Wall Street Journal - January 14, 2002
January 14, 2002 ------------------------------------------------------------------------
Review & Outlook
Another Whitewater? Yippee!!
We hasten to agree that the Enron collapse should be investigated. On the record so far, it looks as if a bunch of natural gas salesmen got over their heads in financial wizardry and made a catastrophic mess trying to make back what they lost. But we don't know the details of their off-balance-sheet inventions, and the deals should be carefully scoured for so-far missing evidence of criminal intent.
It's also clear that Enron executives gave a lot of money to politicians of both parties, but especially to Republicans and a pile to George W. Bush. On this the record so far reads: The misstatement of Enron earnings goes back to 1997, and whatever regulatory depredations contributed to its stock run-up took place under a previous, Democratic administration.
When the jig went up last year, Enron came around asking for help from its Republican friends, and didn't get any. President Bush has called for an investigation, and his Justice Department is chartering a special task force while his Attorney General has recused himself. But who knows, Democrats and prodding pressies may be right that somewhere in here there's another Whitewater.
Did someone say Whitewater? What a delightful word. We didn't think it would come back from the semantic grave until the Special Division of the U.S. Court of Appeals releases Independent Counsel Robert Ray's final report. That's likely to be in the next couple of weeks, and as a preview we can only imagine what revelations will come next if Enron really is another Whitewater:
For openers, we can expect to learn that Enron nabob Kenneth Lay was not only a Bush campaign contributor, he was a personal business partner of the former Texas Governor and his wife Laura. Mr. Lay's wife Linda will turn out to have been a fourth partner, whose role was advertising their venture riding a stallion while clad in short-shorts. Eventually Mr. Lay will allege an affair between his wife and the Governor, who will turn out to have been a notorious rake.
The Lay-Bush partnership hit a financial storm, we will learn, but stays barely afloat with a lot of help. A federally backed loan agency lends $300,000 to a front company set up in Mrs. Lay's name, and $50,000 of that is funneled to the Bush-Lay partnership to pay off a loan and make a down payment on some land. The Texas good ol' boy running the loan agency says the Governor solicited the loan, and that he was told it was for the "political family"; he pleads guilty to two felonies and goes to jail. The money runs in and out of a savings and loan run by Mr. Lay, which collapses at a taxpayer loss of $73 million.
When some of this surfaces in the Presidential campaign, the Bush campaign gets a buddy at Arthur Andersen to report that everything's kosher. When Mr. Bush is elected, he summarily fires all of the U.S. attorneys, especially that pesky Mary Jo White in Manhattan. He seeds the White House counsel's office with Laura's buddies and business associates. The partner he sends to oversee the Justice Department is later forced to resign and goes to prison for bilking his own associates.
Another crony in the White House counsel's office commits suicide, after defending Laura's task force to solve the Social Security problem in 100 days, and preparing a Presidential tax return ignoring the gift from Mr. Lay when he assumed the first couple's share of the Lay-Bush debts. White House Counsel Alberto Gonzales refuses the Justice Department permission to search the office. Deputy Attorney General Larry Thompson asks, "Al, are you hiding something?"
Meanwhile, back in Texas, federal regulators are looking at Mr. Lay's bank records, and a field investigator has sent a criminal referral to Washington naming the Bushes, the Lays and President Bush's successor as Texas Governor, Rick Perry, as possible beneficiaries of crimes. Deputy Treasury Secretary Kenneth Dam shows up at the White House to deliver a "heads up" on the Presidential citation. The referral is shuffled back to Texas, to be buried by the newly installed U.S. attorney, and the field investigator is taken off the case.
All of this recounts only the first year or so of the new Whitewater, of course, but we can look forward to continuing amusements. Congress will get involved. Republicans will pillory that poor Texas field investigator; her computer disks will be scanned for compromising details. Independent counsels will come and go; the Supreme Court will be called upon to issue rulings against White House stonewalling. In Texas, Governor Perry, Mr. and Mrs. Lay and 11 others will be convicted on a series of charges related to bank fraud and conspiracy. Laura Bush will launch a campaign suggesting that anyone raising questions about Enron is a part of a "vast pinkoconspiracy."
The first year's pattern of behavior will persist, however, through a whole series of questionable Presidential activities involving campaign fund-raising, women, lies and political assaults on anyone raising issues of Presidential responsibility. Mr. Bush will end up lying to a federal grand jury, but will beat back a half-hearted impeachment attempt. During his last week in office he will pardon Greenwich financier Martin Frankel; one of the groupies who accompanied him evading a four-month international manhunt in 1999 will turn up as a Bush campaign contributor and sometime Presidential companion.
It sure sounds like fun, but we keep pinching ourselves. Two Whitewaters is just too much to ask. In our sober moments, we suspect that political contributions had little to do with the rise and fall of Enron. Its ascendancy under Democrats and bankruptcy under Republicans doesn't exactly fit the current pressie axiom that money tends to corrupt and political money corrupts absolutely.
Rather, the ultimate lesson may turn out to be that Enron was able to play fast and loose in a financial boom and Clintonian moral climate, and was called to account in a recession when the moral climate has turned Ashcroftian. And for Whitewater, the lesson of Enron may be that all the agony didn't have to be, that the best protection against looming scandal is honesty and sunlight.