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AMERICAN MORNING WITH PAULA ZAHN

Sound Off: Does Enron Illustrate Need for Changing Campaign Finance Laws?

Aired January 14, 2002 - 08:44   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
PAULA ZAHN, CNN ANCHOR: Turning once again to the Enron aftermath, company executives were major campaign contributors to both the president and members of Congress on both sides of the aisle, and there is a question about whether they used their political connections to protect themselves as Enron went bust.

(BEGIN VIDEO CLIP)

LAWRENCE LINDSEY, DIR., NATL. ECON. COUNCIL: People in both parties are -- have received money, there's no question. The important thing here is that American capitalism is not crony capitalism. In America, when a company makes a mistake, even when it's a big company, even when it's well politically connected, that that company bears a responsibility for its decision.

(END VIDEO CLIP)

ZAHN: So, does Enron illustrate the need for changing campaign finance laws? Joining us now to Sound Off, Emmet Terrell, editor and chief of "The American Spectator."

Welcome back.

And Paul Begala, former Clinton adviser, and coauthor of a new book called "Buck Up, Suck Up and Come Back When You Foul Up."

Good to see you as again, as well, Paul.

PAUL BEGALA, FMR. CLINTON ADVISER: Thanks, Paula.

ZAHN: All right, gentlemen, can we, for starters, agree that this Enron mess is a bipartisan problem, Emmet?

EMMET TERRELL, "THE AMERICAN SPECTATOR:" Yes, I would agree with that. But the problem started in '97. It's a stock run-up, Enron's stock ran up starting in '97. Regulatory agencies didn't react in '97, '8 and '9. There was accounting practices, it seemed, there were accounting practices that enhanced this run-up.

As far as wrongdoing goes, the White House hasn't been found doing anything wrong. The White House wasn't involved in it. And it's an issue that should be discussed, I think, with regard to accounting and with regard to regulatory agencies that didn't regulate.

ZAHN: All right, Paul, before I let you directly address that -- I see you smiling, and it looks like a cynical smile there...

BEGALA: No, not at all. I'm not a cynic; I'm a romantic.

ZAHN: I'll let you talk your piece here.

But the bottom line remains that Republicans are now saying that because Bob Rubin, the former treasury secretary under Bill Clinton, called the current administration to try to help out Enron, that that diffuses this.

BEGALA: Former -- former is the keyword there, Paula. He doesn't work for the government anymore. He owes a fiduciary duty to his corporation and to try to protect those shareholders. But it's the government we need to take a look at.

And you said it was bipartisan, in a sense it is. They gave money to both political parties, but three-fourths of that money went to the Republican Party. But everyone should be watching those Democrats and Republicans both on Capitol Hill who took money from Enron. Let's see how fairly they investigate this.

The question is, what did the government do to aid Enron? In the Bush administration, the answer is an awful lot. They allowed Enron to handpick the energy regulators that would be regulating Enron. "New York Times" reported that several months ago. The Bush/Cheney energy report contains recommendation after recommendation that would directly benefit Enron, this after Enron met with the vice president and his staff six times. So we see again and again, a lot of favors for Enron from this administration.

ZAHN: But is there any evidence any of accrued to Enron's benefit?

BEGALA: Absolutely. Why do you think the chairman of Enron threatened, according to "The New York Times," threatened the chairman of the Federal Regulatory Commission, Mr. Curtis Hebert (ph). Apparently told Mr. Hebert, according to "The New York Times," that if he adopted a pro-Enron regulatory regime, well then maybe he could keep his job in the Bush administration. Mr. Hebert declined to do that, and lo and behold, President Bush replaced Mr. Hebert him with a guy named Pat Wood, a more pro-Enron regulator from Texas who had helped create Enron as we know it today when he was regulating Enron in Texas.

So there's a terrible sort of brother-in-law relationship here. In fact, you know, the guy from the Bush administration, you showed your viewers, Larry Lindsey, used to work for Enron, the guy who was in the clip that you showed at the beginning of this.

ZAHN: Give, Emmet a chance.

Emmet why don't you react to some of these charges in "The New York Times." Not all of these are new, but worth talking about. TERRELL: I wouldn't bring up brother-in-laws at this point, because in his administration, brother-in-law, sister-in-laws, and the president and his former partners in partners were engaged in the scandals that muddied up his career.

I think that campaign finance is a false issue here. I think the real issue is, how did Enron stock manage to run up as rapidly and as high as it did starting in 1997? And while it was running up in '97 and '98, why weren't the regulatory agencies doing something about it? Those are the rule issues. Let's get to the beginning of this scandal and discuss how it managed to become the scandal it did.

After all, it began in the Clinton administration and it ended in the Bush administration.

ZAHN: All right, gentlemen, before I let you go, let's address this whole issue what "Time" magazine is reporting, what appears to be very bad news for Arthur Andersen, indeed a memo has surfaced actually instructing Arthur Andersen employees to destroy documents related to Enron. Is there no doubt in your mind, Paul, we will see criminal indictments in this Enron case?

BEGALA: I hate to jump to could be conclusions. There's certainly criminal investigations. People will be watching this very, very carefully, because the Ashcroft/Bush Justice Department that's looking into this has very close tied to Enron. To his credit, the attorney general has recused himself, and he should of, and I want to salute that. The person who's now in charge, the number two guy at the Justice Department, came from a law firm that represented Enron. So there are a lot of people that are going to suggest maybe he should recuse himself as well.

So unless there is a very vigorous prosecution of this wrongdoing, I think there is going to be a real political downside for the Bush administration.

ZAHN: Do you think we'll see any indictments, Emmet?

TERRELL: Well, I suspect you'll see indictments. I must say, the destruction of documents that are alleged to have been committed by the Andersen Company are very troubling. And Paul Begala ought to know a great deal about the destruction of documents, hey, Paul?

BEGALA: It happened a lot in Iran-Contra under President Reagan; it never happened under President Clinton, if that's what you're saying, Mr. Terrell?

(CROSSTALK)

ZAHN: Were you referring to those documents that weren't found for a while in the White House?

TERRELL: Took an awful long time to find that stuff.

ZAHN: But they weren't destroyed.

(CROSSTALK)

BEGALA: We have 21,000 people who've lost their job. We have tens of thousands of people who've lost their investments. We have a very, very cozy relationship between the president, who on Friday falsely denied how long he's known Mr. Lay, the chairman of Enron, and falsely claimed that the Enron chairman had supported his opponent for governor. Both of those were...

(CROSSTALK)

ZAHN: Gentlemen, we're going to have to leave it there this morning. Thank you both for dropping by, Emmet Terrell and Paul Begala. We will continue our debate another time. Appreciate your time.

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