For Gramms, Enron Is Hard to Escape

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By Dan Morgan and Kathleen Day
Washington Post Staff Writers
Friday, January 25, 2002; 12:00 AM

In late 1998, lawyers advised Enron Corp. board member Wendy L. Gramm that she faced a "material conflict of interest" if she owned stock in the company while her husband, Sen. Phil Gramm (R-Tex.), was introducing legislation affecting Enron.

To remove any hint that she could benefit financially from her husband's legislation, she cashed in 10,256 Enron shares for $276,912 and had Enron revise her compensation package so she would be paid in cash instead of stock starting in 1999, according to filings with the Securities and Exchange Commission.

"We concluded that Congress was going to debate electric power generation," Sen. Gramm said last week, "and both of us believed -- and especially I -- that it would be better if we didn't own any Enron stock. I was going to be the leader in the debate."

Gramm subsequently involved himself in bills affecting Enron, but the action taken in 1998 has not shielded him and his wife from charges that Enron used improper influence on politicians to push its agenda before it collapsed last year.

Barron's, the weekly financial newspaper, has branded the couple "Mr. and Mrs. Enron." The watchdog group Public Citizen suggested that the coming storm over Enron was a reason Gramm announced Sept. 4 that he would not seek reelection, a suggestion he dismisses. The Senate Governmental Affairs Committee, meanwhile, has subpoenaed records of Wendy Gramm, an Enron board member since 1993 and senior member of the Audit Committee that oversaw the company's financial reporting and internal controls.

Despite all that, an examination of Sen. Gramm's role in legislation affecting Enron reveals a more complex, ambiguous story, in which issues of spousal independence in a powerful marriage mingle with questions about possible conflicts of interest and money in politics.

Complicating the situation is the fact that Wendy Gramm, an expert on some of the financial issues in which her husband is also involved, has often made her views on policy known to agencies and officials, in her capacity as the paid director of regulatory affairs for a policy group at George Mason University. Since 1996, the Mercatus Center has received $50,000 from Enron and another $10,000 from a foundation set up by former Enron Chairman Kenneth L. Lay and his wife.

Wendy Gramm did not return phone calls seeking comment for this article. But her husband denied any improprieties. "Never has my wife tried to influence me on Enron," he said. "My wife has deeply held values, like I do. Anyone who knows her and her academic record knows that's the case. She's nobody's woman but her own."

Sen. Gramm, who has received nearly $100,000 in campaign contributions from Enron or its employees since 1989, according to the Center for Responsive Politics, has also denied knowledge of Enron's impending problems. He said this week that he and his wife "leave office business at the front door." when they go home.

Questions about the Gramms' connections to Enron have focused primarily on legislation in which Gramm was involved in 2000. His wife's Enron compensation that year included at least $78,000 in salary and fees, according to filings with the Securities and Exchange Commission.

In July 2000, Sens. Gramm and Charles E. Schumer (D-N.Y.) introduced a bill requiring states to institute competition in the sale of electricity to retail customers. Former Enron officials recall providing comments on the bill to Schumer's staff, but don't recall discussing it with Gramm.

The legislation also would have given the Federal Energy Regulatory Commission jurisdiction over most "bundled" electricity sales by utility companies, a top Enron goal. Enron attorneys were about to enter a court battle on the bundled sales issue that would go all the way to the Supreme Court.

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© 2002 The Washington Post Company

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