NARRATOR: From our studios in New York, BILL MOYERS.
What was former Enron C.E.O. Kenneth Lay telling Vice President Cheney about energy?
KENNETH LAY(TAPE FROM FRONTLINE): I'm flattered that he decided to meet with me as to some of the things that I thought were pretty important.
NARRATOR: Did Enron executives influence the administrations energy appointments?
LOWELL BERGMAN: People we've spoken to have said that you brought a list of your nominees, your favorites, for the FERC, into the White House.
LAY (FRONTLINE TAPE): I signed a letter which, in fact, had some recommendations as to people that we thought would be good FERC commissioners.
NARRATOR: And a threat to democracy from an obscure provision of the North American Free Trade Agreement.
WILLIAM GREIDER: This was not in the debate at all.
NARRATOR: How is it that foreign corporations can trump health and safety laws right in our own country?
WAGNER: It's sort of like a sophisticated extortion racket.
NARRATOR: We'll ask political theorist Benjamin Barber about democracy and the new global economy. A Bill Moyers interview.
And they are the invisible people, working illegally without documents.
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FELIX: All I knew was he worked there. He never told me what he did.
NARRATOR: On the margins of society and now denied benefits.
CARMEN: I was afraid to go ask for help. I didn't even have money for a token.
NARRATOR: Can they come out of the shadows? NOW investigates.
From our studios in New York, Bill Moyers.
MOYERS: Welcome to NOW.
The fall of Enron raises questions about the State of the Union that most of official Washington didn't want to talk about this week.
The stakes in the scandal were raised, nonetheless, when the investigative arm of Congress, the General Accounting Office, headed by a Republican, said Vice President Cheney must make public the identity of the people outside of government who helped him write the new energy policy. Enron's fingerprints are all over it, but Cheney's not telling how they got there.
Enron's former boss, Kenneth Lay, has admitted he met with Cheney. You'll hear that now in our first report.
The journalist and investigator Lowell Bergman, reporting for both FRONTLINE and THE NEW YORK TIMES, called on Lay last year for a documentary about energy.
That interview, including some things that didn't make air at the time, suggests why Vice President Cheney would prefer to keep the whole affair off the record.
LOWELL BERGMAN: This memorandum, obtained by THE NEW YORK TIMES, is what Enron used to talk to Vice President Cheney in that private meeting of April 17 of last year.
It describes what Ken Lay and Enron wanted from the Vice President's national energy strategy task force.
BERGMAN: You did meet with Ken Lay.
VICE PRESIDENT DICK CHENEY (TAPE FROM FRONTLINE): Ken has been a friend. I was once involved in building a baseball stadium for Ken Lay. It didn't have anything to do with energy. This time around when he came in to see me, he did want to talk about energy.
BERGMAN: On the top of Ken Lay's agenda in that meeting was what Enron calls fair transmission access, meaning opening up the 100,000 miles of electric transmission lines in the United States.
If they could get federal intervention to open up the patchwork of public and private lines, Enron and other energy traders could do more business and make more money.
BERGMAN: The transmission grid is of primary importance to you, right?
LAY: High voltage backbone for the electric industry. It's kind of like a super highway system for electricity. It moves electricity around the states and around the country.
BERGMAN: What makes Ken Lay's visit in April so remarkable in the midst of the energy crisis in California is that he was the only chief executive of a major player in the electric power industry to confer privately with Vice President Cheney as he formulated his national energy strategy.
Ken Lay says he didn't know that he was the only one.
LAY: Well, I didn't know that until this moment.
BERGMAN: It puts you in a class of one.
LAY: I'm flattered that he decided to meet with me, and at least hear me out as to some of the things that I thought were pretty important that should be considered for his report.
BERGMAN: Ken Lay didn't just meet with Vice President Cheney; he took his number-one priority opening up that electric transmission grid to the White House.
LAY: I have... I had two or three meetings with various people in the White House on the whole issue of energy policy.
That did include some discussion about, in fact, the inter-state transmission grid and how we thought it could be made to operate more efficiently.
BERGMAN: Did you meet with the President and speak with him about energy policy?
LAY: I did not.
I mean, I've been in a couple of meetings with other C.E.O.s where he's asked questions about the general economy, where he's asked questions about energy and I've commented on it.
But I have not had any separate meeting or private meeting or telephone conversation with the President about it.
BERGMAN: Ken Lay may not have talked with the President about his wish list, but while he was in the White House he did bring along a list of nominees for the Federal Energy Regulatory Commission (F.E.R.C.). The only agency that has control over the electric transmission grid and Enron's main business: trading energy.
The people we've spoken to have said that you brought a list of your nominees, your favorites for the F.E.R.C. into the White House.
LAY: I brought a list. We certainly presented a list, and I think that was by way of letter. As I recall I signed a letter which, in fact, had some recommendations as to people that we thought would be good commissioners.
BERGMAN: We understand that you personally interviewed some of the potential nominees at least on the phone or otherwise.
LAY: I'm not sure I ever personally interviewed any of them but I think in fact there were conversations between at least some of them and some of my people from time to time.
BERGMAN: In fact, later in this interview we conducted last May, Ken Lay acknowledged that he had phone conversations with potential nominees.
And he also said he had spoken with then Chairman of the F.E.R.C. Curt Hebert who has disagreed with Ken Lay and Enron about forcing access to that electricity grid.
BERGMAN: Has Ken Lay called you?
CURTIS HEBERT: I talked with Ken Lay on the phone and in private.
BERGMAN: How often have you spoken with Curt Hebert since the inauguration?
LAY: I think two or three times.
BERGMAN: Has any other C.E.O. of any company ever called you privately to lobby their position other than Ken Lay?
BERGMAN: We've been told that he, in fact, says things like, "I'll help you with what you need politically," let's say staying on as chairman of the F.E.R.C., if you'll go along with me on this policy issue.
Has that ever happened?
HEBERT: I would never make that trade.
BERGMAN: Did he ever propose such a trade?
HEBERT: I would just say that I will never make such a trade.
I think he would be a much bigger supporter of mine if I was willing to do what he wanted me to do.
BERGMAN: He reflects a certain attitude because he is in a sense the only C.E.O. or the only head of a major company to have done this; is that correct?
HEBERT: It's correct that he's the only C.E.O., I guess, that has asked me to take certain positions.
But I've had those conversations with Ken Lay for a long time and have disagreed with him for a long time.
BERGMAN: Do you think your disagreement may result in your not being Chairman anymore?
HEBERT: I think the President will make the decision on whether or not I remain to be chairman.
I serve at the will and the pleasure of the President not Ken Lay.
BERGMAN: And in a subsequent interview published in THE NEW YORK TIMES, Curt Hebert said he was offended by Ken Lay's overture.
LAY: I suppose Curt is entitled to believe whatever Curt believes. Curt is a very, very capable individual.
I'm quite sure I did not in that conversation, as I would not, say that if you can't agree to this, then we can't support you.
I think I did say in that conversation that clearly whoever became Chairman would ultimately be decided by the President, not by Ken Lay, not by Enron, not by anybody else.
BERGMAN: So we asked Vice President Cheney, did Ken Lay talk to him about Curt Hebert?
Did he talk with you about who was running the F.E.R.C.
BERGMAN: He never raised a question about his dissatisfaction with Mr. Hebert.
BERGMAN: He never talked about replacing Mr. Hebert with Mr. Wood?
BERGMAN: Mr. Wood is Pat Wood, long an Enron favorite.
In this 1994 letter, Ken Lay wrote to then Governor-elect George W. Bush recommending Mr. Wood.
In our interview last May, Vice President Cheney was already referring to Mr. Wood as the Chairman, long before any public announcement.
CHENEY: Pat Wood has got to be the new Chairman of F.E.R.C.
BERGMAN: Off camera the Vice President confirmed that Mr. Hebert was history and Mr.. Wood a supporter of opening up the transmission grid, was to be the new Chairman of the F.E.R.C..
BERGMAN: I've talked to the Vice President.
He says Pat Wood will be the new Chairman. Sounds like Ken Lay is getting his way.
HEBERT: He might.
This would be the first knowledge I've had if Pat Wood is, in fact, to be Chairman.
BERGMAN: Three months after this interview President Bush named Pat Wood Chairman of the F.E.R.C.
While Ken Lay did not get everything that he wanted from the Vice President in his national energy strategy, he did get his number one wish: a recommendation to open up the electric transmission grid and force the states and the utilities to comply.
We talked with the lobbying group for the utilities, Enron's rival, the Edison Institute, about their access and influence in the Bush administration.
We asked them, did you submit a list, for instance, of nominees for the F.E.R.C?
They didn't do it.
And have you ever are any direct conversations with Curt Hebert about policy questions and they say they don't do that.
LAY: Well, I'd be very surprised with... I'm very surprised with all those answers.
BERGMAN: You don't believe them?
BERGMAN: Whatever Enron's rivals were doing, Ken Lay and Enron have never been shy about exercising their political muscle. Which was essential to their meteoric rise to number seven on the Fortune 500 list.
Changing the laws and regulations in Washington and the 50 states was the key to Enron's success and Ken Lay told us he's always had to have friends on both sides of the aisle.
LAY: We had a lot of access in the Clinton administration.
I mean, we were able to certainly... Secretary Richardson called on me and Enron on a number of occasions to at least discuss different energy matters and certainly Secretary Rubin on other matters.
BERGMAN: It isn't true that you are the closet Secretary of Energy?
LAY: I am not the closet anything.
Of course, the good news is that this administration has some very, very capable people, particularly in the energy area, starting with the Secretary of Energy, but obviously also people like Dick Cheney and Don Evans as well as the President himself that knows a lot about energy.
BERGMAN: Ken Lay and his fellow Enron executives have been the biggest contributors to George W. Bush's political career.
But you understand that people would have this idea that people with power, the C.E.O.s, the people who have contributed to your campaigns, the people who mention your name in interviews that we do because they've gone hunting with you or fishing with you....
CHENEY: Yeah, I mean that's the conspiracy theory of public policy. It's irresponsible. It's not true.
Some politicians promote it because it's easier than dealing with substance. I mean, I went out and got elected with the President of the United States. We got on the ticket. The the American people got to choose and they picked us, a very close election obviously but now our job is to govern.
BERGMAN: Informed of this report, the White House last night confirmed that two people on Ken Lay's list Pat Wood and Nora Brown were in fact picked by President Bush for seats on the F.E.R.C..
MOYERS: Next week Kenneth Lay will testify for two Congressional investigative committees.
Among other things, they'll want the answer to this mystery.
The final draft of the energy bill that emerged from the White House contained language encouraging energy development in India, where Enron had a plant that was losing money.
The provision was not in the original draft, which was allegedly written before Kenneth Lay's secret meetings with Vice President Cheney.
The Vice President then reportedly interceded with the Indian government in behalf of Enron.
How did America's second most powerful official in government turn to lobbying for the single biggest contributor to President Bush's political career?