White House adds fuel to Enron fire

THE first rule of damage control is to get out all the information, no matter how damaging. It is the drip-drip of daily revelations that keep a story on the front page and undermine an administration’s credibility.

The Bush administration learned that lesson anew over the weekend as top officials appeared on the talk shows in an effort to clear the administration of any wrongdoing in connection with the collapse of Enron - and instead added more fuel to the fire.

The commerce secretary, Don Evans, revealed that he had told Andrew Card, the White House chief of staff, some time ago about the calls he had received from Enron.

This only added to scepticism that President George Bush was unaware of Enron’s problems, given his close friendship with Kenneth Lay, Enron’s chief executive.

After trying to downplay the connections between Enron and top Bush officials, the White House conceded that it knew of at least 14 conversations that had taken place last year.

White House officials remain confident that in the end it will be shown that administration officials behaved properly by doing nothing to help Enron. They argue that the collapse of the company and government’s laissez-faire reaction demonstrated the strength of the system.

"Companies come and go," declared Paul O’Neill, the treasury secretary. "It’s part of the genius of capitalism."

Still, the Washington scandal machine is likely to grind on for some time, distracting President Bush and displacing him from his above-the-fray perch as a war president.

Senator Joseph Lieberman, a likely presidential candidate in 2004, described Mr O’Neill’s comment as "cold-blooded".

Democrats are thrilled to finally have a scandal that appears to have traction with the American people. In addition to Enron employees who lost their life-savings, millions more Americans have suffered because they invested in money markets with significant holdings in Enron.

Mr O’Neill’s comment was received by the Democrats as evidence of the Bush administration’s uncaring attitude toward average workers.

Reviving the stereotype of Republicans as too close to corporate interests is probably Mr Bush’s major vulnerability in the unfolding scandal.

Mr Lieberman chairs one of the Senate committees looking into Enron, and whether Enron officials practised deception in shielding themselves from financial loss while exposing employees to financial risk.

Enron’s web of influence touches many politicians, Republican and Democrats, and is a metaphor for the way politics works in the modern world. Campaigns are expensive, and politicians spend literally half their time raising money.

To pretend that these contributions buy nothing is to ignore the extraordinary access a man like Enron’s Ken Lay had in Washington.

"We’re all tainted by the millions and millions of dollars that were contributed by Enron executives," said Republican John McCain, who acknowledged that he had received $9,500 from Enron in two of his campaigns.

Mr McCain has long championed campaign finance reform, and succeeded last year in getting Republicans and Democrats to pass his reform bill in the US Senate.

The bill is currently languishing in the House of Representatives, where Republican leaders have refused to bring it to a vote.

Republicans oppose the bill for philosophical reasons. They do not believe government should put restraints on political contributions, which are an expression of free speech. Plus, they enjoy a substantial edge over Democrats in raising money under the current system, and they don’t want to put that advantage at risk.

Some observers think the stench of the Enron collapse could create momentum for campaign finance reform. Democrats lack only three votes in the House to bring what is known as a discharge petition that would force Republican leaders to hold a vote on the campaign finance bill.

The Enron scandal could also veer off into a look at accounting firms, and their lax oversight of corporate behaviour. The Arthur Andersen company has been one of the blue-chip accounting firms, and the financial world was shaken by the revelation that one of its auditors ordered the destruction of documents related to Enron.

"The folks at Arthur Andersen could be at the other end of an indictment before this is over," said Mr Lieberman.