Cheney’s Role Draws Scrutiny

Vice President Dick Cheney sought to help Enron Corp. last year in a multimillion-dollar dispute over a power plant in India, but his only goal was to advance U.S. interests, the White House said Friday.

The vice president’s actions--documented in retrieved White House e-mails--brought no immediate allegations of wrongdoing, but a spokesman for Democrats on the House Government Reform Committee called for more details of Cheney’s advocacy for the Houston-based energy trading firm.

“This deserves a closer look,” said Phil Schiliro, chief of staff for Rep. Henry A. Waxman of Los Angeles, the panel’s top Democrat.

It is not unusual for administration officials to promote U.S. business interests when traveling overseas, as Cheney was when he broached the power plant issue to a leading politician in India. But Enron’s financial collapse late last year has focused attention on the extensive political ties between the Bush administration and the company.

Enron executives contacted Treasury Secretary Paul H. O’Neill and Commerce Secretary Don Evans last autumn about the company’s financial troubles, but the Cabinet members have said they did not attempt to intervene on its behalf.

Cheney’s involvement in the power plant dispute occurred in June, before signs of Enron’s problems had surfaced. Enron owns a 65% interest in a $2.9-billion natural gas-fueled power generator built in Dabhol.

The electricity board fell behind in payments for the plant, and Enron launched arbitration proceedings in April. Enron claims it is owed $63.9 million.

Also at stake in the dispute are more than $300 million in loans and risk insurance put up by the Overseas Private Investment Corp., a federal agency that provides political risk insurance to help U.S. firms invest in developing countries.

Cheney inquired about the status of the power plant when he met June 27 with Sonia Gandhi, head of India’s Congress Party, White House Press Secretary Ari Fleischer said Friday.

One of the White House e-mails, written by a National Security Council aide June 28, said: “Good news is that the veep mentioned Enron in his meeting with Sonia Gandhi yesterday.”

Fleischer said that Cheney, in bringing up the matter, was simply doing his job.

“It is an important project to create jobs in America, and there’s also a taxpayer exposure as a result of the work that’s being done through the Overseas Private Investment Corp.,” Fleischer said.

He also noted that three of President Clinton’s Commerce secretaries made efforts to promote the Dabhol energy project.

The White House e-mails indicated that President Bush was urged by some advisors to bring up Enron’s case in the financial dispute over the plant when he met with Indian Prime Minister Atal Behari Vajpayee in Washington on Nov. 9.

But another e-mail, dated the day before the Oval Office meeting, warned: “President Bush cannot talk about Dabhol.”

White House officials were not able to elaborate on this message Friday.

At least one administration official was cautioned to avoid playing any role in the power plant matter because of previous connections to Enron.

Fleischer said Friday that White House economic advisor Lawrence B. Lindsey received an ethics ruling from White House lawyers last year advising him to have “no direct involvement in the Dabhol plant.”

Lindsey once served as a consultant to Enron, earning $50,000.

Meanwhile, the political fallout of the Enron debacle took another victim Friday as Texas’ top utility regulator, a former Enron executive, resigned.

Max Yzaguirre, a former chief of Enron’s operations in Mexico, led the Texas Public Utility Commission in its initiative to deregulate the electricity market. He has been under attack for failing to detail his Enron duties on his application for the state post.

Yzaguirre was appointed to the job in June by Texas Gov. Rick Perry, who served as GOP lieutenant governor under former Gov. George W. Bush. Texas Democrats have raised questions about hundreds of thousands of dollars in political donations Enron executives have made to Perry’s campaigns since 1994, including a $25,000 contribution made by Enron Chairman Kenneth L. Lay the day after Yzaguirre’s appointment.

Also Friday, congressional investigators met in Houston with Enron’s chief accounting officer, Richard A. Causey, and in New York with Michael C. Odom, an Andersen partner who was relieved of management duties after the destruction of Enron-related documents.

Andersen, which was fired Thursday as Enron’s auditor, has come under criticism for not sounding alarms about the energy trader’s questionable financial practices.

In other developments:

* A plan to revive Enron’s core trading operation through a cashless sale to UBS Warburg, the New York investment banking arm of Swiss financial services firm UBS AG, was approved by U.S. Bankruptcy Judge Arthur Gonzalez, who said it was in the “best interest” of the company. In court testimony, Enron financial consultant Steven Zelin said that Enron, which would get a share of any future profits, could earn $1 billion to $2 billion over the next several years.

* Connecticut Atty. Gen. Richard Blumenthal called for an investigation into possible wrongdoing by Andersen.

* The Florida attorney general’s office subpoenaed documents from Enron as part of a racketeering investigation into the sale of the energy company’s stock to the state pension fund while the share price was plunging.

*

Times staff writers Jeff Leeds in Houston, Nancy Rivera Brooks in Los Angeles and Richard Simon in Washington contributed to this report. Reuters and Associated Press also contributed.

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A Dozen Inquiries Underway

FEDERAL AGENCIES

Labor Department: Announced Dec. 5 it was investigating Enron’s employee retirement benefit plans. Enron, while changing plan administrators, temporarily froze employee 401(k) accounts last fall, preventing employee access to those accounts.

Securities and Exchange Commission: Began a formal investigation Oct. 30 into whether Enron’s SEC filings contained “false and misleading statements, or omissions of material facts,” in violation federal securities laws.

Justice Department: Investigating possible fraud in Enron’s accounting and auditing practices.

SENATE COMMITTEES

Governmental Affairs: Hearings are scheduled for Thursday. Expected to focus on whether the SEC, the Federal Energy Regulatory Commission, the Commodity Futures Trading Commission or the Department of Labor could have done more to protect Enron’s employees, shareholders and others.

Governmental Affairs, Permanent Subcommittee on Investigations: Hearings are not yet scheduled, but they are expected to focus on how Enron was governed and audited, and the company’s use of offshore entities.

Commerce: Hearings into the collapse of Enron began Dec. 18 with testimony from employees and investors. Hearing is scheduled for Feb. 4 with executives. Committee will examine collapse from a consumer fraud-related angle.

Banking: Five former SEC commissioners scheduled to testify Feb. 12 on accounting and investor protection issues.

Energy and Natural Resources: Hearing is scheduled Jan. 29. Investigating the effects and consequences of the Enron collapse on competitiveness of the energy markets.

Health, Education, Labor and Pensions: Hearing is scheduled Feb. 7 to focus on company retirement plans and better protections for and oversight of employees’ retirement plans.

HOUSE COMMITTEES

Energy and Commerce: Investigating Enron’s collapse and its implication for the U.S. electricity and natural gas markets, SEC oversight, employee retirement fund management and accounting and auditing practices of Enron and Andersen.

Financial Services: Hearings possible next month. Investigating accounting practices of Enron and Andersen, potential securities law violations and Enron’s employee retirement plans.

Education and the Work Force: No hearings are scheduled, but a spokesman said the committee plans to examine the effect of Enron’s collapse on employee retirement plans.