The Magazine

Enron and the Clintonites

The Clintonites may have been more accommodating than the Bushies.

Jan 21, 2002, Vol. 7, No. 18 • By DAVID BROOKS
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ON JULY 5, 1995, Enron Corporation donated $100,000 to the Democratic National Committee. Six days later, Enron executives were on a trade mission with Commerce Secretary Mickey Kantor to Bosnia and Croatia. With Kantor's support, Enron signed a $100 million contract to build a 150-megawatt power plant.

Enron, then a growing giant in energy trading, practically had a reserved seat on Clinton administration trade junkets. Commerce Secretary Ron Brown, who egregiously linked political donations to government assistance, accompanied Enron chairman Ken Lay on a mission to India. Enron president Joseph Sutton was on the trip to Bosnia during which Brown lost his life in a plane crash (Sutton was not on Brown's plane at the time). After Brown's death, Enron's Terence Thorn, a $1,000 donor to the Clinton-Gore campaign, traveled with Commerce Secretary William Daley to South Africa. Ken Lay also traveled with Energy Secretary Hazel O'Leary on her trade trips.

There were other contacts between Enron and the Clinton administration. Ken Lay was a close friend of Mack McLarty, Clinton's first chief of staff. In his 1993 disclosure statement, Robert Rubin listed Enron as one of the firms with which he had had "significant contact" while at Goldman Sachs. Enron was represented by the law firm of Akin, Gump, Strauss, Hauer & Feld, the firm where Clinton advisers Robert Strauss and Vernon Jordan worked.

And Enron benefited from its government contacts during the Clinton years. After Lay's trip to India with Ron Brown, Enron received nearly $400 million in U.S. government assistance so that it could build a power plant south of Bombay. According to reports in the Houston Chronicle at the time, the Export-Import Bank kicked in $298 million, while another federal agency, the Overseas Private Investment Corporation, put up $100 million.

In February 1995, David Sanger of the New York Times wrote a fascinating insider account of how the deal had been consummated. Enron had been the lead bidder to build the new power plant. Jeff Garten, then undersecretary of commerce for international trade, created what he called "our economic war room" to push the American firm's interests. The State and Energy departments were enlisted to press Enron's case. According to Sanger, the U.S. ambassador to India, Frank Wisner, "constantly cajoled Indian officials." The CIA performed some risk analysis and investigated rival British companies.

Clinton himself was involved in starting the India effort for Enron. According to Michael Weisskopf of Time, Clinton scrawled a note to McLarty telling him to help with the project.

Support for the Bombay power plant was just a small part of the help Enron received from the Clinton administration. All told, Enron received over $4 billion from OPIC and the Export-Import Bank for projects in Turkey, Bolivia, China, the Philippines, and elsewhere.

Under Clinton, the Commerce Department was proud that it was finally using the might of the U.S. government to assist favored firms. But the enterprise was plagued by constant criticism that somehow it always seemed to be big political donors that got most of the help. According to the Boston Globe, all but three of the recipients of OPIC aid during Brown's tenure were substantial Democratic donors. According to a study by the Center for Public Integrity, Enron, U.S. West, GTE, McDonnell Douglas, and Fluor donated a combined $563,000 to the Democratic party during 1993 and 1994 and received $2.6 billion in foreign contracts secured with government help. The Globe found that during the first Clinton term, 27 firms had donated $2.3 million to the Democrats and received nearly $5.5 billion in federal support.

All of this is not to deny that Enron was primarily a Republican donor. Nor is it to minimize the connections between Enron and the Bush administration. Rather, the connections between the Clintonites and Enron remind us that the scandal is not the donations. The scandal is what gets done by federal officials in return for the donations. And while the Clintonites received less money from Enron than the Republicans, the evidence thus far suggests that Democrats extended more favors to Enron than Republicans. That suggests that the nascent Enron scandal may not end up helping Democrats as much as they now think.

Make no mistake, though: The press corps is in full frenzy over what the Bush administration may or may not have done to help Enron as it was going down the tubes--though there is no evidence the Bush administration did anything beyond take phone calls from desperate Enron executives. But the real story here is not about lawbreaking or extraordinary behavior. It is about what has become standard practice in Washington every day.

When corporations make political donations, the money is generally not used to lobby for free market reforms--although Enron did some of that. Rather, the money is used to encourage French-style dirigisme. It is used to lure government into bed with private commercial interests. That's not an effect conservatives should cheer.

David Brooks is a senior editor at The Weekly Standard.