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With the Theater or PACs, Texans Saw Kenneth Lay as 'On Top of the World'

Influence: The former Enron chief 'was a guy with swagger and loot who bought his way into whatever needed buying.'


HOUSTON — For all his clout in Washington, Kenneth L. Lay's greatest influence was back home in Texas where the mirror-sheathed Enron headquarters building glimmers above the Houston skyline.

Operating here in his home base, Lay--who resigned Wednesday night as chairman of the once high-flying energy trading company he founded--was a kingmaker who could create or crush political careers, spearhead professional sports stadium drives, finance youth clubs and endow theater troupes.

"This was a man on top of the world. It was well known that if you needed something done you went to Ken Lay," recalled Felix Fraga, a former Houston city councilman who has known Lay more than 30 years. "He could have run for mayor, governor, or done anything he wanted."

As part of President Bush's celebrated "pioneers" club, Lay and his wife, Linda, donated more than $145,000 to the national Republican Party and the Bush campaign. The Lays also contributed $100,000 to the Bush inaugural gala and $10,000 to the election recount fund.

But in Texas, where his money was less diluted, state Ethics Commission records show Lay gave $55,000 to one state Senate campaign alone. Other large contributions graced the coffers of Gov. Rick Perry, Atty. Gen. John Cornyn and Houston Mayor Lee P. Brown, for whom Lay sponsored a $50,000 fund-raiser Oct. 8.

However, in a sign that Enron fortunes were already on a slide, Brown campaign finance director Sue Walden said Lay failed to show up for the fund-raiser and never sent a check.

Always the Go-To Guy

Over the years, Texas officeholders ranging from Houston City Council members to state railroad commissioners benefited from Lay's political largess.

"Ken Lay was a guy with swagger and loot who bought his way into whatever needed buying," said Texas populist politician and commentator Jim Hightower. "He had this aura of being bulletproof, a corporate superstar who was real connected to the Bushes."

After Lay's spectacular fall from power and grace, the extent of Lay's and Enron's insertion into Texas government only now is surfacing.

The first casualty was Texas Public Utilities Commission chairman Max Yzaguirre, a former Enron executive Lay helped get appointed as the state's chief utility regulator. Yzaguirre, tainted by his Enron connections, resigned his post Jan. 17.

Others caught in the backwash of the Enron collapse are Perry, who received a $25,000 contribution from Lay the day after he appointed Yzaguirre to direct the PUC; Cornyn, a U.S. Senate candidate who reversed an earlier position and recused himself from the state Enron investigation because of donations he received from Lay and Enron; and Texas elected Supreme Court Justice Priscilla Owens, whose appointment by Bush to the U.S. 5th Circuit Court of Appeals now is in jeopardy because of Enron contributions she received beginning in 1995 and decisions she made favoring the company.

According to Rice University political scientist Bob Stein, Lay displayed a particular genius for picking out politicians on the rise.

"These were investments about where these guys were going, not necessarily where they were at the time," Stein said. "Ken Lay was a big supporter of Bush probably before Bush himself knew he was running for president."

According to the Austin-based watchdog group Texans for Public Justice, the Lays personally donated $122,000 to Bush's two gubernatorial campaigns. Similarly, Lay was an early backer of Cornyn, even before the Republican attorney general announced his candidacy for the seat to be vacated by Republican Sen. Phil Gramm, who is retiring after this year's elections.

Payroll Deductions to the Company PAC

Gramm, whose economist wife served as a paid member of the Enron board of directors, is caught up in the vortex because of the tens of thousands of dollars he received in contributions from Enron and Lay.

Enron's system for political contributions operated on two fronts. Employees were encouraged to give money to candidates believed to be supportive of company issues, particularly those involving market deregulation central to the energy trading business.

Additionally, top executives were tapped for what amounted to a tithe to the Enron Political Action Committee, one of the country's biggest corporate political PACs. A percentage of each executive's paycheck was withheld from every biweekly pay period. For example, Joe Allen, Enron vice president for state government affairs, gave $83.34 every two weeks to the Enron PAC, for an annual total of $2,166. Other executives gave much more.

The money primarily was used to fund campaigns of candidates for Congress, particularly those with key energy-related positions. According to documents on file with the Texas Ethics Commission, the Enron PAC collected $336,000 from executives in 2001.

But not all of Lay's and Enron's munificence was reserved for major political offices, nor was it limited to politics.

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