Financial regulators! Missing documents! Crony capitalism in a state that official Washington considers a Southern backwater! Last week, the parallels between Enron ("Bush's Whitewater") and Whitewater ("Clinton's Whitewater") seemed self-evident. This week, however, political gossips pooh-poohed the similarities. Which is it? As a political scandal, how does Enron compare with Whitewater?
Unlike Enron, Whitewater was a political scandal from the start. The Whitewater scandal began in March 1992 during the Democratic presidential primary, when the New York Times ran a front-page story questioning Bill and Hillary Clinton's business partnership with Jim McDougal, the owner of a failed savings and loan. The central questions raised by the story: Should a governor "be involved in a business deal with the owner of a business regulated by the state"? Should the governor's wife have been paid for legal work done for the business, a real estate corporation called Whitewater Development? Did McDougal use his S&L, Madison Guaranty, to illegally subsidize Whitewater? Did McDougal cook the books at Madison to inflate profits? Did Gov. Clinton appoint a securities commissioner who gave special treatment to Madison?
Whitewater burbled below the radar screen for a while before erupting in late 1993 and early 1994. We all know how it ended. (In case you've forgotten, click here for a useful flow chart of the intertwining scandals that led to Clinton's impeachment.)
As Jacob Weisberg noted this week, Republicans and Democrats alike have an interest in downplaying Enron's similarities with Whitewater—Democrats because they want to downplay Whitewater, Republicans because they want to downplay Enron. Furthermore, the bipartisan component of the Enron scandal means that politicians of both parties may want to portray it as a "business scandal."
It's difficult to compare a scandal-in-the-making to one that's aged to the point of nostalgia. But as Enron ripens, it bears interesting parallels to Whitewater. They're both business scandals, though from that perspective one is clearly bigger than the other. They're both extraordinarily difficult to understand. And from a political perspective, here are the two biggies, for those who haven't been scoring at home:
1. A mysteriously replaced regulatory commissioner. In January 1985, Gov. Clinton appointed Beverly Bassett Schaffer as the Arkansas securities commissioner. She was a lawyer in a firm that represented Madison Guaranty, and some questioned whether she gave the S&L special treatment.
Flash forward to Enron. Curtis Hebert, former chairman of the Federal Energy Regulatory Commission, told the New York Times in May 2001 that Enron chairman Ken Lay "offered him a deal: If he changed his views on electricity deregulation, Enron would continue to support him in his new job." Hebert says he refused, and he resigned in August after the Bush administration packed the commission with Enron supporters. (The Times reported that Lay supplied the Bush administration with a list of preferred FERC candidates and that at least one candidate was "interviewed" by Lay.)
2. Stonewalling and cover-ups. President Clinton didn't agree to turn over Whitewater documents to the Justice Department until he was threatened with a subpoena. Likewise, Vice President Cheney may wait for a General Accounting Office lawsuit before he releases more documents relating to Enron's discussions with Cheney's National Energy Policy Development Group. Cheney recently revealed that Ken Lay or Enron met with him and the energy task force six times.
Similarly, President Bush's forthrightness has been less than inspiring. When asked last Thursday about his relationship with Ken Lay, Bush said Lay was "a supporter of Ann Richards" in the 1994 Texas governor's race, and "that's when I first got to know Ken and worked with Ken." But the Houston Chronicle reported that Lay and his wife gave Bush $47,500 in donations in 1994, compared with $12,500 for Richards. (George Will called Bush's comment "Clintonian": "That is, he was technically right, but on the real matter, wrong.")
The Chronicle also reported that Lay met George W. Bush in the late 1980s, long before the 1994 race. In a February 2001 story, the Los Angeles Times noted the many Enron connections in the Bush administration and concluded that none of them "can top the bond between Lay and Bush."