Enron Spoils the Party

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None of these plot twists brought the story into the West Wing until the New York Times reported last week that conservative strategist Ralph Reed had received a $10,000-a-month consulting contract from Enron in 1997 with a little push from Rove, who was political adviser to then Governor Bush. Like so much about Enron's business practices, it is unlikely that such an arrangement would have been illegal. But the timing of Reed's Enron work had people who know about the finances of fledgling presidential campaigns clucking. A powerful force among Christian conservatives in the late 1990s, Reed was hired by Enron to bang the drum for energy deregulation in Pennsylvania at a time when the Bush team in Austin would have appreciated a low-cost, low-profile way of keeping Reed on their side, off their payroll and yet far from the crowd gathering around Steve Forbes and other conservative rivals. If Rove gave Enron a nudge about Reed--"Karl Rove gave Ralph Reed a good recommendation," said press secretary Ari Fleischer, and Rove says he doesn't recall--then the young Bush campaign was at least capable of the same sort of creative accounting that ultimately brought down Enron in December: finding quiet, off-the-books ways to help itself and its friends.

Democrats termed the disclosure serious and promised to investigate. Reed, a political consultant in Georgia, points out that Enron tried to hire a Democrat, James Carville, for the same work in 1997--something Carville, no friend of Rove's, acknowledges. And Rove told Time that if he spoke to anyone at Enron about Reed, it might have been only after Reed was hired. An Enron official, meanwhile, who says he and two others made the decision themselves, told TIME they had no contact with Rove about the matter. But a veteran G.O.P. organizer who was in contact with Reed in 1997 said Reed told him the Bush campaign had steered business his way-- something Rove doesn't deny.

After a year in office, one thing is clear about Bush's political operatives: when they make a mistake, they fix it fast. When their conservative instincts lead them down a path that much of the country isn't keen on, they are awfully good at changing the subject while holding to their original course. Which is why Bush, early last week, said his mother-in-law was one of the little people who got screwed by the corporate giant. On a trip to a West Virginia machinery shop Tuesday, Bush told workers that Jenna Welch, 82, had lost almost all of her $8,000 investment in Enron last year. And he fired up his own boilers a bit, saying he was "outraged" by what happened at the Texas firm. But the Bush team didn't stop there. By late last week, it got out a few more iron shields to wedge between the White House and the mess in Texas. On Friday the Administration announced that it had ordered a government-wide review of more than $60 million in federal contracts with Enron and Andersen. Mitch Daniels, Bush's budget director, said the move was "purely a management issue."

Meanwhile, the long-simmering dispute between Dick Cheney and Congress about the Vice President's energy task force started bubbling again. The General Accounting Office, which is as close as Congress comes to having an independent auditor, announced that it would file a lawsuit against the White House this week if Cheney did not fork over the details of his energy task force's private meetings with Enron officials. The GAO had postponed the suit after Sept. 11, but when it became clear Cheney had no intention of complying with its request, or even negotiating, the tiny agency decided to fight.

Congressional interest in those documents increased last week when House Democrats discovered what they think may be a subtle but significant last-minute change in Bush's energy policy, made before it was submitted to Congress. According to Rep. Henry Waxman, a California Democrat, language was added to the final energy plan that was designed to help Enron with a financially troubled power-plant project in India. Waxman obtained a copy of an earlier draft of the plan, dated March 30 and written by an interagency group. That version, sent to Cheney, included no reference to India's energy output, Waxman said. But when Cheney made his final energy plan public in May six weeks later, the proposals included a new section calling for increased energy production in India. The plan directed the secretaries of State and Energy to work with India to help that country maximize its domestic oil and natural-gas output. The provision was significant because Enron has a controversial $2.9 billion natural-gas-fired Dabhol power plant in India, but the plant's only customer, the state of Maharashtra, found Enron's prices too high and began buying power elsewhere. Enron was eager to get out of the Dabhol investment or get the facility back on line and had sought Washington's help. Cheney met with Lay on April 17, exactly one month before the final energy proposals were unveiled. Waxman asked Cheney in a letter late last week to explain how the provision evolved and who recommended it.