Enron scandal: Pressure growing on Bush

Pressure was today growing on US President George W Bush as he faces his first political scandal following the biggest corporate bankruptcy in history.

Mr Bush and many of his top officials had close ties to Enron, the failed energy trading giant whose collapse is now being investigated by the FBI.

The White House is engaged in a damage-control exercise for the first time in Mr Bush’s presidency, as it tries to distance itself from the company.

But it has been criticised for refusing to be open, with spokesman Ari Fleischer telling White House reporters the administration will not reveal what contacts it had with Enron since last summer unless there is a specific allegation of wrong-doing.

He accused them of a ‘‘fishing expedition’’, but raised memories of ex-president Bill Clinton’s series of scandals, particularly the Monica Lewinsky affair, which was fuelled by refusing to be open and up front about the facts, leading to a far worse crisis when the truth eventually emerged.

The move has put the White House on the defensive and given it its first taste of criticism since the September 11 terror attacks, as commentators warn it that by failing to be open, it risks giving the impression that something is being hidden.

The biggest questions surround the White House’s energy task force, which Mr Bush set up soon after taking office a year ago.

Its meetings, chaired by Dick Cheney, were held in secret and the White House has refused to reveal the nature and extent of its contact with Enron.

Also under scrutiny is a study Mr Bush ordered from his chief economic adviser, Larry Lindsey, about how a possible Enron collapse would affect the economy, before the firm declared bankruptcy.

Mr Lindsey was a former board member of Enron who had been paid £35,000 as a member of the company’s advisory board.

Enron was based in Houston and was a major contributor to Mr Bush’s campaign for the presidency and its president, Kenneth Lay, was a friend of the president.

He even had a Bush nickname - Kenny Boy - something Mr Bush reserves for only a few of his closer allies and friends.

The company’s share price plunged as it emerged it had used accounting practices outlawed in Britain to hide its massive debts, eventually becoming bankrupt, while its auditors destroyed thousands of documents and e-mails which could help investigators discover what went wrong.

As it faced extinction and the loss of thousands of jobs, Enron chiefs called members of Mr Bush’s cabinet to tell them there were problems, but received no aid.

Its end was finally spelled when it went bankrupt, and on Wednesday its shares were removed from the New York Stock Exchange.

The close links Enron cultivated with politicians meant attorney-general John Ashcroft, the top US prosecutor, had to say he would take no part in the criminal probe into its demise, while hundreds of both Democratic and Republican members of Congress received donations from the firm.

Attention has focused on the allegations of dubious accounting practices and the shredding of documents, with the FBI setting up a team of more than 30 detectives to look at whether there will be criminal charges.