But last March in an interview for PBS? Frontline, Ken Lay described the relationship differently. Mr. Lay said, "I'd worked very closely with Ann Richards also, the four years she was Governor. But I was very close to George W. and had a lot of respect for him, had watched him over the years, particularly with reference to dealing with his father when his father was in the White House and some of things he did to work for his father, and so [I] did support him."
According to Texans for Public Justice, ?Mr. Lay and Enron's PAC were early donors to Bush?s 1994 race, contributing $30,000 to Bush's gubernatorial committee as early as November 1993. All told, Enron's PAC and executives contributed $146,500 to Bush's first gubernatorial war chest in 1993 and 1994.? This compares to the $19,500 that Ann Richards received from Enron sources during that campaign, according to the Dallas Morning News. The Center for Public Integrity names Enron as President Bush?s number one ?Career Patron?. In other words, President Bush received more money from Ken Lay and Enron for his political campaigns than any other source.
For that reason, I heard echoes of Nixon?s infamous statement ?I am not a crook,? when Bush uttered a white lie about his relationship to Lay. In essence, Bush was saying ?I am not a friend of a crook.? But anyone familiar with the history of Enron would know better.
The first time I met George W. Bush was at a Luby?s cafeteria in Midland, Texas in the mid-80s. At the time, my father was the Senior V.P. of Exploration for Enron Oil and Gas. My father explained that he knew the son of the V.P. of the United States, because ?W? was an investor in Enron oil and gas exploration projects, ones for which my father was the principal geologist. Now, its hard for me to believe that my father knew an investor while his boss, Ken Lay, did not, since Lay and others higher up the corporate command chain lined up the investors. But, for the sake of argument, let?s say as ?W? claims that he didn?t ?get to know? Lay until after he became Governor. On the other hand, we can say that ?W? either as a business partner or a recipient of campaign donations has had a long and close relationship to Enron since its founding. And Enron was born crooked.
Attracted by the booming oil industry, my father, a World War II veteran and Cal-tech-trained petroleum geologist, came to West Texas in late 1940s. My father enjoyed the scientific challenge of oil and gas exploration, but not managing large numbers of people, so he joined the small independent Houston Natural Gas (HNG) company in 1972. Under my father?s direction, the exploration department achieved the highest ?find rate? in the industry. That is, they hit fewer dry holes than any other oil and gas company and even discovered the largest natural gas field in the region.
But, like a bleeding wound in shark-infested waters, such success drew interest from Wall Street. Through a merger, Ken Lay became the CEO of HNG in the early 80s. Soon afterwards, Lay sought the help of Wall Street financial wizard, Michael Milken, who later, through one of the largest scandals on Wall Street, became an icon of greed and corruption in the 1980s. With Milken?s help, Lay leveraged the assets of the small but successful HNG to merge his way to atop the nation?s largest natural gas pipeline company. The management changed the transformed company?s name to Enron, alluding to the names of the majors, Chevron and Exxon, and illustrating their ambition to become a major corporation themselves.
Then, in 1986, oil prices dropped from $28 to $10 a barrel. Lay called upon Jeff Skilling at McKinsey & Co., the nation?s premiere management consulting firm, to study Enron and recommend a new strategy to him. But Lay and Skilling kept the study secret. Employees were told that Skilling and the McKinsey team were writing a sequel to the best-selling business book, In Search of Excellence, written by the Director and a former partner of McKinsey & Co. They said that McKinsey & Co. wanted to feature HNG/Enron in their new book, since the small company had been so successful. When Skilling and the McKinsey team showed up to interview my father, they even brought in photographers. Of course, HNG/Enron was never featured in a new book, but Skilling?s report presented to CEO Lay featured prominently my father?s exploration department. Skilling recommended that Enron get out of the oil and gas exploration business and restructure toward ?downstream? industries like natural gas distribution, power generation and energy trading. My father?s exploration department became ground zero in a major corporate ?restructuring.?
My father was 63 years old at the time. He desperately wanted to hold onto his job for 2 more years, so that he would receive his full pension. For the next 2 years, he became a target of psychological warfare, corporate style. Lay brought in a new president to oversee my father?s work. The new president fired a majority of the employees in my father?s department. Then, like blaming the goose who laid the golden eggs for a drop in the price of gold, Lay flew my father to Houston and humiliated him at meeting of upper level management by judging his performance based on his department?s lack of profits over the previous 6 months. My father justifiably claimed that due to low oil prices and high production costs in West Texas, it was impossible to make a profit in the short term. Besides, exploration projects take years to plan and develop and cannot be judged on a quarterly basis. Moreover, my father failed to appreciate being judged over such a short period, when he and his department had discovered billions of dollars of oil and gas for Enron, making its new incarnation even possible. But the feverish obsession with quarterly profits had taken over Enron.
The shift downstream contained a strong political offensive. Since the 1930s, government has regulated industries like power utilities and natural gas distribution to protect consumers from price-gouging monopolies. To make these industries ?more competitive? (read ?profitable?), Enron needed to persuade legislators and regulators to deregulate. They accomplished this by pumping money into political campaigns like they did oil from the ground. Indicative of this new strategy, my father received a $2,000 bonus with directive from management to donate that bonus to a particular candidate. With this circumvention of the campaign finance laws, Enron?s rise to political prominence began. By its end, Enron had become the largest campaign contributor to the President and had so many ties to the current Administration through former employees, paid consultants and/or stockholders, that it is difficult to tell where Enron ends and the Administration begins.
My father never lived to see that day. He survived the pressure of Enron?s restructuring to receive his pension, but 2 months after turning 65, he had a nervous breakdown. He was working on a report demanded by Lay to project how much oil and gas his department would discover over the next 5 years. Due to the nature of oil and gas exploration, such a demand is absurd, and it was the straw that broke my father?s back. He came home from work complaining that he could not concentrate and never returned---the stress had triggered a major depression. He died 10 years later after suffering 2 years of depression and 8 years of a rare disease called basal ganglionic degeneration. The innermost core of his brain disintegrated for no obvious reason. The National Institutes of Health flew my father to Washington to study his disease. They surmised that the disease derived from one of the drugs, or some combination thereof, that he took for the depression. I had a different diagnosis---as they now say in Houston, he ?got Lay?d.? He fell as one of the first victims of Enron?s crooked climb to the top. Unfortunately, he was far from the last. All of this leaves me pondering, as Marjorie Kelly in Business Ethics put it: ?why the system lent so much power to villainy, and why there were so few checks and balances to stop it.?
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