Bush accused of revising history over Enron links

US President George W Bush asserted last week that he had "inherited" Enron chief executive Mr Kenneth Lay as a supporter from Democratic Governor Ann Richards when he defeated Ms Richards in the gubernatorial election of 1994.

That's not how they see it in Houston, Texas, where Enron is headquartered.

Mr Bush "revised history", said Texans for Public Justice, a campaign finance reform organisation which produced evidence to show that Mr Lay in fact strongly favoured Mr Bush in 1994.

The President is clearly anxious to distance himself from Mr Lay as the scandal grows over the bankruptcy last autumn of the giant energy trading company, which cost thousands of jobs and wiped out the retirement savings of many employees.

In the latest revelation, Time magazine disclosed that on October 12th, just four days before Enron reported a stunning $618 million (€694 million) loss for the third quarter, the auditor, Arthur Andersen, received an extraordinary instruction from an Enron lawyer to destroy all audit material, except for the most basic "work papers", and that the process of shredding went on for weeks.

Mr Lay and his wife Linda personally gave Mr Bush $47,500 and Enron executives gave the Bush campaign another $146,500 in the closely-fought 1994 campaign for governor of Texas, which Mr Bush won, while Ms Richards received only $12,500 in Enron money, according to Texans for Public Justice.

Mr Lay "was a supporter of Ann Richards in my run of 1994", Mr Bush said last week. "And she did name him head of the Governor's Business Council, and I decided to leave him in place just for the sake of continuity. And that's when I first got to know Ken . . ." Mr Lay confirmed his support for Mr Bush in 1994 in a television interview last year, when he said he supported him in that campaign because by then "I was very close to George W".

Mr Bush received a total of $220,700 from top Enron executives for his 2000 presidential campaign, of which Mr Lay contributed $44,000, according to another watchdog group, the Centre for Public Integrity. During his political career, Mr Bush has received $550,000 altogether from Enron, its employees and relatives, according to the Washington Post, which discounted earlier reports that he got up to $1 million.

Enron's total contributions to Republicans over the years amounted to $1,766,244 and to Democrats $680,654, according to the Houston Chronicle.

Court filings based on public records have meanwhile exposed how much Enron executives made by selling their shares while the company was riding high on the back of financial reports that hid losses going back to 1997.

A group of 29 Enron executives made $1.1 billion by selling shares from 1999 until six months ago, according to court papers filed by Amalgamated Bank of New York. Of these, at least 12 received $30 million or more through their share sales. Mr Lay got $101.3 million by selling 1.8 million shares, trading almost every day between 1999 and mid-2001.

Mr Lou Pai, former chairman of an Enron subsidiary, received $353.7 million, according to the filings. Mr Jeffrey Skilling, who left Enron last year, received $66.9 million.

The law suit accuses the 29 executives of "unlawful insider trading", saying they employed "devices, schemes and artifices to defraud". "This is the most massive insider bailout that we have ever seen," said Mr William Lerach, a bank lawyer. An Enron spokesman said the suit was "completely without merit".

Mr Lay has been asked by the ranking Democrat on the House Commerce Committee, Mr Henry Waxman, to explain an e-mail message to employees last August stating Enron remained strong. Severely wounded by its role in the Enron scandal, Arthur Andersen may be forced to seek a merger with one of the other Big Five accounting firms in the US, according to industry analysts.

However, the other members of the Big Five - Ernst & Young, KPMG Peat Marwick, Deloitte Touche Tohmatsu and PricewaterhouseCoopers - may not be willing to adopt Andersen's problems. Last year, the Securities and Exchange Commission fined Andersen $7 billion for not disclosing fraud at Waste Management.

They are also facing scrutiny over too-cosy relationships with firms they audit, as most of their profits now come from consulting services. Last week, Andersen admitted that it had destroyed the documents relating to its Enron audit. The company faces a Justice Department criminal investigation, a Congressional inquiry and billion-dollar law suits from shareholders.

Supervisors at Andersen repeatedly reminded employees of the document-destruction memo in the weeks leading up to the first SEC subpoenas that were issued on November 8th, according to Time. The firm did not rule out the possibility that some destruction continued even after that date.

The federal investigation in Washington will be overseen by Mr Josh Hochberg, head of the fraud section who was involved in the case of the FBI tape of Linda Tripp and Monica Lewinsky, which lead to the case against former president Mr Bill Clinton.

The probe will try to determine whether Enron's partnerships with shell corporations were designed to hide its liabilities and mislead investors, if evidence was intentionally destroyed and whether Enron received special favours for its political contributions.