Army secretary defends history of work at Enron

WASHINGTON -- Army Secretary Thomas White said Thursday he is "appalled and angered" by the scandals that drove Enron Corp. into bankruptcy but denied any role in or knowledge of wrongdoing while he was an Enron executive.

In testy exchanges with skeptical senators, White repeatedly said he had played no part in manipulating California energy prices and knew nothing of other improprieties while he helped run an Enron subsidiary.

"Thousands of us who worked at that company were proud of what we accomplished," White said, testifying voluntarily and under oath before the Senate Commerce Committee. "I am ashamed of what has happened to that corporation."

He told senators he shared their outrage and their desire "to hold people accountable who were responsible" for any illegal conduct.

Although White said after the hearing he had no plans to resign his Pentagon post, Sen. Barbara Boxer, D-Calif., urged him to do just that in a letter late Thursday.

"I believe it is in the best interest of the country for you to step down as the Secretary of the Army as I believe today's hearing will spark more investigations and more distraction from your crucial duties," Boxer wrote.

Not satisfied

Boxer said she was not satisfied with White's testimony: "I found him evasive, argumentative, not contrite about what happened, not forthcoming."

Enron's December bankruptcy was the first of a series of business scandals that have rocked the stock market and prompted Congress to push for passage of legislation that would crack down on corporate fraud and accounting irregularities.

Democrats are trying to use the scandals as an election-year issue against Republicans, pointing to President Bush's close ties to corporate leaders and the large number of former business executives, such as White and Vice President Dick Cheney, in his administration.

Most of Thursday's questioning concerned the electricity crisis in California and neighboring states in 2000 and 2001 that caused soaring utility bills, rolling blackouts and the bankruptcy of Pacific Gas and Electric.

Boxer and other senators grilled White about trading strategies in California's electricity market detailed in December 2000 Enron memos. The memos described several schemes that critics say took advantage of California's power crisis, including one that involved White's Enron subsidiary, Enron Energy Services.

EES had long-term contracts to provide power to retail customers in California and other states. One Enron strategy called for using inflated estimates of how much power EES customers needed to show congestion in California's electricity grid -- thereby driving up the price of power supplied by Enron's wholesale power divisions.

White said he was unaware of the strategies and memos until the Federal Energy Regulatory Commission made them public this year. He said the ploys would have hurt his subsidiary by driving up power costs that EES could not pass on to its customers.

"I was unaware of any overstating of load in the state of California," White said. "From the way our business was being done, it wouldn't make sense."

But Boxer challenged him: "I never saw so many smart people running away from the truth."

"I'm not running away from the truth," White retorted. "I'm telling you how it ran."

Sen. Byron Dorgan, D-N.D., expressed disbelief that people in White's division did not know what other Enron divisions were doing.

"It's all part of the Enron Corporation. You're all kissing cousins here," Dorgan said.

Sen. Ron Wyden, D-Ore., and other committee Democrats said the FERC should question White as part of its investigation into alleged electricity price manipulation by Enron and other companies.