What secret e-mails from Enron teach us about influencing politicians

March 24, 2013

Poli-Sci Perspective is a weekly Wonkblog feature in which Georgetown University's Dan Hopkins and George Washington University's Danny Hayes and John Sides offer an empirical perspective on the issues dominating Washington. In this edition, Hopkins looks at what internal Enron e-mails show about how corporations try to influence the government. For past posts in the series, head here.

In 1999, Sen. John McCain (R-AZ) denounced “a campaign finance system that is nothing less than an elaborate influence-peddling scheme in which both parties conspire to stay in office by selling the country to the highest bidder.” Judging from the polls, such perceptions about lobbyists buying influence with campaign contributions were widely shared, even before Citizens United. In a 2006 Los Angeles Times poll, 65 percent of Americans favored a prohibition on lobbyist-hosted political fundraisers, versus just 19 percent who thought a prohibition would infringe on Constitutional rights.

But are campaign contributions actually central to corporate lobbying efforts? If the now-bankrupt Enron Corporation is any indication, the answer is no.

Assessing the role of campaign contributions in corporate political strategy is a tricky business. If elected officials and lobbyists see themselves as involved in a transaction, with contributions buying favorable policies, both parties have a strong incentive to keep the transaction secret.

That’s where the Enron Corporation comes in. In the fall of 2001, the energy company famously descended into bankruptcy. The wave of accounting scandals and corporate fraud that engulfed Enron made it quite clear that the company’s leadership was willing to break the rules if there was a profit to book. As an advocate of energy deregulation, Enron had extensive contacts with elected officials; its C.E.O, Ken Lay, was a close personal friend of the Bush family. In 2001, it spent $5.1 million on lobbying, making it one of the 50 largest spenders on lobbying that year.

If quid pro quo political contributions are an important tool in corporate lobbying, Enron had the motive, opportunity and willingness to put that tool to use. And if Enron wasn’t investing much effort in targeting its contributions, the conventional wisdom about the importance of contributions in corporate lobbying would seem overstated, too.

As part of the litigation that followed Enron’s bankruptcy, the firm released 250,000 e-mails to the Federal Energy Regulatory Commission. In a recently published article in Legislative Studies Quarterly (ungated), Lee Drutman and I use those e-mails to get an inside view of Enron’s strategy of political influence. The e-mails were written with the expectation that they would remain private. For that reason, they provide us with an unusual window into the lobbying strategies of a large, politically active corporation.

To measure Enron’s political attention, we first identified those e-mails with political content and then classified each political e-mail based on the major activity it describes. Past research has found that much of lobbying involves monitoring events, on the off-chance that there is sudden movement on a particular issue. And our analysis reinforces that finding. Sixty-six percent of all of Enron’s political e-mails involved information-gathering. The figure below illustrates the share of e-mails we identified as falling into each category over time. As it shows, Enron relied on a mix of public and private information sources, with less unique intelligence in the firm’s final months.

Another 15 percent of the political e-mails involve “legislative contacting,” which includes interactions with elected officials and allies about specific legislation. A third category—formal participation in legislative and bureaucratic processes—accounts for an additional 9 percent. Within this category, Enron focused primarily on submitting formal comments to governmental agencies and testifying at hearings.

When we think of lobbying, we typically think of Congress. But Enron devoted substantial effort to lobbying bureaucrats as well. Judging from the content of its e-mails, it was quite concerned with making compelling arguments to regulators. Enron’s employees e-mailed as if the company’s primary advantage in lobbying was its ostensible wealth of information about energy policy, not its campaign contributions.

Still, the biggest surprise is shown in the bottom center panel of the figure, which illustrates the e-mails devoted to campaigns, elections and donations. They account for just 1.1 percent of all Enron’s political e-mails. Enron focused a tiny share of its political attention to campaigns and contributions, indicating that it didn’t see those contributions as a worth much effort—or as a primary source of political leverage.

To be sure, in some instances, Enron executives explicitly connected their campaign contributions with policy goals. In one such e-mail, an Enron executive notes that “Nick Lampson called and asked for a contribution. I committed to one without knowing about his vote on PNTR [Permanent Normal Trade Relations with China]. I will keep my word by making an individual contribution but will also communicate to him that in my capacity as Enron PAC chair i cannot authorize the PAC to make a contribution as a result of that vote.”

Yet even in this case, the contribution is a reaction to a request rather than a proactive attempt to win support. What’s more, the head of Enron’s Political Action Committee committed to a donation without knowing a home-state Member’s vote on one of Enron’s legislative priorities—and wound up making a personal donation anyhow. That’s not much of a quid pro quo. 

It is plausible that after Citizens United, Enron might have acted differently. But these e-mails from 1999-2002 make it clear that campaign contributions were not central to the company’s lobbying strategy, echoing prior arguments about lobbying and its limits.

Popular discussions of lobbying focus on quid pro quo transactions between legislators and lobbyists, with campaign contributions as the currency of choice. And if any company had the connections, incentives and willingness to engage in those transactions, it was Enron. But in Enron’s case at least, the company’s employees devoted far more attention to monitoring political events and formally participating in bureaucratic processes than to planning campaign contributions.

We commonly think of corporate lobbyists’ checkbooks as their primary source of influence, and Congress as their primary target. But in doing so, we forget the importance of the proprietary information they bring to the table, and the connections that corporations forge with the bureaucrats who regulate them.

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