Center for International Policy

As printed in
The South Florida Sun-Sentinel
July 13, 2004

Relationship Could Not Have Been Cozier

By Wayne S. Smith

It is poetic justice (though a macabre form of poetry, to be sure). Just as President Bush and Vice President Cheney are assuring us that John Edwards must be a low life because he's a lawyer, Ken Lay, their erstwhile closest buddy and associate, is indicted for crimes related to the Enron scandal. And what a scandal! Lay, along with various other Enron chiefs is accused of insider trading, securities fraud, conspiracy, manipulation of earnings reports to hide the massive salaries and bonuses the chiefs were raking off while the employees lost their savings and retirement benefits. And let's not forget their manipulation of the California energy market. Via tape recordings aired recently by CBS, we heard Enron energy traders laughing about leaving grandmothers in California without energy and gloating over the prospects that George W. Bush would appoint Ken Lay Secretary of Energy!

Ever since Enron's crash brought to light the company's incredible skullduggery, both Bush and Cheney of course have sought to put distance between themselves and their former friends in the Enron front office. In fact, however, despite the President's memory loss, relations between the Bushes and Enron could not have been cozier over the years, the former, according to The Nation magazine (in its July 8, 2002, edition), having received from the latter no less that $8 to 10 million, and possibly as much as $25 million, in campaign contributions, library and inaugural contributions, consultancies and the like. Enron was indeed the largest contributor to the presidential campaigns of both President George W. Bush and his father.

And from the standpoint of Enron, it was money well spent. A whole series of positions in the present Administration and during the first Bush presidency went to
Enron officials. Ken Lay, the Enron chief, was chairman of the first President Bush's Export Council, as well as closest friend and confidant. Top Enron executive Tom White was George W. Bush's Secretary of the Army; and former member of the Enron advisory board Robert Zoellick is U.S. Trade Representative (yes, that's right, the man who urges other countries to have confidence in the ethics and trading practices of American companies).

And the influence it bought! The first Bush Administration pushed through the Energy Policy Act of 1992, which gave Enron so many advantages that it might have been written by Enron itself (in fact, perhaps it was), and the Bush-appointed Commodity Futures Trading Commission created an exemption for Enron so that it could begin trading energy derivatives.

And the pattern of Enron influence on energy policy continued into George W. Bush's Administration. Enron officials were almost certainly present at the secret energy policy meetings chaired by Vice President Cheney, the meetings for which he refuses to release the records. If he wants to prove that Enron did not play a key role, all he has to do is release the records!

Nor was this virtual partnership restricted to the United States. Far from it! Indeed, one of George W. Bush's first forays into foreign affairs came in 1988, just after his father's successful bid for the presidency. The younger Bush already had an oil-well deal with Enron. He now called Rodolfo Terragno, Argentina's Minister of Public Works, on behalf of Enron to urge that the construction of a pipeline to carry natural gas move forward and that the contract for its construction be given to Enron. Terragno is quoted in the Janaury 18, 2002, edition of the Buenos Aires daily La Nacion, as saying that Bush told him a deal with Enron would be beneficial to Argentina's overall relationship with the United States.

Bush staffers in Austin later tried to deny to The Texas Observer that any such call had been made, but Terragno remembers it well. It was obvious, he said in La Nacion, that Bush was trading on his father's position as Vice President (and president-elect) to win favor for Enron. Terragno felt it was improper. Nothing came of the call, however, for the government of President Raul Alfonsin, then coming to the end of its tenure, did not move forward on the pipeline project. But a far more cooperative government then entered the scene, one headed by President Carlos Saul Menem, already known to the Bushes - so much so that Neil Bush flew into Buenos Aires the day after the inauguration for a much-publicized game of tennis with the new President. Menem quickly approved the pipeline project - cleared it indeed without waiting for the completion of feasibility studies. He also signed a presidential decree that freed Enron and various other companies from tariffs and value-added taxes.

Eventually, Enron, pushed by the Bushes, became a major player in the Argentine energy market, under conditions hugely favorable to Enron. The results of course were disastrous for Argentina, as they had been for India and virtually every other country where Enron had spread its tentacles.

But Enron was as indifferent to the hardships its policies caused the peoples of other countries as it was later to those of the thousands of its own employees in the U.S., who were laid off, often losing pensions in the process. The executives got out with fortunes. Who cared about the little guy? Talk about low lifes! The good friends of Bush and Cheney!

Wayne S. Smith, a former U.S. diplomat, is now a Senior Fellow at the Center for International Policy in Washington, D.C. He served five years as Political Counselor at the U.S. Embassy in Buenos Aires.