The Mirror Image of Whitewater

Missing documents. Financial wrongdoing. Is Enron another Whitewater? Actually, Enron Corp. looks like the mirror image of Whitewater: a scandal less likely to implicate a President, but more likely to affect public policy.

Whitewater was about finding a smoking gun that would incriminate President Clinton or his wife. Everyone knew what then-Sen. Alfonse D'Amato, R-N.Y., was getting at when he asked, at the outset of the 1994 Whitewater investigation, "What did the President know, and when did he know it?" In the Enron case, no one is making criminal allegations about President Bush. This time, a Senator from the opposition party is again chairing the Senate investigation. But Sen. Joe Lieberman, D-Conn., set a different tone when he said, "There are some interconnections here with the Bush Administration, but that's not the focus of this inquiry."

Whitewater was a shady land deal of no great public consequence. The collapse of Enron, the seventh-largest Fortune 500 corporation, matters a great deal. It wiped out $60 billion in shareholder value. Tens of thousands of people got hurt.

"The grave consequences of Enron's collapse are economic and personal, not political," Lieberman said. Unlike Whitewater, which was intensely political, it's hard to dispute that the Enron investigation concerns a matter of legitimate public interest. As Sen. Carl Levin, D-Mich., observed, "Either laws and regulations were followed, in which case those laws and regulations are pitifully inadequate.... [or] laws and regulations were violated."

Enron's well-connected executives and directors may have defrauded investors by concealing information about the company's finances. And these officials may have engaged in insider trading by selling more than $1 billion worth of stock before its price collapsed.

Enron virtually financed Bush's political career. The company had ties to high-level officials in the Bush White House. And Enron was a major contributor to both political parties. None of that is illegal. But it does raise serious issues. For instance, Enron clearly tried to influence the Bush Administration's energy policy in its favor. Enron representatives met with Vice President Cheney's energy task force six times. Enron Chairman Kenneth Lay pushed, successfully, to replace the head of the Federal Energy Regulatory Commission. Clearly, Enron had special access. Were special favors granted?

The White House has acknowledged that Lay sought help from top Cabinet and Treasury Department officials as the company struggled to avert bankruptcy. Administration officials say they refused to intervene. Bush's supporters say that Enron's collapse is proof that the company got no special protection. "It's a tribute to our capitalism," Sen. Don Nickles, R-Okla., said. "Capitalism is the freedom to succeed and the freedom to fail and not have a government guarantee of success."

But the issue is not merely whether the government attempted to protect the company. It's also whether the government protected the public. Rep. Henry A. Waxman, D-Calif., has said: "It is now clear that the White House had knowledge that Enron was likely to collapse but did nothing to try to protect innocent employees and shareholders who ultimately lost their life savings."

What is not clear is how much and how early the Bush Administration knew about Enron's problems. "I have never discussed with Mr. Lay the financial problems of the company," Bush said last week. Moreover, the calls from Enron seeking help came in late October, after the company's financial problems had become public.

It is also unclear what the Administration could have done. Companies fail all the time. Professional auditors and Wall Street analysts didn't raise any alarms about Enron's finances.

What's driving the political story is the fact that the Administration is behaving so defensively. Why was the White House so reluctant to divulge the records of its energy task force? Why was the Administration so slow to acknowledge contacts between Enron executives and Cabinet officials? In the Enron case, the revelations themselves have not been particularly damaging to the Administration. But the fact the Administration has been so secretive about them raises suspicions of a cover-up.

So far, the main damage has been to Bush's image. The President may have behaved properly, but the company that has been the chief backer of his political career is now under criminal investigation. There is no way that can look good.

Enron reinforces a damaging stereotype about Bush, just as Whitewater did about Clinton. Americans had doubts about Bill Clinton's character from the outset. Whitewater brought those problems into focus: Is the President a liar? Americans also started out with a stereotype about George W. Bush: He was a man of limited intellectual ability who raised a lot of money from his rich friends. Enron brings those problems into focus: Is this President a front man for the Big Money boys?

That image is especially damaging when you have a Republican President born to wealth and privilege in office during an economic downturn. Bush's war leadership can counteract that stereotype—for a time. But which will last longest—the war, the recession, or the Enron controversy? If it turns out to be the recession and the Enron controversy, that combination could be politically lethal.