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Senior US Official Grilled on Ties to Bankrupt Enron Corp. - 2002-07-18


U.S. Army Secretary Thomas White, a former Enron Corporation executive, testified Thursday before a Senate panel probing the company's bankruptcy, the largest in U.S. history. The committee is also investigating Enron's role in California's recent energy crisis.

Secretary White came under tough questioning from Democrats on the Senate Commerce Committee about California's energy crisis when he was an Enron executive.

"There is substantial evidence that when Mr. White served as vice chairman, his former company was directly involved in Enron's trading schemes to manipulate west coast energy markets," said Senator Ron Wyden of Oregon.

Memos written by Enron lawyers released earlier this year describe how company traders manipulated California's energy market during the state's power crisis last year, boosting company sales and profits.

One memo specifically referred to Enron Energy Services, a division of which Mr. White was vice chairman, and which provided energy and energy services to California customers.

Secretary White expressed regret about Enron employees losing their life savings after the company went bankrupt. But he denied knowing anything about the firm's profit-making energy trades during California's power blackouts in 2000 and 2001.

"I have no knowledge of our participation Enron Energy Services' participation in any of the schemes outlined in either memo," he said.

"You were not stunned to read them, even though I just told you they were against the law in California?," asked Democratic Senator Barbara Boxer. "If they are against the law then I am all for those that participated in it, being prosecuted to the full measure of the law," he replied.

Committee Chairman Byron Dorgan, a North Dakota Democrat, expressed skepticism that Mr. White could be unaware of what other divisions of Enron were doing in allegedly seeking to manipulate electricity prices.

The committee is also looking into the $12 million Mr. White made when he sold stock last year, and his contacts with Enron officials after he became Army Secretary.

Mr. White said he had to sell his stock as part of government ethics rules after he was nominated to be army secretary.

He acknowledged making dozens of phone calls to former colleagues at Enron after he assumed his job at the Pentagon. But he said he did so to discuss Enron's deteriorating situation, and that he never offered administration assistance as the firm headed toward bankruptcy.

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