Enron Suddenly Emerges as Major Campaign Issue

Suddenly, the Enron scandal has exploded into prominence in the race for California governor, sending candidates into contortions as they try to attack and defend at the same time.

Republicans Bill Jones and Richard Riordan say Gov. Gray Davis cozied up to Enron by secretly talking last year with the company’s ousted chief, Kenneth L. Lay. But neither condemns the Bush administration’s own private meetings with Enron officials while shaping its energy plan.

Democrat Davis lumps former Los Angeles Mayor Riordan with Enron by accusing the city of gouging the state during last year’s energy crisis. At the same time, Davis is fending off calls to return more than $100,000 in Enron campaign cash.

As the contradictions suggest, there is no obvious partisan advantage in the finger-pointing. Riordan has led the attacks this week on Davis, part of an attempt to shift attention away from the knotty abortion issue.

But it was learned Wednesday that the former mayor had closer ties to Enron than he has revealed: The company gave $10,000 in 1996 to a campaign Riordan was waging to let the city’s utility sell power in the newly deregulated California market.

At the time, Enron was one of three companies vying for a contract with the Los Angeles Department of Water and Power. Enron’s efforts were unsuccessful.

“People are seeing that just about everybody is a little bit pregnant,” said Larry Sabato, a University of Virginia expert on the politics of scandal, noting Enron’s lavish giving and ties to prominent figures in both major parties.

But that has not stopped the candidates from seizing on the Enron affair, with its messy allegations of corporate greed and influence peddling, to try to splatter their opponents.

The scandal first surfaced in last month’s debate among the Republican hopefuls. Secretary of State Jones and businessman Bill Simon Jr. suggested that there were signs of wrongdoing by Enron but nothing yet proven.

Riordan went further. He condemned Enron’s extensive political giving and said he had not received any money from the company. If he had, he said, he would have returned it. The next day, Riordan was forced to correct himself, acknowledging that he had received $500 from an Enron offshoot.

Jones seized on that admission to attack Riordan along with Davis, who has received $119,500 from Enron and its employees since 1996.

Then the governor acknowledged last week that he had periodically spoken with Lay during last year’s energy crunch. Jones immediately demanded a full accounting of Davis’ contacts with the energy industry.

“Why is it that only a Republican administration should be scrutinized for its activities when we have a glaring example of rampant conflict of interest and a governor who has not told the truth to the media and the public?” Jones said in a speech earlier this week in Sacramento.

Jones has not, however, demanded the same disclosure by the White House, which is fighting efforts to divulge the extent of its outside contacts while formulating its energy plan last year.

“I am strongly in support of the executive ability to be able to have discussions that may in fact not be part of the public purview,” Jones said Wednesday.

Riordan has similarly attacked the governor--”What is Gray Davis trying to hide?” he demanded this week--while refusing to discuss the Bush administration’s lack of disclosure.

Asked about the contradiction, the Riordan campaign refused to respond.

“I’m not getting into that,” said Margita Thompson, a Riordan spokeswoman. “What I’m talking to you about is Gray Davis.”

Like the governor, Riordan conferred privately with Lay during the height of last year’s electricity crisis.

The mayor’s meeting took place in Beverly Hills. Lay presented Riordan, financier Michael Milken, actor Arnold Schwarzenegger and other luminaries with a four-page plan calling for greater deregulation as a way of solving the state’s energy shortage.

On Wednesday, Thompson suggested that Davis’ talks with Lay were more significant. “Gray Davis is the one who has a direct impact on the future of California’s energy crisis,” she said. “We don’t know what Enron got for its investment in Gray Davis.”

Thompson also defended the $100,000 Enron contributed to the 2000 Democratic National Convention. Riordan was chief fund-raiser for the extravaganza, held at Staples Center in downtown Los Angeles. “That [argument] would taint everyone involved with the Democratic National Convention,” she said of Enron’s donation.

Davis, for his part, has said he has no intention of returning the campaign contributions he received from the collapsed energy giant.

“It’s really not a large amount, considering what we’ve raised in this campaign,” said Roger Salazar, a Davis spokesman. To date, the governor has collected more than $40 million.

“If you take a look at the folks who are bringing this up, the only reason they’re bringing this up is they espouse the same type of free-market policies Enron does and they’re trying to change the subject,” Salazar said.

Aides also say Davis has been one of Enron’s biggest critics, fighting the company over price caps and reimbursements for alleged overcharges for power.

The governor, who has been widely faulted for his handling of the electricity crisis, has sought to turn the issue against Riordan by accusing Los Angeles of being among those overcharging the state for surplus power.

“He gouged the rest of the state, charging us twice as much as out-of-state generators,” a Davis TV spot charges. “More than Enron.”

But Riordan says Los Angeles sold its excess energy to the rest of California at prices set by state regulators. He also notes that the city was spared the rolling blackouts that hit the rest of California and never raised rates during his eight years as mayor. With all the Enron connections, most observers doubt that any one candidate will suffer, unless some more dramatic revelations surface.

“If you can link conversations or Enron contributions to Gray Davis’ inaction ... or can link Enron donations or contributions with Riordan’s pro-deregulation stance, then maybe you’ve got something,” said UC Berkeley political scientist Bruce Cain. Otherwise, “the Enron mud is around everybody, so people are going to throw that. They’ll stop when the polls show it’s not getting them any points.”

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Times staff writers Michael Finnegan and Nancy Vogel contributed to this report