Red-Faced Politicos Probe Enron

WASHINGTON -- Senator Joseph Lieberman embodies the way Enron Corp.'s collapse has tied the capital in political knots.

Already, Lieberman, Democrat-Connecticut, who will strike the gavel Thursday to open the new year's first congressional hearing on Enron, has been buffeted by criticism from both sides of the aisle for his stewardship of one of 10 congressional committees now investigating Enron's fall.

Republicans are complaining that Lieberman should recuse himself because his former chief of staff, Michael Lewan, worked as a lobbyist for Enron, the Houston energy-trading company. Others have raised questions about campaign donations to Lieberman from Enron and its accounting firm, Andersen.

And some fellow Democrats are expressing dissatisfaction that Lieberman, who harbors presidential aspirations, has not yet made the administration of President George W. Bush his prime target.

The bipartisan criticism of Lieberman reflects how deeply Enron, its campaign money and its deregulatory agenda have become embedded in Washington's money culture in the last dozen years.

Like many Fortune 100 companies, Enron spread largess all over Washington. Although it gave more money to Republicans, it gave plenty to Democrats, too. Enron has written campaign checks to three-quarters of senators and nearly half of the members of the House of Representatives.

Perhaps because of those donations, Democrats and Republicans have pledged to aggressively investigate Enron's bankruptcy and its impact on thousands of employees, for fear of looking soft on today's favorite corporate target.

"They are all living in a glass house," Mary Matalin, counselor to Vice President Dick Cheney, said of lawmakers on Capitol Hill. "How far are they going to go with guilt by contribution?"

Everyone agrees that the Enron bankruptcy is a corporate scandal. While most politicians say it has the classic elements of a political scandal, too, they insist it is still too early to declare it one. Many elected officials on Capitol Hill are proceeding cautiously as they embark on lengthy and complicated inquiries.

"I think they are being cautious because they don't know all the facts," Republican strategist Charles Black said. "This is a very complex thing. And there is no evidence that any elected official or government official did anything untoward. So they are right to be cautious."

Lieberman was asked by a legal watchdog group to recuse himself because a group he co-founded, the New Democrats Network, had received $25,000 from Enron. Critics have also pointed out that Citigroup, Enron's largest lender, is Lieberman's top donor, having given his campaigns a total of $112,000 since 1997, campaign records show.

A long-time Republican strategist said: "Lieberman's problem is simple -- Enron's biggest creditor is his campaign's biggest contributor."

For his part, Lieberman has pledged a fair and thorough inquiry that will not become "a witch hunt."

Enron, and Andersen were among the most generous contributors to Bush's presidential campaign. Enron has given more than $700,000 to Bush since 1993.

In addition, Lay was one of the "Pioneers," raising more than $100,000 for Bush's campaign, and he and his wife gave a total of $10,000 to Bush's Florida recount fund. Enron and Lay also contributed a total of $200,000 to Bush's inaugural festivities.

While Enron's accounting problems worsened last September, Lay continued to raise money for candidates. He was host of a luncheon for Elizabeth Dole, who is running for the U.S. Senate from North Carolina, at the Four Seasons hotel on Sept. 20. The event raised about $20,000 for Dole's campaign, but she has pledged to donate Lay's contribution -- about $5,000 -- to the Enron employees' fund. Other candidates, lawmakers and campaign committees are busily returning Enron donations.

The congressional panels are focusing on the reasons for Enron's collapse. They intend to investigate a wide array of issues, including retirement fund management, the oversight of energy trading markets and financial accounting and auditing.

The Senate Government Affairs Committee, whose chairman is Lieberman, will look at whether regulators could have done more to monitor the company's practices.