March 25, 2003
Enron Lobbyist Pushed Deregulatory Agenda, Failed to Register Activities With Congress
Public Citizen Calls on Congressional Investigators to Determine Whether Enron Lobbying Firm That Pushed for Energy Legislation Violated Law
WASHINGTON, D.C. – A firm that lobbied for Enron Corp. in 1999 and 2000 should be investigated for potentially failing to comply with a law that requires lobbyists to register with Congress, Public Citizen said in a letter sent today to the Secretary of the Senate and Clerk of the House of Representatives.
Through documents obtained by a Freedom of Information Act request, Public Citizen learned that Cadwalader, Wickersham & Taft, a Washington, D.C., law and lobbying firm, contacted government officials on behalf of Enron and set up meetings between Enron and the President’s Working Group on Financial Markets about proposed amendments to the Bankruptcy Reform Act of 1999 and 2000. Enron sought to add amendments that would permit large-scale retail energy trading and derivatives contracts to be made in deregulated markets, and reclassify those derivatives so they would be counted as larger assets in bankruptcy proceedings.
The Cadwalader firm lobbied for Enron on a number of levels – contacting working group officials and U.S. Department of the Treasury staff on the company’s behalf, and planning and preparing materials for Treasury’s review, Public Citizen’s letter said.
Although that bankruptcy bill never passed Congress, the provisions for retail swaps were subsequently included in the Commodity Futures Modernization Act of 2000, allowing Enron to engage in energy trading without government oversight. This freed Enron to profit by withholding supply and driving up the cost of wholesale electricity, leading to the West Coast energy crisis in 2000 and 2001.
“Enron and the Cadwalader firm fought so hard for these provisions, and their eventual victory meant enormous electricity rate increases and rolling blackouts for consumers on the West Coast. The least they should do is meet their obligation to register with Congress,” said Tyson Slocum, research director with Public Citizen’s Critical Mass Energy and Environment Program. “By failing to register, Cadwalader has shielded its involvement with a corrupt corporation that went on to defraud the public.”
The Lobbying Disclosure Act of 1995 requires that lobbying activity be registered with the Secretary of the Senate and Clerk of the House within 45 days of the first contact with government officials. The maximum penalty for a violation is $50,000. The three Cadwalader employees who did extensive work on the bankruptcy bill amendments were never registered as lobbyists for Enron. The firm is registered as a lobbyist for other companies, but not Enron.
Documented contacts between Cadwalader’s employees and government officials include:
- In May 1999, Treasury staff circulated an internal memo regarding Cadwalader’s proposed amendments to the bankruptcy bill, calling them “Statutory changes proposed by Cadwalader/Enron.”
- In June 1999, Norman Carleton, Treasury’s director of finance policy analysis, circulated an e-mail describing the working group’s general opposition to the Enron/Cadwalader proposals because they were too broad. He sent a second e-mail the same day, adding, “I forgot to mention that Enron has been lobbying for expansion of the netting provisions with the help of the Cadwalader law firm.” Two days later, Treasury staff and Cadwalader lobbyists held a conference call.
- On Sept. 10 and Nov. 10, 1999, and March 1, 2000, Cadwalader submitted additional proposals to Treasury staff, which the staff discussed in e-mails that were heavily redacted before being given to Public Citizen.
“Cadwalader was pushing for drastic deregulation of the energy market, which has always been a priority for Enron, and the records are quite clear that they were working together to push the agenda on Treasury,” said Slocum. “But this law exists to keep Congress and the public apprised of who is influencing decisionmakers. Congress needs to enforce its laws to their full authority.”
Click here to view a copy of Public Citizen’s letter.