Army Chief Defends Enron Record, Stock Trades

Beleaguered Army Secretary Thomas E. White said Wednesday that he regrets missing the deadlines to divest his Enron Corp. stock holdings, but said ongoing investigations of his finances and military travel are not interfering with his job or harming his standing in the Bush administration.

White also disputed characterizations of the Enron subsidiary that he helped lead for several years as a factory of fictitious profits, saying that it was an above-board business unit that has been unfairly maligned since Enron’s collapse into bankruptcy.

White asserted that he is “on solid ground” with members of Congress and his boss, Secretary of Defense Donald H. Rumsfeld. He expressed hope that he has survived the worst of the intense scrutiny he has faced in recent months, which also includes a probe of his use of a military aircraft for personal business.

“There aren’t any new facts to come,” White said. “It’s the same old stuff. Most all of it’s been ground through 50 ways from Sunday.”

White’s comments came during an interview with Times reporters in which he touted his effectiveness as secretary of the Army and vigorously defended his record at Enron, his employer for 11 years.

His remarks were the most extensive he has offered since the disclosure in recent weeks that he is being investigated by the Justice Department and the Inspector General’s Office at the Pentagon.

Appearing confident and relaxed, if somewhat annoyed that questions of his integrity persist, White said scrutiny of his record was inevitable when Enron declared bankruptcy last fall.

“Enron is probably the most notorious bankruptcy in the history of American business, at least in scale,” he said. “I spent 11 years in the corporation, so a lot of these questions are reasonable, and I have tried to be as forthright and honest about it as I can.”

The most serious questions surrounding White center on his sales of millions of dollars’ worth of Enron stock last year, which he agreed to when he was named Army secretary in May. Responding to inquiries from Rep. Henry A. Waxman (D-Los Angeles), White revealed in a series of letters that while he was selling his stock, he was also making dozens of phone calls to former colleagues at Enron.

White acknowledged Wednesday that he has turned over records of his Enron stock trades and phone calls to Enron employees to the Justice Department. The department’s interest in such items suggests that the FBI may be looking for evidence that White took advantage of information from company insiders while he was selling stock.

White has said repeatedly that he never sought nor received inside information, and that his calls were largely made out of concern for former colleagues at a failing company. White said that the records in question were turned over months ago, and that he has had no subsequent contact with FBI investigators.

White, a West Point graduate and retired brigadier general, joined Enron in 1990. In his final years with the Houston-based company, he was vice chairman of Enron Energy Services, a division created to take advantage of deregulation around the country by helping large clients find cheaper sources of power.

Former employees have said the unit overstated profits by hundreds of millions of dollars during White’s tenure through questionable accounting methods.

But White passionately defended his stewardship of the division, saying it was legitimately profitable, adhered to approved accounting methods and never took part in any deal with Enron’s notorious off-balance sheet partnerships.

When asked whether any of the reassessments of Enron’s earnings and revenue can be traced to the subsidiary, White replied: “To my knowledge, not one dime.”

When he was named Army secretary, White agreed to divest all of his Enron holdings within 90 days. He subsequently received at least two extensions. But he was reprimanded by the leadership of the Senate Armed Services Committee when members learned that White continued to hold a large chunk of Enron stock options into January and had failed to inform them that he had accepted a pension partly paid by the company.

Some on Capitol Hill have suggested that White may have been clinging to his holdings in hopes that Enron stock would somehow rebound. But White dismissed that theory, saying he was simply distracted.

“In hindsight, I should have [divested sooner],” he said. “We were fighting a war, and I didn’t pay enough attention to it.”

White also has come under scrutiny for an official trip in March during which he and his wife, traveling aboard a Defense Department jet, stopped in Aspen, Colo., to sign papers on the sale of their $6.5-million, three-story home there.

White declined to discuss the matter Wednesday, except to say that he is cooperating with an investigation by the Inspector General’s Office. He has previously said he was required to be on secure aircraft that weekend and that Aspen was a logical and convenient stop on a trip that included official business in Dallas and Seattle.

Even some of White’s supporters say they are puzzled by White’s decision to visit Aspen and invite further scrutiny after the Enron scandal had begun to subside.

“Stopping in Colorado just doesn’t seem like a prudent thing to do,” said Ted Stroup, a former lieutenant general who is now vice president of the Assn. of the U.S. Army, a nonprofit organization. “Unless you’re stopping to refuel,” Stroup said, “it’s a little too gray.”

Current and former military leaders say that White is generally held in high regard as an advocate for the Army. But some voice concern that his effectiveness is being eroded by his troubles.

“The uniformed military still thinks highly of Secretary White,” said Dan Christman, a retired lieutenant general who until last year was the superintendent of the U.S. Military Academy. “But what his record will reflect will sadly be tarnished by the press that has surrounded what’s happened in Enron.”

One sign that White remains influential in the Pentagon is his recent success in temporarily sparing two weapons programs targeted for elimination by Rumsfeld: the Crusader artillery system and the Army’s beleaguered Comanche helicopters.

“I fought for it,” White said of the Crusader, “and I’ll fight for it again in the next budget cycle and the next.”

At one point, he expressed exasperation with speculation about his personal finances, including suggestions that he is building a house in Florida to take advantage of state law there that protects homes from creditors in bankruptcy proceedings.

“That is one cockamamie theory,” White said, noting that he is in no danger of seeking bankruptcy protection. “I mean, really, people ought to get a life.”