Enron's Political Contributions:
Another Bad Investment
By Marc Levin
Recent revelations about Enron's
extensive political contributions have been portrayed as impugning the
integrity of the Bush administration and bolstering the case for
campaign finance reform. However, upon closer scrutiny, it is
apparent that Enron's bevy of political contributions provided the
company little political power when it most needed it.
Thus, far from proving the need for campaign finance reform, the Enron debacle illustrates that political contributions may be one of the worst investments a business can make. The real lesson from this fiasco may be that company shareholder representatives and boards of directors should be more skeptical of the utility of corporate political expenditures.
According to the Center for Public Integrity, Enron and its CEO Ken Lay have donated more than $550,000 to Bush since 1993, making the company his top career patron. Additionally, Enron has made $5.8 million in campaign contributions to members of Congress since 1989.
However, after all this profligacy, we have now learned Enron could not muster a morsel of assistance from the Bush administration when Lay called Commerce Secretary Don Evans to warn that its bankruptcy might be imminent. Contrary to conventional wisdom, the negative response from the Bush administration to this plea for help demonstrates the impotence of campaign contributions, not their overpowering influence.
It is instructive that Enron was rebuffed at that time. Given the fact that September 11 was still fresh on people's minds and that the airlines were being bailed out, the administration surely could have contrived some public justification for taking action to stave off Enron's bankruptcy had Enron's contributions been as influential as they are now alleged.
Similarly, despite receiving tens of thousands of dollars from Enron, U.S. Attorney General John Ashcroft and Texas Attorney General John Cornyn have wasted no time in holding Enron's feet to the fire. Unfortunately, both have now recused themselves from their offices' investigations, giving credence to the claim that somehow they could not oversee an impartial investigation.
The truth is that, once an issue receives even a scintilla of the publicity of the Enron scandal, politicians are much more likely to be swayed by public opinion than campaign contributions. First, there are countless sources of campaign funds but only one electorate. Furthermore, the downside of negative media scrutiny regarding even a perception of a conflict of interest easily overrides the benefits of whatever advertising a candidate could purchase with the donations.
Finally, in the case of Enron, since it is bankrupt, there is little possibility of future donations of anywhere near the magnitude of its past bounty. As its past political contributions are already safely tucked away, Enron's inability to make large contributions in the future enormously diminishes its influence, quite apart form the fact that its bankruptcy is now a radioactive political issue. After all, if the phrase "fair-weather friend" was defined in the dictionary, a picture of politicians might well appear.
To be sure, political contributions can buy a company access. Ken Lay even got to sleep at the White House. However, while such royal treatment may do wonders for the ego of a company's CEO, it is far from clear that it results in tangible benefits for its bottom line.
A company is most likely to get mileage out of its campaign
contributions when the issues with which it is concerned are of little interest to the public and receive no media attention. The proliferation of alternative media and the Internet has arguably diminished the number of such low profile issues on which politicians can side with their contributors without public notice.
The fact that Enron could not get any assistance from a President for whom they were the largest donor should lead shareholder representatives and corporate boards to examine more closely the efficacy of political contributions. If these contributions are merely massaging the ego of executives by allowing them to rub shoulders with politicians, they ought to be discontinued.
In fact, many successful large companies have decided to curtail their political contributions and are doing quite well without them. Among the companies that have recently stopped making soft-money contributions to the political parties are General Motors, Monsanto, Time Warner, and Allied Signal. "We're not going to contribute 'soft money' at the federal level any more; we've decided it's not a beneficial practice," said Linda Fisher, Monsanto's vice president for government and public affairs.
There are certainly many lessons to be learned from Enron's implosion, but there is simply no evidence that either Republican or Democratic officials did anything improper on behalf of the company. Instead of demonstrating the need for campaign finance reform, Enron's excessive political contributions may have only been yet another of its many bad investments.
Levin is President of the Houston-based American Freedom Center (www.americanfreedomctr.org) and can be reached at email@example.com.
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