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| FACT SHEETS | ||||||||||||||||
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Ken Lay - An Especially Powerful Interest
As Chairman/CEO of Enron, the now-bankrupt former energy giant, Ken Lay made some powerful friends. These connections and his vast personal and corporate wealth enabled him to influence policies and elections all over the United States, often at the expense of the American people. Facts -- Since 1994, Lay contributed more than $1 million to candidates and political committees. That's $100,000 a year - roughly three times the average U.S. household income after taxes. -- In 1994, Ken Lay didn't like his congressman, Craig Washington, because he opposed NAFTA. So, Lay recruited Sheila Jackson Lee to run against Washington in the Democratic primary, and along with his Enron buddies pumped $24,000 into Lee's campaign. She tromped Washington, and Ken Lay had his own personal hand-picked NAFTA supporter in congress. -- Lay didn't stop at the boundaries of his own district. At least 73% of his contributions from 1989 to 2002 went to candidates outside his district. These contributions worked. In all but one case in the 2000 elections, the candidate backed by Enron interests and their shady accounting firm Arthur Anderson was able to outspend their opponent and win the race. -- In the 2000 election, George W. Bush received more than $100,000 in campaign contributions that his longtime friend "Kenny-boy" Lay helped raise, enabling Bush to easily outspend John McCain in the Republican primary. In fact, Lay's company Enron and its employees gave Bush more than half a million dollars over his fairly brief political career, qualifying them as Bush's #1 career patron when he became President.
Kenny's Boys Caught on Tape In the aftermath of the energy crisis which hit California and other western states in 2001-2, some utilities have sought to recoup payments made to Enron on the basis that they were unjust or unreasonable or fraudulent. Snohomish County Public Utility District outside Seattle, WA is one such group that is seeking refund of money Enron charged to provide power during the 2000-2001 energy crisis. The following are excerpts of conversations between Enron traders that come from tapes obtained by the Snohomish County PUD in the course of this effort. --On California's efforts to recoup the billions of dollars it lost to Enron's price gouging during the energy crisis: KEVIN: So the rumor's true? They're [expletive] takin' all the money back from you guys? All the money you guys stole from those poor grandmothers in California. BOB: Yeah, Grandma Millie, man. But she's the one who couldn't figure out how to [expletive] vote on the butterfly ballot. --On profit-taking from California: TIM: He steals money from California to the tune of about a million -- - - PERSON 2: Will you rephrase that? TIM: O.K., he, um, he arbitrages the California market to the tune of a million bucks or two a day. --On the hope around Enron that then-Texas Gov. Bush will win the 2000 presidential election because he opposes price caps: MATT: When this election comes, Bush'll [expletive] whack that [expletive], man. He won't [expletive] play this price cap. ... I bet they impose a national price cap at a thousand dollars. (Later in the same conversation:) TOM: Caps are gone. MATT: That [expletive] Bill Richardson, he's [expletive] gone.
... TOM: Yeah. MATT: And who's the biggest, ah, single contributor to the Bush campaigners? TOM: You. MATT: Enron. TOM: Enron. What? MATT: Enron. TOM: Is it Enron? MATT: Yeah. TOM: The biggest single contributor. MATT: Yeah, the biggest corporate contributor to the -- TOM: Holy -- really? That's huge. MATT: And No. 1. TOM: That's huge. MATT: Ken Lay's going to be secretary of energy. Timeline 1992: Lay co-chairs the Houston host committee for the Republican National Convention, at which then-President George H.W. Bush, George W. Bush's father, was re-nominated for President. 1994: In the 1994 governor's race, Lay and Enron executives donate $146,500 to Bush, nearly seven times more than they did to then-Governor Anne Richards. Enron's political action committee and executives are the largest donors to Bush's campaign, just as they would be to his presidential campaign six years later. 1997: On Ken Lay's behalf, Gov. Bush lobbies Pennsylvania Governor Tom Ridge regarding an Enron proposal to provide electricity to Philadelphia. Lay expresses his appreciation in a letter to Bush: "I very much appreciate your call to Tom Ridge a few days ago," Lay wrote, "I am certain that will have a positive impact on the way [Ridge] and others in Pennsylvania view our proposal." 1998: Lay asks Bush to write a letter to U.S. House Ways and Means Committee Chairman Bill Archer about a federal tax bill "expressing your support for the measure." 1999: According to an investigation by the New Jersey Division of Criminal Justice, from Oct. 22 through Nov. 1, Enron makes more than 30 financial contributions to various New Jersey political candidates and/or campaigns in violation of New Jersey election law. Enron would eventually pay a $100,000 penalty in 2003 to settle the allegations. March 25: Enron schedules nearly 2,900 megawatts over a transmission line capable of carrying only 15 megawatts. 2000: According to documents filed in the Snohomish County case, Enron manipulates the energy market on more than 400 of the 537 days stretching from January 2000 to June 2001. August: Tim Belden, head of Enron's Western trading desk, tells Richard Shapiro, Enron's Vice-President of Regulatory Affairs and principal D.C. lobbyist, of the California schemes. October: Ralph Reed joins the legions of national political and economic figures who worked for Enron when Enron hires Reed's company Century Strategies to promote deregulation in Congress. Other figures include Bush economic adviser Lawrence B. Lindsey, Weekly Standard editor William Kristol, economist Paul Krugman, CNBC commentator Larry Kudlow, U.S. Trade Representative Robert B. Zoellick and Republican National Committee chairman Marc Racicot. December: Enron assistant general counsel Richard Sanders is informed of an Enron trading schemes dubbed Fat Boy, Ricochet, and Death Star among others. Internal Enron documents show that with Fat Boy, the company submitted an exaggerated estimate of the power its customers would need the next day so it could reap extra payments when the state demanded more power to the grid. December 8: California Independent Systems Operator, the agency responsible for running the transmission grid for most of the state, asks the Federal Energy Regulatory Commission (FERC) to lift price caps. 2001: It was the best of times . . . January 3: Ken Lay is named to the Bush Administration transition team. He gives $100,000 to the Bush Inauguration. January 17-18: Rolling blackouts start in California. January 20: George W. Bush is sworn in as 43rd President of the United States. February: Jeffrey Skilling takes over as CEO of Enron from Ken Lay. Lay remains chairman of the board of directors. February 22: Vice-president Dick Cheney's energy taskforce meets. Ken Lay is in attendance. March: Ken Lay takes trader Tim Belden out for dinner in Portland, OR to celebrate the incredibly high profits of the Enron Western Trading desk, which Belden runs. March 14: FERC does not set price caps. April 17: Cheney and Lay meet. Lay gives Cheney a memo which states: "The administration should reject any attempt to re-regulate wholesale power markets by adopting price caps . . ." April 18: Cheney tells the LA Times that price caps are out of the question. May 4: Cheney tells Frontline that California's poor regulatory scheme and its lack of new power plants caused the energy crisis. The Vice-president: "They've obviously created major problems for themselves and bankrupted PG&E [an Enron subsidiary] in the process." May 16: The energy taskforce delivers its report. California's energy problems are mentioned 110 times. May 17: In a follow-up interview with Frontline, Cheney is asked: When people see that the companies are making 500 percent profit last year, the generators, when you have $2000 a megawatt-hour prices and prices almost that high constantly, couldn't it be manipulation? Couldn't there be some kind of cartel like behavior going on? His answer: "No." That same day: Lay organizes meeting of politicians and financiers in California to talk about the energy crisis. Future Governor Arnold Schwarzenegger is in attendance. May 23: Enron lobbyist and vice-president Richard Shapiro meet with White House economic adviser Robert McNally and Energy Secretary Spencer Abraham's chief of staff about Bush's National Energy Policy and Enron's opposition to price controls in California. May 29: President Bush tells California Governor Grey Davis that he opposes price caps. Bush says he is disturbed that wholesale prices of natural gas are three times higher in California than in New York. . . . it was the worst of times. June 18: FERC imposes price caps. October 16: Enron reports a $618 million third-quarter loss and discloses a $1.2 billion reduction in shareholder equity, partly related to partnerships run by Chief Financial Officer Andrew Fastow. October 17: SEC sends a letter to Enron asking for information. October 24: Enron ousts CFO Andrew Fastow. November 9: Enron discloses that it overstated its earnings by $567 million since 1997. Two company officials are fired. December 2: Enron, once one of the world's largest electricity and natural gas traders, files for Chapter 11 bankruptcy protection. 2002: January 23: Kenneth Lay resigns as Enron's CEO. February 12: Former Enron CEO Kenneth Lay invokes the Fifth Amendment and refuses to testify after being forced by congressional subpoena to appear on Capitol Hill. May 7: Enron documents reveal that the company was gaming the California market. The Gaming of U.S. Elections Ken Lay's ability to put both Republican and Democratic friends into office caused a great deal of harm for Americans. Enron and its executives shelled out more than five million dollars in campaign funds from 1994-2001 to get people elected to office who shared its agenda. Enron and other energy companies would go on to cause blackouts and gouge consumers by faking the California energy crisis. Enron destroyed thousands of employee pensions and defrauded investors of tens of billions of dollars by cooking its books with more than 2,830 subsidiaries and offshore bank accounts. And our elected officials did nothing to stop them. Our current political system works pretty well for guys like Ken Lay. But the rest of us get to sit in the dark while our electric bills skyrocket, our jobs are sent overseas, and our retirement funds are stolen away to offshore banks. home > fact sheets > ken lay |
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