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2002-01-16

Money and Connections Bought Enron Power. Now, As the Company Unravels in Scandal, Can Theybuy It Innocence As Well?

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The plot of the Enron scandal thickens. Yesterday, Arthur Andersen, the accounting firm accused of bungling EnronCorporation’s audit, fired its partner in charge of reviewing the company’s books. Anderson said it had ordered thedestruction of thousands of documents and e-mail messages after learning that the Securities and Exchange Commissionhad begun an investigation of Enron’s accounting.

Interestingly, George W. Bush was himself the subject of an SEC investigation into energy trading a decade ago. In1990, Bush sat on the board of directors of Harkin Energy Company and on their audit committee. Just before thecompany announced a $23 million loss, Bush sold some $850,000 worth of stock, which he later used to purchase theTexas Rangers baseball team. As in the Enron case, the SEC investigated the possible insider deal. But it broughtno charges. Perhaps this isn’t surprising: the head of the SEC at the time was appointed by Bush the elder. And theSEC’s general counsel at the time, James Doty, actually helped to engineer George W. Bush to buy the Texas Rangerswith the Harkin stock money. Doty also hails from the law firm, Baker and Botts, the law firm of former Secretary ofState James Baker fame. James Baker, one of the most prominent figures in the first Bush administration, representedGeorge W. Bush in the legal battle for the presidency.

Baker and Botts is also implicated in today’s Enron scandal. It is the same law firm that produced President Bush’sappointee Lee Rosenthal, the Texas judge who was assigned to the employee and shareholder lawsuits against Enron.Just last week, Judge Rosenthal denied a motion to freeze the assets of Enron executives and board members. She hassince recused herself from the case.

Guest:

  • Andrew Wheat, Research Director, Texans for Public Justice.

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