Kenneth Lay offered former treasury secretary seat on Enron's board, documents show

WASHINGTON - Former Enron Chairman Kenneth Lay in 1999 offered Robert Rubin - then treasury secretary - a seat on the company's board and lobbied Rubin and his successor on issues affecting Enron, documents obtained Wednesday show.

The notes and letters show that Lay pressed Enron's interests to Clinton administration officials. Last month, the Bush administration disclosed a series of telephone calls from Lay - one of President Bush's biggest campaign contributors - to members of the Bush Cabinet as the company was sliding toward bankruptcy last fall.

The new documents were provided by the Treasury Department under a Freedom of Information Act request by The Associated Press.

Enron's current chief executive officer, meanwhile, said Wednesday that someone could end up in jail on charges stemming from the government's investigation of the collapsed energy-trading company and the web of partnerships - used to hide more than $1 billion in debt - that eventually brought it down.

"Given the enormity of the damage that's been created, I think it's going to be difficult to not hold one or more people accountable," said Stephen Cooper, who took the helm of Enron after Lay resigned as chairman last month.

Rubin, who left the government in mid-1999, is chairman of the executive committee of Citigroup Inc., which along with other banks lent hundreds of millions of dollars to Enron, hoping to keep it afloat. Rubin called Treasury's undersecretary for domestic finance, Peter Fisher, last Nov. 8 to seek his intervention on Enron's behalf. At the time, rating agencies were poised to downgrade their opinions on the financial status of Houston-based Enron.

"If you are considering joining any corporate boards, I would like very much to talk to you," Lay wrote Rubin on May 14, 1999, after Rubin announced he was leaving his post. "Given the way Enron has evolved, not only do we badly need a person with your experience and insights ... but also I think you would find serving on our board intellectually and otherwise interesting."

"I have placed a call to you in the hope that I might mention this to you personally," Lay told Rubin.

Rubin did not join Enron's board of directors.

The same day, Lay wrote a note to Rubin's successor in the Clinton administration, Lawrence Summers, congratulating him on becoming treasury chief and promising to be available "if there is anything at all I or Enron could do for you or the department."

Lay's spokeswoman, Kelly Kimberly, declined comment on the documents. Leah Johnson, a spokeswoman for Rubin at Citigroup's New York headquarters, had no immediate comment.

In another letter, dated Dec. 3, 1998, Lay urged Rubin to approve Houston's application to be named an "empowerment zone," a status that brings tax breaks and other incentives meant to promote economic revival.

"An empowerment zone would be extremely helpful in our efforts to diversify our economic base and to recover from a decline in oil and energy-related industries," Lay said.

Enron, with some 20,000 employees when it filed for bankruptcy on Dec. 2, has been one of the largest employers in Houston. The city has not been designated as an empowerment zone.

Bush, in his new budget proposed this month, is seeking to eliminate grants for empowerment zones in urban areas.

Enron had lobbied throughout the government and Congress against regulation of electricity markets and the trading of financial products, known as derivatives, tied to energy commodities. In a letter to Summers on Oct. 8, 1999, Lay said Enron was "troubled" by the idea. He indicated he was prompted to write by a speech by a treasury assistant general counsel, who said that federal regulators might be considering regulation of the huge global derivatives market that exists outside of commodities exchanges.

"Larry, hopefully the comments made by John Yetter were just a misunderstanding," Lay wrote. "I would very much appreciate receiving a call or note from you if in fact there is any reason that we should be concerned about this occurring."

Then, dropping Rubin's name, Lay mentioned that he had spent some time with him in Shanghai the previous week and that "he looked more relaxed than I have seen him in years."

Summers responded on Nov. 22, noting that Yetter and another treasury official, Assistant Secretary Lee Sachs, had met with several Enron executives to discuss the company's concerns and that Sachs spoke on the phone with Lay about the issue.

Cooper, the new Enron CEO, was asked on ABC's "Good Morning America" if crimes were committed at Enron. He responded, "The crime is that all of these people have been hurt ... the crime is that somebody turbocharged it to the point where it just, poof, blew up."

"I think it is - I don't know if it's a high likelihood, but I think that there is some likelihood that ... one or more people could end up ... going to jail," he said.

Investors nationwide lost money on a stock that had been a Wall Street favorite, and thousands of Enron employees were stripped of their retirement savings in accounts loaded with Enron stock as they collapsed.

Both the Securities and Exchange Commission and the Justice Department are investigating Enron and the role of its longtime auditor, Arthur Andersen LLP.