Army Chief Rebuked for Keeping Ties to Enron

Army Secretary Thomas E. White has drawn an unusual rebuke from congressional leaders for moving too slowly to sever financial ties to his former employer, Enron Corp.

“We are concerned by the manner in which you have handled the divestiture of your interests” in Enron, wrote Sens. Carl Levin (D-Mich.), chairman of the Armed Services Committee, and John W. Warner (R-Va.), the panel’s top Republican, in a March 1 letter to White that was made public Wednesday.

While White did not respond to that letter, he said in a letter to the senators last month that “I have disclosed all matters that were requested by the Office of Government Ethics and by your committee. . . . I will continue my efforts to comply with my ethics agreement.”

White spent 11 years at Enron, accruing millions of dollars in company stock. Before joining the administration, he was vice chairman of Enron Energy Services, whose accounting practices have come under scrutiny. That has made him a target for congressional panels investigating the Dec. 2 bankruptcy of the country’s seventh-largest corporation.

The senators’ letter accused White of failing to abide by an ethics agreement, signed in May, requiring him to divest his Enron holdings within 90 days. In August, he received a 90-day extension.

In October, White accepted an annuity payable in part by the energy company, according to the senators, who complained that they did not learn about it until three months later. Levin and Warner said they also learned in January that White still owned Enron stock options, and they expressed concern that White could get back Enron stock he had invested in a partnership.

“We do not believe that your actions satisfied the requirements of this committee,” they said.

The federal Office of Government Ethics also questioned White’s compliance with the ethics agreement. “Secretary White should have consulted with this office, and he should have amended his ethics agreement, before electing to take the annuity,” an ethics official said in a Feb. 19 letter to Levin.

But the ethics office, citing White’s assurance that he would not participate in any decision that could affect Enron, said that “as long as Secretary White abides by this recusal, his interest in an annuity does not create a conflict of interest.”

Still, the senators wrote White: “In the future, we expect you and other Senate-confirmed officials in the Department of Defense to fully carry out the commitments that they make in their ethics agreements.”

In January and February letters to the ethics office, White said he believed he had done so.

In other Enron developments Wednesday, the House Energy and Commerce Committee called on more than a dozen investment banks and credit-rating firms to turn over records related to Enron.

And the Senate Finance Committee reported that Enron offered to make available its tax records to congressional investigations but set conditions on how the information could be used.

A joint statement by Sens. Max Baucus (D-Mont.), the committee chairman, and Charles E. Grassley (R-Iowa), the ranking GOP member, said the agreement “paves the way for a thorough and comprehensive probe to determine whether Enron may have engaged in aggressive tax planning to improperly avoid paying federal income taxes or exploited loopholes in our tax system.”