Greenbacks and Election Blues

George W. Bush Gets Layed

The Mutually Beneficial Relationship Between Enron CEO Ken Lay and the Republican Contender

By Pratap Chatterjee
Special to Corporate Watch
July 20, 2000

Early last October, every member of a ninth grade girls track team and the freshman football team at suburban Houston's Deer Park High School's north campus returned from practice reporting severe breathing problems. That day Deer Park registered 251 parts of ozone per billion, more than twice the federal standard, and Houston surpassed Los Angeles as the smoggiest city in the United States.

One of the biggest contributors to Deer Park's pollution is a plant owned by Enron, Houston's wealthiest company. Enron is also the single largest contributor ($555,000 and counting) to the political ambitions of Texas Governor George W. Bush, Republican Candidate for President of the United States. Kenneth Lay, the chief executive of Enron, has personally given over $100,000 to Bush's political campaigns, more than any other individual. He is also one of the "Pioneers" - a Bush supporter who has collected at least $100,000 in direct contributions of $1,000 or less.

Enron is best known as the largest buyer and seller of natural gas in the country. Its 1999 revenues of $40 billion has made it the 18th largest company in the United States. Enron is invested in energy projects around the world including the UK, Argentina, Bolivia, Brazil, the Philippines, Indonesia, China, India and Mozambique.

The company has recently expanded from energy to "bandwidth" capacity for the Internet, making it one of the world's largest Internet-based trading companies, buying and selling a dizzying array of products ranging from pulp and paper to petrochemicals and plastics, as well as esoteric products like clean air credits that utilities purchase to meet emission limits.

Texas activists say that this tight connection between Bush and Lay bodes ill for the country, if Bush is elected. Andrew Wheat, from Texans for Public Justice, a campaign finance advocacy group in Austin, compared the symbiotic relationship between Enron and the Governor to "cogeneration"-a process used by utilities to harness waste heat vented by their generators to produce more power. "In a more sinister form of cogeneration, corporations are converting economic into political power. A Bush election fueled by Enron dollars could fill the White House with dangerous levels of Enron gas. When that gas ignites in the public-policy arena, consumers will get burned," he told Corporate Watch.

Indeed Bush campaign spokesman Ray Sullivan told Corporate Watch that, if elected president, the governor is keen to promote the kind of policies that he has crafted with companies like Enron for the state of Texas. "The governor believes in competition, free enterprise, better service and technology improvements. He has promoted sweeping and effective reforms in education and has been the first governor in Texas to seriously address limits on emissions. He will carry his agenda to Washington to do what he believes is best for the country."

But is what Bush believes is good for Texas, good for the United States Of America? Texas has one of the worst environmental records in the country, particularly in the field of air pollution. And its education record is not much better. Unfortunately, the Bush platform for the country is very similar to the kinds of programs that he has worked on with Enron, cutting corporate taxes, deregulating industry and replacing social programs with private sector volunteerism.

In addition Enron is invested in energy projects around the globe-some of which have been tainted by charges of human rights abuses. For example, in India construction of it's controversial Dhabol power plant has brought charges by international groups like Human Rights Watch and Amnesty International of complicity with police brutality in rural communities. It is also accused of human rights violations in Bolivia, where it is building a major gas pipeline threatening indigenous communities and the rainforest environment, according to California-based Amazon Watch.

Houston, We Have a Problem

The Enron Methanol plant in Pasadena, Texas lies in the Houston Ship Channel area, the nation's largest concentration of petrochemical plants just east of the city. The Enron Methanol plant has won special concessions from Governor Bush allowing the company to pollute without a permit, as well as giving the company immunity from prosecution for violating the law. Indeed, plants like this in Texas actually emit twice as many nitrogen oxides, a key ingredient of smog, as do all the nine million cars in Texas put together.

Only seven percent of the more than 3,500 tons of nitrogen oxide emitted by the Enron Methanol plant in 1997 were permitted. Enron got away with this under the "grandfather clause" of the 1971 Texas Clean Air Act which allows plants built before 1971 to continue their polluting practices. Governor Bush extended this clause under the 1999 Clean Air Responsibility Enterprise (CARE) program that his office drew up in a series of secret meetings with representatives of the top polluters in the state. CARE waives permit requirements for plants that volunteer to cut emissions.

The CARE program is backed up by an act that Bush signed in May 1995 giving sweeping protections to polluters who perform internal environmental or safety audits. The law makes these audit documents confidential from the public and allows polluters to escape responsibility for environmental violations. To date Enron has conducted five such audits and filed for immunity from prosecution for violations of the law, according to the Texas Natural Resources Conservation Commission (TNRCC), the state equivalent of the Environmental Protection Agency.

Tamara Maschini, who lives about five miles from the Enron plant is one of the founders of a local environmental group called Clean Air Clear Lake. "Whole families in this neighborhood have asthma because of the pollution from plants like Enron," she says. "It's gotten so bad that NASA has a problem recruiting people to work here at Mission Control which is just down the road. Houston is in trouble and George Bush is the reason-- he has allowed the situation to deteriorate over the past several years," according to Maschini.

Mark Palmer, head of public relations for Enron, says that the company's contribution to local pollution is minimal. "If the grandfather clause was canceled right now, we would benefit the most of any of the companies in Texas because our nitrogen oxide emissions add up to less than half a percent of the total," he told Corporate Watch.

Neil Carman, a former employee of the Texas Air Control Board, who now works for the Sierra Club, agrees that Enron's grandfathered nitrogen emissions add up to less than one percent of the total for all of Texas. However, he points out that Enron Methanol plant alone contributes 3.6% of the nitrogen oxide emissions from the nearly 250 stationary sources of pollution for the city of Houston--the equivalent of 152,500 cars.

What's more, he says that Enron is simply paying lip service to the Bush proposal to cut pollution at grand fathered plants. "Enron showed up at the governor's press conference to volunteer for the CARE program but they have been missing in action ever since. They haven't even bothered to file their voluntary plan."

Enron's Field Of Dreams

If environmental regulators wanted to speak to Enron's senior officials about the missing voluntary program, they would be well advised to follow the presidential candidate around as he is often chaperoned by Enron officials.

On April 7, 2000, Ken Lay, Enron's chief executive, played host to Bush junior and his father, former president George Bush, at the Houston Astros' first home game of the season at the baseball team's brand new stadium - Enron Field - which was built with the help of a $100 million donation from Enron. (The company got free advertising, a tax break and a $200 million dollar contract to supply power to the stadium in return.)

Less than three weeks later Lay joined Bush in Washington DC for a Republican fund-raiser that topped all previous records by bringing in a staggering $21.3 million, easily the biggest one-night haul for any political party in history.

That's not all. Lay makes sure that the Bush presidential campaign has access to other Enron facilities. For example last year the Bush campaign borrowed Enron's corporate jets eight times to fly aides around the country, more times than any of the 34 other companies that made their company aircraft available to the presidential hopeful. (Under federal law, campaigns must reimburse companies for transportation, typically at the cost of a first-class ticket so Enron received $25,000 from the Bush campaign for this favor).

Lay's ties to Bush junior begin with his father, former President George Bush, who was also a recipient of Enron/Lay's financial largesse. Like his son now, Bush senior was also happy to return the favor: from 1991 to 1993 Bush appointed Lay to the President's Export Council.

When Corporate Watch asked Ray Sullivan, a spokesman for the Bush campaign, about the relationship between the two men, he chose his words carefully. "Ken Lay is a noted business leader in Texas who has long been active in Republican politics. He is chair of the Governor's Business Council. But the governor has his own agenda based on what he believes is best for Texas and for the country."

Lay toed a similar line when recently interviewed by the New York Times. "When I make contributions to a candidate, it is not for some special favor, it's not even for access -- although I'll be the first to admit it probably helps access. It is because I'm supporting candidates I strongly believe in personally." Indeed both Lay and Enron are generous contributors to local and national politicians wherever they do business, often following the long standing corporate practice of funding candidates on both sides of the election.

According to campaign records, Enron and Lay have contributed to Democrats as diverse as Texas Land Commissioner Garry Mauro, U.S. Rep. Richard Gephardt of Missouri and Texas House Speaker Gib Lewis. In 1984, Lay was Harris County chairman of a $1,000-a-plate Reagan-Bush fund-raiser, while at the same time co-chairing a fund-raiser for U.S. Sen. Lloyd Bentsen, the vice presidential candidate on the opposing ticket.

Industry Volunteers

Bush delivers just the kind of results that Lay wants. Candidate Bush says he will "work with local jurisdictions using market-based solutions and not try to sue our way or regulate our way to clean air and water." He proposes allowing industries to voluntarily police themselves, just like he did for Enron and the other polluters in Texas.

Texas has regularly ranked as the most environmentally polluted states in this country for years. According to the Environmental Defense Fund, Texas has the worst record of all 50 states in air pollution, water pollution, overall toxic releases, recognized carcinogens in the air, suspected carcinogens in the air, developmental toxins in the air (affecting brain and nervous-system development in children) and cancer risk.

While it is true that Texas was the most polluted state in the country before George W. Bush became governor, the reason it has stayed that way is simple: Bush's policies have effectively allowed these industries to continue to pollute through a system of voluntary compliance.

Read His Lips?

Ken Lay and Enron's political beliefs overlap with candidate Bush in other arenas such as education. For example on August 20, 2000 the Houston Astros will host a book drive at Enron Field to promote one of George W Bush and Enron's favorite charities - the Reach Out And Read (ROAR) literacy program.

Launched in 1998, by Laura Welch Bush, the governor's wife, the program calls for physicians and nurse practitioners to give free culturally appropriate books to their pre-school age patients at every checkup. Enron also regularly volunteers its employees to read to children in area clinics and conducts book drives. The cost to Enron for this five year publicity program was $400,000.

"Along with good nutrition, exercise, care and love, doctors agree that children need a daily dose of parent-child reading. This program will serve as a model for clinics across Texas." said Laura Bush in a press release.

Susan Cooley, the director of Texas ROAR, was gushing in her support for the company, the governor and his wife. "I've been a nurse for 25 years. I don't know anything about sponsorship or advertising. But at Enron they have whole departments to do this, so finding a corporate sponsor has been a godsend," she told Corporate Watch.

However Enron is less than supportive of schools that do not provide similar public relations opportunities. And its political reach goes beyond the governor's mansion. Some 20 miles north of the company's headquarters in Houston Enron has effectively cut approximately $225,000 from the annual budget of the Spring school district, one of Houston's ethnically diverse, poorer suburbs. Spring, Texas, sits on top of Bammel Field, a huge underground salt cave, which Enron uses to store large quantities of natural gas. As the largest business in Spring, Enron was required to pay taxes based on the value of its property and mineral holdings on January 1st of each year.

But under a special 1989 provision Enron and other large business property owners were allowed to choose September 1st as their tax assessment date, when the company has less gas stored in Bammel field. Enron was able to reduce its property taxes by $15 million in 1990, blowing a hole in the school districts budget, Katherine Trumbull, a tax accountant with the school district, told Corporate Watch.

The Spring school district went to court to challenge the new tax provision as unconstitutional and won at the appeals court level. Enron appealed this decision to the Texas Supreme Court. While the case was pending Enron's Political Action Committee (PAC) and senior executives contributed heavily to the election campaigns of every Republican judges vying for seats (all the members of the Texas Supreme Court are elected and may take money from contributors for the campaign expenses). Enron's employees and PAC doled out $78,700 between the seven of the winning justices in the 1996 campaign including more than $24,000 from Ken Lay personally. The Supreme Court justices ruled unanimously in Enron's favor on May 6, 1996, a month after Lay gave Chief Justice Thomas Phillips $5,000 for his campaign.

"I have nothing against Enron, after all they are our biggest taxpayer. They can afford to pay for good lawyers and lobbyists and we can't," says Trumbull simply. Enron's Palmer had no comment about the tax lawsuit brought by the Spring Independent School District.

Enron's Global Reach

Enron has also courted Bush's help for its business abroad. For example, in March 1997 Lay wrote a letter to Bush, that was subsequently released to the press under Texas open records laws, asking him to contact every member of the Texas delegation to explain how "export credit agencies of the United States are critical to U.S. developers like Enron, who are pursuing international projects in developing countries."

These agencies include the Overseas Private Investment Corporation (OPIC), a federal agency which provides political risk coverage and financial support to United States companies investing abroad including hundreds of millions of dollars for Enron projects in countries from Brazil to India. Unfortunately for communities in these countries Enron's investments have had devastating impact.

In India where Enron received $200 million in political risk insurance for the Dabhol offshore oil and gas development project in 1996, the company has been blamed by both Human Rights Watch as well as Amnesty International, for financing local police brutality.

For example, just before dawn on June 3, 1997, police stormed the home of several women in Veldur, a fishing village in western state of Maharashtra, India.

"The policemen forcibly opened the door and dragged me out of the house into the police van parked on the road. (While dragging me) the police kept beating me on my back with batons. The humiliation meted out to the other members of my family was similar to the way I was humiliated... my one and a half year old daughter held on to me but the police kicked her away," says Sugandha Vasudev Bhalekar -- a 24 year old housewife who was three months pregnant at the time of her arrest, according to Amnesty International documentation.

The only "crime" committed by these women was to lead a peaceful protest against a massive new Enron natural gas plant. An investigative team from Amnesty International found that a number of the women subsequently sustained injuries, including bruising, abrasions and lacerations on arms and legs. Several hundred other peaceful protestors have been arrested and temporarily detained by Indian police since December 1996, according to the report. Meanwhile, a January 1999 investigation by Human Rights revealed that the police were directly on the Enron payroll. (see India sidebar)

Likewise, Enron has been severely criticized for the Cuiabá Integrated Energy Project in Bolivia and Brazil, for which it received US$200 million in insurance from OPIC in 1999.

On February 4, 2000 an oil pipeline operated by Transredes, a joint venture between Enron and Shell in the Cuiabá Integrated Energy Project, erupted in the Bolivian altiplano and dumped an estimated 10,000 barrels of refined crude oil and gasoline into the Desaguadero River, which supports indigenous communities like the Uru Moratos. Facing starvation from the loss of their life- sustaining waterfowl and fish, the Uru Moratos left their ancestral lands at the southern shores of Lake Poopo in April and marched 85 miles to the city of Oruro to ask for government help.

White House Hopes

In January 1999 Enron pitched in $50,000 to help pay for Bush's inaugural bash in Austin, Texas, when he won the reelection for governor. Today the polls show that George W. Bush currently has a better than even chance of winning the November presidential elections and moving from Austin to Washington DC.

If he does, it is very likely Ken Lay will be on hand when Bush is inaugurated as the next president of the United States, hoping that in return for generously supporting his campaign, Bush will be equally generous in his support for Enron's businesses at home and abroad in the future.

Craig McDonald, director of Texans for Public Justice, says that the relationship is bound to pay off. "Those two have a mutual self-interest in being buddies. Bush has always delivered on Ken Lay's political pitches. Enron depends upon government policies to enhance their bottom line in lots of ways. The company relies upon this kind of access to government," he recently told an Associated Press reporter. It is people from the Uru Moratas of Bolivia to the school children of Deer Park and Spring, Texas, who will ultimately pay the price through the continued destruction of their communities and environment.

This story was made possible by the Corporate Watch Fund for Investigative Journalism.