State GOP Sought Donations From Enron;

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Politics: Requests brought in $50,000 during probe of the energy firm.

The Los Angeles Times

SACRAMENTO: Republican legislative leaders solicited tens of thousands of dollars in campaign donations from Enron Corp. even as the state government was investigating the company and other producers suspected of price gouging and market manipulation during last year’s energy crisis, according to internal Enron documents.

As state investigators probed Enron‘s business dealings, Sen. Jim Brulte and Assemblyman Dave Cox, the two GOP floor leaders, appealed to the company for contributions and were rewarded with checks, said the confidential company records obtained by The Times.

Enron gave $50K to the Rep party at Brulte and Cox’s request,” wrote Enron‘s Sacramento lobbyist in an October 2001 memo. State records disclose that the funds arrived in August as lawmakers were wrapping up their energy legislation.

Brulte, of Rancho Cucamonga, denied Friday that he solicited money from Enron on the party’s behalf. A spokesman for Cox, of Fair Oaks, defended the assemblyman’s appeal for contributions as nothing out of the ordinary. Neither the contributions nor the solicitation of them is a violation of campaign-finance law.

Although the party reported the contributions as required by law, the documents detail a relationship between Republican leaders and the now-failed energy giant that neither the company nor the state GOP has ever publicly acknowledged. Indeed, during this spring’s primary campaign, the Republican candidates for governor all criticized Gov. Gray Davis for accepting nearly $120,000 from Enron.

A memo to managers at Enron‘s landmark skyscraper headquarters in Houston said the donations given at Cox and Brulte’s request would entitle company executives to a place at the table of an Oct. 29 luncheon that the generator industry planned for the two Californians.

“Expect Brulte and Cox to push us for another 75K,” the internal Enron memo warned.

Enron executives in Texas were urged to attend because the political picture in California was changing rapidly. GOP gubernatorial contender Richard Riordan, the former mayor of Los Angeles, appeared to be on the rise in opinion polls while Democrat Davis was in trouble over his management of the energy crisis.

“Given where Davis’ numbers have gone recently, Riordan’s imminent announcement and potential, and the fact that the R’s [Republicans in the Legislature] have played it about as well as could be expected under the circumstances . . . this could be a useful gathering,” said the memo by Jeff Dasovich, an Enron government relations executive.

Dasovich said the only Republican to speak out against the energy producers during the energy crunch was Sen. Bill Morrow of Oceanside. “We may want to bring [that] up with Brulte,” he advised Enron colleagues.

The unpublicized private luncheon would have the added advantage of occurring far from Sacramento, he said. “And it doesn’t require crossing the border into California, to boot.”

Sen. Joe Dunn (D-Santa Ana) has alleged that Enron influenced GOP lawmakers, but they have denied it.

Enron, now in bankruptcy but once so powerful that its influence reached around the globe, played a pivotal role in California’s calamitous 1996 decision to deregulate its energy market. The company’s aggressive campaign to assert itself as a leader in the deregulated environment last year brought accusations from consumer advocates, Davis and other Democrats that Enron and others had “gamed” the newly deregulated market and gouged Californians with astronomical prices.

By soliciting contributions for their party rather than their own campaigns, legislators and other officeholders are able to obtain donations from unpopular interests without ever having to disclose their role in raising the money.

Karen Denne, an Enron corporate spokeswoman, said Saturday that she was unfamiliar with specifics of the $50,000 contribution and internal memos but she knew the company was being solicited for contributions as the Legislature and Davis wound up action on energy crisis bills.

She said she believed the appeals for funds by Brulte and Cox were no more “aggressive than those of other members of the Senate and Assembly.”

A Republican Party spokesman confirmed that Cox and Sen. Ray Haynes (R-Riverside) traveled to Houston for the lunch. Brulte did not attend because of illness.

The affair was hosted by R. Steven Letbetter, chairman of Reliant Energy, another Texas-based producer, and was aimed at giving industry executives a political update on California. Enron officials, who by then were coping with the financial collapse of their company, did not attend.

“The event in Houston was not a fund-raiser per se,” said GOP spokesman Rob Stutzman, “[but ] we want to be clear that the hope was that the companies would contribute money.”

He defended the decision to seek donations from energy companies, then a highly unpopular industry, saying that if any violated laws during the power crisis, state and federal investigators would take the appropriate action.

“Until the laws are changed, generators are still part of the solution to keeping our lights on,” Stutzman said. “We think it would be foolish to treat them as pariahs.”

Brulte said in an interview Friday that he never solicited contributions specifically from Enron. He said it was a party aide who approached the company for donations.

He said it was part of his duties as a party leader to raise money for the GOP. He and Cox regularly appear at fund-raising events staged by the party and have so far raised about $3 million, Brulte said.

Cox was reported unavailable for comment on this story. His spokesman, Peter DeMarco, said he was unaware of the details of the timing of the Enron contribution, but defended Cox’s role.

“The generators are doing business in California. Part of the world of the leaders is to go and secure funds for their candidates,” DeMarco said. He denied as “mischaracterization” the notion that Cox pressured Enron for donations.

At their state convention in February, Republicans assailed Davis for accepting $119,500 in Enron contributions over the last five years. They demanded that he return it. Davis refused, saying that he took his last contribution of $10,000 from Enron in May 2000, a few months before the power crisis began.

Asked at the time about the $50,000 donation to the California GOP, Party Chairman Shawn Steel said he would strongly recommend that the money be returned. “I don’t think we should keep their money at all,” he told reporters.

The party has never returned the money.

“To do so requires an action by the board of directors of the party and the board has not taken such action at this time and I do not believe intends to at this time,” spokesman Stutzman said Friday.

One consumer advocate who lobbied during the energy crisis, Douglas Heller, recalled that Republican lawmakers pushed for legislation embraced by energy producers, including relaxing environmental regulations to encourage more power plant construction, a move Davis later agreed to.

Heller said he believed at the time it was a political mistake for the Republicans not to put more distance between themselves and the energy producers.

“They pointed fingers at Davis while continuing to present Enron‘s policy argument as their own,” said Heller, who represented the Foundation for Taxpayer and Consumer Rights. “The Republicans were given a free ticket to escape culpability for the deregulation debacle because it fell on Davis’ watch and he bumbled his way through it. They refused, however, to stand with consumers and fight the energy companies.”

In testimony to Congress earlier this month, Dunn, who heads a committee investigating alleged price gouging, said confidential records from Enron‘s governmental affairs department suggested a “very close” relationship between the company and unnamed leaders of the Legislature.

“On the one hand, California’s legislative leaders appealed directly to Enron for contributions and on the other received explicit instruction about specific legislation,” Dunn testified.

He refused to elaborate Saturday, citing confidentiality restrictions. But he said the legislative leaders he had in mind were “primarily from the Republican side of the aisle. I’m not aware of any Democrats that made such an appeal to Enron.”

Dunn refused to discuss his allegation that Enron issued orders to lawmakers on bills. He said he hopes to reach agreement with Enron soon on resolving confidentiality conflicts and intends to publicly disclose evidence to substantiate his allegation.

Times staff writer Nancy Vogel contributed to this report.

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