With Enron vetting Federal Energy Regulatory Commission (FERC) appointees, the revelation earlier this month that several Bush aides have close ties to the electrical power concern might have been predictable. Financial disclosure forms released June 1 showed that economic advisor Lawrence Lindsey received $50,000 from Enron last year from serving on an advisory board. Chief of Staff Andrew Card reported earning more than $479,000 last year as General Motors' chief lobbyist. National Security Advisor Condoleeza Rice reported selling her Chevron stock, worth up to $500,000, but received $60,000 in fees for serving as a Chevron director. Earlier in her term as a Chevron director the firm named an oil tanker after her.
Senior political advisor Karl Rove holds Enron stock valued at up to $250,000, but it is Rove's Intel holdings that have come under the most scrutiny recently. On March 12 Rove met with Intel's chief lobbyist Jim Jarrett, and CEO Craig Barrett, who were seeking federal approval for a merger between the Dutch firm ASML, and one of Intel's suppliers, SVG. The merger requires federal approval because it would create foreign ownership of a U.S. company that supplies the military, among other clients. SVG produces machines that manufacture computer chips, Intel's principal product.
At the time of the meeting, Mr. Rove owned Intel stock valued between $100,000 and $250,000. Federal law prohibits an executive official from participating in recommendations, advice, or rulings on matters in which he has an economic interest. Rove sold all of his stocks on June 7 as the scandal came to light, but documents obtained by the Associated Press show Rove was copied on correspondence concerning the Intel matter until a decision was made in early May. Law professor Mike Gerhart of William and Mary Law School told the Associated Press, "I think Karl Rove has a lot of explaining to do....If this were the Clinton administration and it was somebody who worked for Hillary or Bill, then Karl Rove himself would be denouncing it in the loudest terms possible" Steven Gillers of New York University Law School said about the incident that Rove could have avoided violating the law only "if he were truly mute and he offered no comment then or later." University of Michigan law professor Richard Friedman said, "I think holding assets while he is in the position he is in creates a significant problem of the appearance of impropriety." Intel officials were reportedly unaware of Rove's holdings in their company at the time of the meeting.
In addition to Intel, Rove met with other companies in which he had a financial interest, despite having received, according to White House spokesman Dan Bartlett, repeated ethics briefings on the importance of avoiding even the appearance of conflict of interest. On March 20 Rove met with nuclear power lobbyists during the formation of the Bush energy plan. Rove owned General Electric stock at the time, valued up to $250,000. General Electric has a nuclear energy division, and was represented at the gathering.
Meanwhile, as of this writing, Treasury Secretary Paul O'Neill, former chairman of the Alcoa aluminum company had still not sold the more than $100 million in stock that he promised to sell on March 25. In the interim, the value of the stock has increased in value by about 30%. Treasury spokesperson Michelle Davis told Salon.com that O'Neill had begun divesting himself of the stock, but as of June 7 the Securities and Exchange Commission had no record. (A large transaction by a former chairman would normally have to be reported to the SEC.)
On April 10, several days after O'Neill's promise to sell the Alcoa stock, officials of the Bonneville Power Administration, a federal hydroelectric power wholesaler in the northwestern U.S., asked aluminum producers in Washington, Oregon and Idaho to stop production for up to two years as an energy conservation measure. Analysts estimate this action would reduce the worldwide supply of aluminum by 5%. At the same time, the agency requested that aluminum companies in Washington, Oregon, and Montana not restart ten smelting plants, thereby reducing the nation's aluminum smelting output by 40%. The reduced supply of course meant higher prices for aluminum, and an increase in the value of Alcoa stock, which jumped $1.75 on April 10 alone. When Alcoa confirmed on May 16 its intention to stop smelting in Washington state, its stock rose another $1.51. The combined increases in Alcoa stock could have netted O'Neill close to $20 million in increased value of stocks and options.
Charles Lewis, director of the Center for Public Integrity, questioned O'Neill's role in administration decisions affecting Alcoa. "What was O'Neill's personal involvement and personal knowledge in the administration's energy policies...? To what extent was he in meetings? What extent was he in the loop as policy was being formulated? What contact has he had with the Alcoa company?"
O'Neill announced through a spokesman that he will sell all his Alcoa stock by June 21. The announcement came in the wake of comments by Democratic officials that they plan to attack the ethics of financial dealings by Bush administration officials including Rove and O'Neill. Democratic Representative Henry Waxman of California requested congressional hearings into Rove's meeting with Intel, writing to house Government Reform Committee chairman Dan Burton, "This is exactly the type of situation that you would have investigated had it occurred in the Clinton administration." On his first day in office, Bush stated that he expected every member of his administration to behave legally and ethically. "This means avoiding even the appearance of problems," he said. Democrats hope to use his own words against him during the upcoming investigations.
Schmidt, Susan and John Mintz "Bush Aides Disclose Finances" Washington Post 2 Jun. 2001
Yost, Pete "Intel Pitched Merger to Rove" Associated Press. 14 Jun. 2001.
Allen, Mike "Ethics of Key Bush Officials Targeted" 16 Jun. 2001
Tapper, Jake "Aluminum sliding" Salon.com 7 Jun. 2001