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Thursday, 10 January, 2002, 23:25 GMT
White House plays down Enron links
President George Bush and Treasury Secretary Paul O'Neill
Enron has ties to Mr Bush and members of his cabinet
By BBC Washington Correspondent Rob Watson

The Bush administration is moving quickly to prevent the Enron collapse becoming a scandal like the Whitewater scandal that plagued the Clinton administration.

Speaking at the White House, President Bush said he was deeply concerned about the losses suffered by Enron workers and shareholders, which is why he was ordering a review of corporate disclosure rules and of company pension schemes.

I have never discussed with Mr Lay the financial problems of the company

President Bush

The review comes on the heels of a Department of Justice announcement that it had launched a criminal investigation into the company's collapse.

Mr Bush received significant contributions from the head of Enron, Ken Lay, and other Enron executives.

The administration is taking aggressive steps to investigate the firm as it seeks to distance itself from the company, which stands as the largest corporate failure in US history.

Presidential ties

President Bush has acknowledged that Enron's chief executive Ken Lay was a political supporter. But he insisted he hadn't discussed the company's problems with Mr Lay.

"I have never discussed with Mr Lay the financial problems of the company. The last time that I saw Mr Lay was at my mother's fundraising event for literacy in Houston. That would have been last spring," Mr Bush said.
Enron CEO Ken Lay
Enron executive Ken Lay was one of Bush's biggest election contributors

But Mr Bush's relationship with Mr Lay could still become a political liability.

Mr Lay served as one of Bush's Pioneers, a group of 214 elite fundraisers who helped the president line his war chest with millions of dollars.

The President's spokesman, Ari Fleischer pointed out that Enron had given money to Democrats as well as Republicans, and warned Congress against what he called partisan witch hunts.

But Mr Fleischer admitted Mr Lay had discussed the company financial problems with Secretary of Treasury Paul O'Neill and Secretary of Commerce Don Evans. Both decided to take no action.

The decisions could well prove embarrassing for the government, given Enron's subsequent collapse.

And other members of Mr Bush's administration have links to Enron.

Attorney General John Ashcroft recused himself from the investigation because of campaign contributions he received from the company.

Mr Ashcroft was a senator from Missouri and an unsuccessful presidential candidate before being appointed attorney general.

Enron executives also met with Vice President Dick Cheney and his energy task force half a dozen times to discuss the administration's energy plan.

Congress investigates

Members of Congress want to know whether the advice company executives gave the administration was self-serving.

I think that it's important for Congress to act in a way that helps solve the policy problems and not in a way that is suggestive of the partisan, politically charged investigations that I think people are tired of

Ari Fleischer, White House press secretary

Despite Mr Fleischer's contention that the American public is tired of political witch-hunts, five congressional panels are investigating the collapse of Enron.

Prominent Democratic senators Joseph Lieberman and Carl Levin launched their investigation earlier in January. Senator Levin is chair of the Senate Permanent Committee on Investigations.

Mr Levin said that based on what is known there is "layer upon layer of conflicts of interest".

When they launched their investigation, the company was already under investigation by the Securities and Exchange Commission, the Justice and Labour departments and by congressional committees in the Republican-controlled House of Representatives.

The administration is working hard to control the political damage.

Mr Bush has been stymied on key domestic political initiatives since the defection of a Republican senator last year swung the balance of power in the Senate in favour of the Democrats.

In mid-term elections due in November, the Republicans hope to maintain their hold in the House of Representatives and regain control of the Senate.

A political scandal could damage their campaign efforts.

See also:

10 Jan 02 | Business
Enron losses prompt pension review
10 Jan 02 | Business
Enron collapse prompts inquiry
10 Jan 02 | Business
Q&A: Enron's plight
12 Dec 01 | Business
Enron to start $6bn sell-off
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