Beware the Enron effect
Britain is not immune to the money trail
Leader Tuesday January 29, 2002 The Guardian
The Enron saga is threatening to stain Labour. At issue for the party's reputation is the £36,000 in sponsorship it accepted from the US energy company, now America's biggest bankrupt. The cash, according to Enron's former European boss, was for "access". The company wanted its £1.5bn acquisition of Wessex Water, Britain's biggest water operator, to pass unhindered by a regulatory review. It did so. The Houston-based energy company lobbied for a moratorium on gas-fired power stations to be lifted. It got its wish there too. Influence was undoubtedly sought by Enron. The question is whether it was bought.
Given the blatant nature of Enron's charms, it is unlikely that Labour ministers were so easily seduced. After all, the water deal was independently approved by both the industry regulator and the director general of fair trading. In the case of the moratorium, ministers buckled under the threat of international court action from the Clinton commerce department, which lobbied to protect the financial interests of American-owned utility companies. More worrying is Labour's reliance on accountants Arthur Andersen, who failed to spot that Enron's balance sheet was more fiction than fact. Apparently dropped by Margaret Thatcher for failing to spot the holes in the accounts of the failed car-maker DeLorean, Andersens was brought in from the cold by Labour to draft the windfall tax. With hindsight, this act of generosity may appear like a mistake.
Having hammered the Conservatives over sleaze before 1997, Labour should not be surprised to be spattered when the mud starts flying. But given the paucity of the allegations and that its potential investigating body is the Labour-dominated parliamentary public administration committee, none of the dirt is likely to stick. The same cannot be said of the Bush White House. What Enron did at Westminster was utterly dwarfed by its actions in Washington. The company paid out more than $6m in campaign contributions over the last decade - and among those favoured were President George Bush and his vice-president Dick Cheney. Mr Cheney also formulated the new administration's energy policy - and met Enron six times in the process of doing so. The congressional bloodhounds that sniff around scandals scent that Enron's donations could have helped it to shape national energy policy.
The White House is determined not to be dragged into the affair - saying that Enron is a corporate not a political matter. But the investigative arm of Congress is now threatening to sue Mr Cheney, after the vice-president refused to release details of the Enron meetings. If this does not worry the administration, then the shift in the public mood should. The latest polls show that the majority of Americans believe the Bush administration is hiding something about its dealings with Enron. The debacle has tapped into a feeling that the political process is up for sale. This exerts a powerful pull on US voters - witness Senator John McCain's success, based upon campaign finance reform, when he stood against Mr Bush in the Republican primaries. Congress should drop some of its Enron investigations in favour of enacting a campaign finance reform bill this coming session. Mr Bush comes from a party which sees itself as the political agency of the large corporations, while Mr Blair uses the private sector to provide a bright, shiny gloss to his policies. But the prime minister should proceed with caution. Political donations have yet to defile Labour. If they start to do so, the stain will be very hard to shift.