. Ridge, a fellow Republican, to vouch for Enron, which was competing to sell electricity in that state.

“I am certain that will have a positive impact on the way he and others in Pennsylvania view our proposal,” Lay wrote.

He was not disappointed. A short time later, Enron gained a foothold in the Pennsylvania electricity market.

But not all the back-and-forth involved business.

Shortly before Thanksgiving in 1997, Lay offered his condolences that Bush, an avid runner, would be undergoing arthroscopic knee surgery.

“But I also want you to know that at least one jogger [me] got past 50 without surgery,” Lay wrote.

“All went well,” Bush replied. “And I am feeling great. I was able to get back to work almost immediately. My only regret is that I will be benched from jogging for about a month.”