Enron's links to Bush team raise questions

SUMMARY:

Facing a possible conflict of interest, Attorney General John Ashcroft and a top aide withdrew Thursday from any connection to the Enron criminal investigation, a move that came on the same day the White House revealed contacts between two Cabinet secretaries and the company's chairman before the giant energy corporation filed for bankruptcy late last year.

UPDATE:

U.S. Attorney General Ashcroft and his chief of staff, David Ayres, recused themselves from the Justice Department's criminal investigation of energy giant Enron because of the attorney general's relationship with the company.

Between 1999 and 2001, Ashcroft's campaign and political committees received $60,999 in hard and soft money contributions from 29 Enron executives, the Enron Corp., and the company's political action committee, according to the Center for Public Integrity, a group that tracks money in politics.

Enron and its executives also gave $74,000 to President Bush's presidential campaign.

Bush distanced himself Thursday from Enron Chairman and CEO Kenneth Lay.

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"I have never discussed with Mr. Lay the financial problems of the company," Bush told reporters. He said he last saw Lay last spring at a literacy find-raising event in Houston organized by his mother.

The White House admitted Thursday that Lay did phone Treasury Secretary Paul O'Neill and Commerce Secretary Don Evans in October to discuss the company's problems.

White House press secretary Ari Fleischer said the calls did not result in any government action on the company's behalf.

A congressional committee is seeking information about what the Bush administration might have known about Enron's financial problems when White House officials met with Enron representatives last year.

Meanwhile, a major accounting firm working with Enron Corp. said Thursday it destroyed or deleted an undetermined number of electronic and paper documents related to the energy giant's financial straits.

The Securities and Exchange Commission, which is conducting a civil investigation of Enron, called the revelation "an extremely serious matter."

Enron markets electricity and natural gas, delivers energy and other physical commodities, and provides financial and risk management services to customers around the world.

Enron's fall left thousands of its employees without jobs and destroyed much of their retirement savings because the company did not allow workers to sell holdings when the stock price was plunging.

KEY QUESTIONS:

Will there be political damage to President Bush or others with connections to Enron from the multiple investigations?

What was Enron, why was the source of its initial success, and what caused its collapse?

Did Enron break any criminal laws or deceive investors by holding back information about financial problems?

Why were Enron employees barred from selling Enron stocks in their 401(k) plans?

Why did analysts continue to recommend Enron stock to investors?

What, if anything, could the federal government have done to prevent Enron's collapse and to protect employees and shareholders?

WHO'S WHO:

Kenneth L. Lay, Enron chairman and CEO; served as Enron's CEO from 1985 until Jeffrey Skilling's election in early 2001; re-elected to job by board after Skilling's resignation in August. Lay helped transform Enron from a regional natural gas pipeline company to global energy behemoth.

Jeffrey Skilling, former Enron president and CEO; resigned in August 2001 for what he said were personal reasons after more than a decade at the company.

Mark Frevert, Enron vice chairman

Lawrence "Greg" Whalley, Enron president and chief operating officer

Jeffrey McMahon, Enron chief financial officer

Andrew Fastow, former Enron chief financial officer, ousted in October

Robert Bennett, the attorney representing Enron in Washington, who also represented former President Bill Clinton in the Paula Jones case

Carl Levin, Democratic U.S. senator from Michigan, chairman of the Senate Permanent Subcommittee on Investigations, said "Something was very rotten in the state of Enron."

Joe Lieberman, Democratic U.S. senator from Connecticut, chairman of the Senate Governmental Affairs Committee

Joseph Berardino, CEO of Enron auditor Andersen, testified in December that his firm told Enron's audit committee that some of the company's actions might have been illegal

Harvey Pitt, chairman of the Securities and Exchange Commission

Dick Cheney, U.S. vice president, met with Enron CEO Kenneth Lay in April for a half-hour and discussed energy policy issues. He or members of the administration's energy task force met six times with Enron representatives, the White House says.

George W. Bush, U.S. president, said he wants federal agencies to look into Enron and "appreciate the importance" of its bankruptcy on employees and others. Enron officials have been key Bush contributors.

IMPACT:

The Enron case already has led to increased investor skepticism about corporate financial reporting, and the Securities and Exchange Commission recently said it would seek new rules requiring greater disclosure of accounting practices by companies.

The case also prompted the Treasury Department to lead a review of federal regulations governing 401(k) retirement investment plans and other pension programs. Officials want to explore whether companies should have to notify investors when its finances decline significantly.