Public Citizen Files Lawsuit Against Government for Shielding Enron Lobbying Firm

Nov. 18, 2003

Public Citizen Files Lawsuit Against Government for Shielding Enron Lobbying Firm

 

Group Seeks Records on Enron’s Efforts to Influence Bankruptcy Policy

WASHINGTON, D.C. – Public Citizen today sued the Clerk of the House of Representatives (Clerk) and the Secretary of the Senate (Secretary) to compel them to disclose correspondence concerning whether the law firm of Cadwalader, Wickersham & Taft acted properly when it failed to report its lobbying activities on behalf of Enron.

Under the common-law right of access, citizens have the right to examine public documents when the public interest in disclosure is greater than that in government secrecy. Public Citizen’s suit maintains that the House and Senate correspondence concerning lobbying registration obligations are public records, and the defendants have violated a mandatory legal duty by failing to disclose them.

The documents at issue should shed light on how the Clerk and the Secretary have construed registration obligations under the Lobbying Disclosure Act, and whether they are conscientiously inquiring into potential violations. In the course of Public Citizen’s investigations into Enron’s lobbying contacts with federal government officials, Public Citizen uncovered documents showing that Cadwalader, acting on behalf of Enron, contacted government officials in an effort to influence the President’s Working Group on Financial Markets.

Cadwalader and 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. Under current bankruptcy law, the value of derivatives is miniscule. Had Enron been successful in changing the bankruptcy law, it would have given enormous value to Enron’s fraudulent business and would have aided the company when it declared bankruptcy in 2001. However, Cadwalader never registered as a lobbyist for Enron under the Lobbying Disclosure Act.

The Clerk and the Secretary are responsible for investigating noncompliance with the Lobbying Disclosure Act. In March 2003, Public Citizen sent letters to the Clerk and the Secretary asking that they investigate whether Cadwalader had violated the act and take remedial action. (Click here to view the letters on the Web.) 

“The Secretary informed us that Cadwalader had responded to our allegations by claiming they were not required to register their lobbying activities under the Lobbying Disclosure Act,” said Tyson Slocum, research director for Public Citizen’s energy program. The Clerk has not disclosed how Cadwalader responded.

Public Citizen has requested that the Clerk and the Secretary release their correspondence with Cadwalader so that the public can evaluate the firms’ explanation for refusing to register. The Senate refused to release the correspondence. The House has not replied, even though Public Citizen requested disclosure seven weeks ago.

“Because the Lobbying Disclosure Act depends on inquiries by the Clerk and the Secretary to enforce its provisions,” Slocum said, “public disclosure of records like the correspondence concerning Cadwalader’s registration obligations is essential to assess whether the Act is being properly implemented and enforced. Unless these officials actively investigate apparent violations, the Act’s disclosure provisions will become toothless because lobbyists will be permitted to evade their registration obligations with impunity.”

Under the Act, the Clerk and the Secretary are responsible for ensuring “the accuracy, completeness and timeliness of registration” and must “notify any lobbyist or lobbying firm in writing that it may be in noncompliance with” the Act. (To read the disclosure and enforcement section of the Lobbying Disclosure Act, click here.) If the violator fails to provide an appropriate response to such a notice, the Clerk and the Secretary must notify the United States Attorney for the District of Columbia, who can seek civil penalties of up to $50,000 against recalcitrant lobbyists. (To read the penalties section of the Lobbying Disclosure Act, click here)

The Clerk and the Secretary are also charged with giving guidance on registration obligations. Neither has given any details concerning how Cadwalader rationalized its failure to register, or disclosed whether the Clerk and the Secretary concur with Cadwalader’s position.

To read the complaint, please click here.

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