Enron and AA in England

["Ian Murray" <seamus2001@xxxxxxxxx>]

[designing tax policies too, mmmmmmm. the irony of the
conservatives going after the liberals in England while the
liberals go after the conservatives in the US is magically
delicious]

Blair mired in Enron row

Labour digs in: Tories urge Labour to 'come clean' over links to
energy firm

Michael White and David Hencke
Tuesday January 29, 2002
The Guardian

Downing Street last night launched a vigorous defence of its policy
dealings with the disgraced US energy company Enron, as the
Conservatives turned their attack on what they termed "a very murky
business" for the government.

Number 10 released a list detailing seven ministerial meetings with
company representatives between 1998 and 2000, and culminating in a
CBE in the 2001 new year's honours list for Ralph Hodge, the former
Enron Europe chairman.

Mr Hodge has now ex pressed unease about the US firm's aggressive
lobbying stance, triggering claims that Enron paid "cash for
access" because it made low-key donations totalling £36,000 to
Labour-sponsored events.

The purpose was to explain "the differences in the UK political
scene" to his US bosses, he told Channel 4 News last night. "It
would be a better world if it was not custom and practice to do
that," Mr Hodge said, stressing that he did not believe Enron had
bought influence.

The firm also hired a Conservative ex-cabinet minister, Lord
Wakeham, who sat as a non-executive director on the Enron board,
and may have to testify on Capitol Hill.

Downing Street officials denied that Mr Blair had ever met any
executives of Enron to discuss the government's moratorium on
gas-fired power stations, which was modified after extensive
pressure from the energy sector.

Ministers and ex-ministers admit there was intense pressure to
create a more active market, but from many firms. There was also an
environmental case for gas. "The change was won by argument, not by
pressure from Enron," one backbench expert recalled last night.

But the former Treasury minister, David Davis, now Tory chairman,
issued a statement based on a Guardian rev elation in August 1999
that the US embassy in London had reported that "prime minister
Blair has recently intervened to water down the moratorium
proposals".

The Guardian document, obtained via the US Freedom of Information
Act, prompted Mr Davis to back calls from Tory and Liberal Democrat
MPs for "further clarification" to test Mr Hodge's claim that
giving money was the "most efficient" way to reach ministers.

"The question remains whether Mr Blair was aware of the meetings
between his ministers and Enron executives and whether he
intervened to secure a change of policy_ The PM now needs to come
clean about the whole affair and in particular the role he played,"
said Mr Davis.

As the deepening implications of Enron's collapse and the
complicity of its accountants, Arthur Andersen, spread within the
US, MPs in all parties are determined to establish whether Britain
has also been tainted by dubious corporate practice.

No 10 and the Department of Trade and Industry, where three
secretaries of state, Margaret Beckett, Peter Mandelson and Stephen
Byers, were involved in the policy change, are adamant that the
moratorium on gas had always been temporary, to help the rival coal
industry through a bad patch.

They also insist that ministers acted on the advice of officials,
notably the director general of gas and electricity, who urged Mr
Byers in April 2000 to ease the block on gas-fired stations. It was
finally done that November.

But according to the Guardian report, a former Enron executive,
David Lewis, wrote in May 1998: "We have a very clear sign from
government that at the moment an extended moratorium is the
frontrunner as a means of protecting the coal industry."

The role of Andersen, who won back access to huge government
contracts through Labour, after being blackballed by the Tories, is
also being questioned. Matthew Taylor, the Liberal Democrat
Treasury spokesman, is seeking to know what government contracts
the partnership has won since 1997, and how many staff, some very
senior, have been seconded to Whitehall.

The MP listed Andersen's help to Labour in opposition, ranging from
policy advice to management training and a crucial report
supporting the controversial policy of public/private partnerships.

Among the contracts Andersen later won was a £70-130m national
insurance computer contract and extensive contracts advising
ministers on privatisations and partnerships, including Railtrack,
London Underground and schools and hospitals.

Beware the Enron effect

Britain is not immune to the money trail

Leader
Tuesday January 29, 2002
The Guardian

The Enron saga is threatening to stain Labour. At issue for the
party's reputation is the £36,000 in sponsorship it accepted from
the US energy company, now America's biggest bankrupt. The cash,
according to Enron's former European boss, was for "access". The
company wanted its £1.5bn acquisition of Wessex Water, Britain's
biggest water operator, to pass unhindered by a regulatory review.
It did so. The Houston-based energy company lobbied for a
moratorium on gas-fired power stations to be lifted. It got its
wish there too. Influence was undoubtedly sought by Enron. The
question is whether it was bought.

Given the blatant nature of Enron's charms, it is unlikely that
Labour ministers were so easily seduced. After all, the water deal
was independently approved by both the industry regulator and the
director general of fair trading. In the case of the moratorium,
ministers buckled under the threat of international court action
from the Clinton commerce department, which lobbied to protect the
financial interests of American-owned utility companies. More
worrying is Labour's reliance on accountants Arthur Andersen, who
failed to spot that Enron's balance sheet was more fiction than
fact. Apparently dropped by Margaret Thatcher for failing to spot
the holes in the accounts of the failed car-maker DeLorean,
Andersens was brought in from the cold by Labour to draft the
windfall tax. With hindsight, this act of generosity may appear
like a mistake.

Having hammered the Conservatives over sleaze before 1997, Labour
should not be surprised to be spattered when the mud starts flying.
But given the paucity of the allegations and that its potential
investigating body is the Labour-dominated parliamentary public
administration committee, none of the dirt is likely to stick. The
same cannot be said of the Bush White House. What Enron did at
Westminster was utterly dwarfed by its actions in Washington. The
company paid out more than $6m in campaign contributions over the
last decade - and among those favoured were President George Bush
and his vice-president Dick Cheney. Mr Cheney also formulated the
new administration's energy policy - and met Enron six times in the
process of doing so. The congressional bloodhounds that sniff
around scandals scent that Enron's donations could have helped it
to shape national energy policy.

The White House is determined not to be dragged into the affair -
saying that Enron is a corporate not a political matter. But the
investigative arm of Congress is now threatening to sue Mr Cheney,
after the vice-president refused to release details of the Enron
meetings. If this does not worry the administration, then the shift
in the public mood should. The latest polls show that the majority
of Americans believe the Bush administration is hiding something
about its dealings with Enron. The debacle has tapped into a
feeling that the political process is up for sale. This exerts a
powerful pull on US voters - witness Senator John McCain's success,
based upon campaign finance reform, when he stood against Mr Bush
in the Republican primaries. Congress should drop some of its Enron
investigations in favour of enacting a campaign finance reform bill
this coming session. Mr Bush comes from a party which sees itself
as the political agency of the large corporations, while Mr Blair
uses the private sector to provide a bright, shiny gloss to his
policies. But the prime minister should proceed with caution.
Political donations have yet to defile Labour. If they start to do
so, the stain will be very hard to shift.