Thomas E. White - Controversy

Controversy

While serving as Vice Chairman of Enron Energy Services White had actively pursued military contracts for the company and in 1999 had secured a prototype deal at Fort Hamilton for privatising the power supply of army bases. Enron had been the only bidder for this deal after White had controversially used his government and military contacts to secure key concessions.

In his first speech just “two weeks after he became secretary of the Army, White vowed to speed up the awarding of such contracts”; as the Enron Ft. Hamilton contract, despite the fact that he still held a considerable interest in Enron. A Pentagon spokeswoman responded to suggestions of a possible conflict of interests by saying that “Defense Secretary Donald Rumsfeld sees no conflict and has complete confidence in the Army secretary”.

The Washington Post reported that in late October 2001, White made numerous phone calls to Enron executives including Vice President Jude Rolfes, former CEO Jeff Skilling and President current CEO Ken Lay. Shortly after the calls were made, White unloaded 200,000 Enron shares for $12 million. The L.A. Times reported that White had brief conversations with Rumsfeld in November and Powell in December, the focus of which were "a concern on their part for the impact that the bankruptcy of Enron may have had on my personal well-being. My response in both cases was that I had suffered significant personal losses but that I would persevere."

The New York Times reported that in late January 2002, Rep. Henry Waxman requested a meeting with White regarding the military contracts and the irregularities with the accounting at E.E.S. stating “you are in a unique position because you are the person in government who has the most intimate knowledge of Enron”. Furthermore the Washington Post reported that at this time White still held interests in Enron, including a claim on 50,000 stock options and an annuity paid by the company, despite having promised to divest himself at his confirmation hearing 8 months earlier. This earned him a rebuke from Sens. Carl Levin (D-Mich.) and John Warner (R-Va.) of the Senate Armed Services Committee. He was also accused in the Washington Post of Misuse of Government Property, by allegedly using military jets for personal trips for himself and his wife. In July, following news reports of the company’s involvement in the 2000-2001 California electricity crisis, White denied his involvement under oath before the Senate Commerce Committee.