posted 10-18-2002 06:17 AM            

A federal judge yesterday ordered the Bush administration to turn over key documents about its energy task force for a second time, while government lawyers gave notice that they plan to take their case to an appeals court before complying.

U.S. District Judge Emmet G. Sullivan gave lawyers representing Vice President Cheney until Nov. 5 to produce documents that detail the membership rolls and meeting schedules of the National Energy Policy Development Group, which Cheney chaired. Sullivan had ordered the same documents turned over in August.

If the government does not produce the documents by the November date, Sullivan said, the administration must submit a claim of executive privilege and the reasons for it.

The hour-long hearing, marked by a series of sharp exchanges between Sullivan and Shannen W. Coffin, the Justice Department attorney handling the case, is the latest development in one of a handful of lawsuits that have sought to force the Bush administration to release information about the task force.

The Sierra Club and Judicial Watch, the plaintiffs in this case, are two of several groups that have alleged that the administration improperly met with private officials from the energy industry last year while shaping its energy policy. Environmental groups say they were largely excluded from the meetings.

While federal judges in other suits have ordered the Energy Department and other agencies to turn over tens of thousands of pages of documents about the meetings, the documents from inside the White House have not been revealed.

The Bush administration has said repeatedly that the separation of powers doctrine shields those documents from outside review because they might show the administration's internal, deliberative process.

But it has yet to invoke the principle of executive privilege, either, and that position drew Sullivan's ire yesterday.

"You have to produce the non-privileged documents and assert the [executive] privilege for those that are," he told Coffin. "You refuse to assert the privilege and won't respond to court orders."

Coffin had submitted motions asking Sullivan to reconsider his August ruling and to issue an order that would ensure the documents remain private pending some further court ruling. He wrote that producing the documents "would impose upon the Executive unconstitutional burdens."

"The consideration of undue interference requires special treatment by this court in this context," Coffin said.

Sullivan rejected the request, and upbraided the lawyer at least twice for interrupting him, a replay of a similar incident during a hearing in August.

Coffin said the government would likely ask the judge to stay his own order before the Nov. 5 deadline. He said the government wants enough time to be able to ask an appellate court to intervene if necessary.

After Sullivan set a series of deadlines for court motions beginning next week, the hearing appeared to be over.

But when Coffin said government attorneys might need even more time because "we haven't done a document review of the office of the vice president," it was Sullivan who interrupted.

"That is a startling revelation!" the judge said twice. "How can you be asserting this is privileged information if you haven't looked at it?"

"We haven't completed the review," Coffin said. "We've done enough to know our arguments" are correct, he said. "I misspoke."

"How could you misspeak on something as significant as that?" Sullivan shot back.

Joining in, Larry Klayman, chairman of Judicial Watch, said, "He made a plain statement, and now he's backing off it because it's bad press."

"We've made a review," Coffin explained, "but we're not going to ask our clients to complete that review because it's an unconstitutional burden."

© 2002 The Washington Post Company

posted 10-18-2002 06:19 AM            

The head of a congressional inquiry into the Bush administration's energy proposals said yesterday he would sue the White House next week if the administration does not comply with his demands, in what would be the first legal action of its kind between the legislative and executive branches of government.

U.S. Comptroller General David M. Walker, head of the General Accounting Office, Congress's investigative arm, said the White House "may be reconsidering" its nine-month opposition to releasing records of the task force headed by Vice President Cheney that drafted the administration's energy policy. Lawmakers are seeking to learn what influence companies such as Enron Corp., which had six meetings with the task force, had on the proposals.

If the White House does not reverse course next week, "it looks as if we'll be heading to court," Walker said. "Unless we get the information or we're in the middle of intense negotiations, I'm not going to sit on this much longer."

The ultimatum from the GAO escalated a battle with the White House at a time when the administration faces questions from various directions about its ties to Enron, the now disgraced energy concern led by executives close to President Bush. Democratic lawmakers have asked whether Enron had disproportionate influence in the administration because of campaign donations, a suggestion the White House adamantly rejects.

Former Enron executives disclosed yesterday that a top Bush campaign adviser, Edward Gillespie, served as the company's key conduit to the White House and House leaders. Gillespie's firm received $525,000 over nine months last year from Enron for lobbying that included the energy task force and economic stimulus legislation with tax provisions that would have helped Enron.

Also yesterday, Judicial Watch, a conservative watchdog group, said it would file a complaint with the Federal Election Commission to determine whether Karl Rove, Bush's top campaign adviser, arranged for an Enron consulting contract for strategist Ralph Reed instead of paying him from campaign funds. The White House and Reed yesterday denied a charge, made by an anonymous source in a New York Times article, that Reed's contract was arranged to keep his allegiance to Bush during the early days of the Texas governor's presidential bid.

New information was released yesterday showing that the White House amended a draft energy proposal by the State Department to include a provision favorable to Enron. Rep. Henry A. Waxman (D-Calif.), the White House's main antagonist over the energy task force records, released papers indicating the White House added to the final report a call to boost energy production in India. In between the draft and the final report, Enron officials had met with the task force, Waxman's staff said.

The development could be significant because the change was made at about the same time the White House was expanding an effort to aid Enron in India. The company was in a dispute with the Indian government over its Dabhol project, a gas-fueled power plan. As efforts to resolve the dispute foundered, Enron sought $2.3 billion from India for its interest in the plant. Cheney spoke twice with Indian officials and Bush was slated to discuss the matter under a campaign coordinated by the National Security Council.

The White House's energy policy, issued on May 17, recommends "the president direct the Secretaries of State and Energy to work with India's Ministry of Petroleum and Natural Gas to help India maximize its domestic oil and gas production." But there was no mention of such a recommendation in a March 30 draft of that section of the report, written by the State Department and released yesterday by Waxman. Cheney met with Kenneth L. Lay, then Enron's chairman, on April 17.

Various organizations have sought to obtain records of the energy task force's meetings, without success. Earlier this week, several Senate committee chairmen wrote to Walker encouraging him to proceed with his efforts.

"I'm confident now the appropriate people in the White House have an understanding of what our position is and how seriously we're taking it," Walker said. If there is no change, he said the GAO would file the first suit against an administration since the office was created in 1921.

Claire Buchan, a White House spokeswoman, said yesterday that "nothing has changed" in the administration's position.

New information about former Bush communication aide Gillespie's ties to the Cheney task force indicated another level of ties between Enron and the administration. Former Enron officials said their key link to the White House and Republicans on Capitol Hill was Gillespie, a former aide to House Majority Leader Richard K. Armey (R-Tex.). Gillespie had worked in the lobbying firm of former Republican National Committee chairman Haley Barbour before setting up his own lobbying partnership in January 2000 with Jack Quinn, former White House counsel to President Bill Clinton.

Gillespie "was our hired gun," recalled one former Enron employee. "Whenever we had to get in to see a Republican, the first call was to Gillespie."

After the Bush victory, Gillespie served briefly as acting director of public affairs at the Commerce Department. He then turned to representing Enron before the administration and Congress on energy policy and repeal of the corporate alternative minimum tax.

Gillespie was in touch with staffers on the energy task force in 2001. He also met with officials at the Energy Department, and helped set up meetings on energy policy for Enron representatives with key lawmakers.

The office of House Energy and Commerce Committee Chairman W.J. "Billy" Tauzin (R-La.) said Enron executive Jeffrey K. Skilling buttonholed Tauzin at a fundraiser for Tauzin's political action committee on April 4 at the offices of Quinn & Gillespie. Skilling, whom Tauzin had not met before, asked for 10 minutes in private. Skilling made a pitch for legislation that would mandate state membership in regional electricity transmission organizations. Tauzin listened but said nothing, Tauzin spokesman Ken Johnson said, and soon after announced his opposition to mandatory membership.

As the economy faltered last fall and Congress and the administration began working on stimulus legislation, Enron called on Gillespie to promote a tax relief package that would include scrapping the corporate alternative minimum tax (AMT). Sources said that Gillespie contacted House leadership officials as well as the White House staff. Enron was one of dozens of companies lobbying for repeal of the AMT, which was part of Bush's proposal.

The House added a provision that would have allowed companies such as Enron to immediately claim outstanding tax credits, which in Enron's case totaled $254 million. Sources said Enron did not advocate an immediate payment. But Enron's Lay called White House budget director Mitchell E. Daniels Jr. to inquire about the status of the stimulus plan when it became clear the company was in financial peril.

Senate Majority Leader Thomas A. Daschle (D-S.D.), asked about the report of Rove's effort to help Reed, said that there should be "full disclosure, a full and open debate about whatever connection, whatever relationship there may have been" between Enron and the administration.

Rove, through a spokeswoman, declined to comment on the Enron consulting contract for Reed. White House press secretary Ari Fleischer said Bush's top political adviser was merely providing a character reference. "Karl Rove gave Ralph Reed a good recommendation, as we all would, as we all do," Fleischer said.

Reed said the people who hired him "never had any conversations with Karl Rove regarding that decision" and said there was no effort by the campaign to get Enron to pay him because his firm was "being paid by the Bush campaign almost from the inception all the way to Election Day."

posted 10-25-2002 07:48 PM            

DALLAS (AP) - Vice President Dick Cheney and Halliburton Co. have asked a federal judge to throw out a lawsuit accusing them of defrauding investors by changing accounting methods at the oilfield-services company.

Cheney was chairman and chief executive of the Dallas-based company when it changed its accounting to recognize more revenue from construction projects that had cost overruns.

Judicial Watch, a self-described government-watchdog group, sued Cheney, the company, its directors and accountant Arthur Andersen in July in federal district court in Dallas.

The group charged that Halliburton's accounting change resulted in overstating revenue from 1999 through 2001 by $445 million, which pumped up Halliburton's share price and cost investors millions when the stock declined this year.

The defendants met a Thursday deadline for responding to the lawsuit by filing a motion to dismiss the case. A copy of the motion was not available Friday.

In a prepared statement Friday, the company said the plaintiffs' complaints were "naked allegations" that are untrue and unsupported by facts. The company also argued that the federal court had no jurisdiction in the case.

Doug Foshee, Halliburton's chief financial officer, said in the statement that the company follows SEC guidelines.

A spokeswoman for Cheney referred inquiries to the vice president's private attorney, Terrence O'Donnell of the Washington law firm Williams & Connally, who also declined to comment.

Judicial Watch president Tom Fitton defended the lawsuit.

"We will prove our case in court," he said. "The complaint's allegations are based in part on Halliburton's own public filings. We look forward to the vice president's sworn testimony on the matter."

Judicial Watch has also sued Cheney in Washington, D.C., federal court, for access to records of a task force he led that drafted the Bush administration's energy policy. The Justice Department said the deadline for responding to that lawsuit is Friday.

Cheney was chairman and chief executive of Halliburton from 1995 to mid-2000. The company provides equipment and services to oil and gas companies and also operates an engineering and construction business.

The Judicial Watch lawsuit focuses on a change in Halliburton's method of accounting for revenue on large construction projects. Beginning in 1998, Halliburton counted some of the cost overruns on large projects as revenue, although customers sometimes disputed the costs.

Halliburton announced in May that the Securities and Exchange Commission was looking into the accounting change and whether the company adequately disclosed the practice to investors. The 1998 change was disclosed in a footnote to Halliburton's 1999 annual report, which was filed in March 2000.

On its Web site, Halliburton said it followed established accounting guidelines. Clients signed "cost-plus" contracts, the company said, because cost changes are common in large construction projects.

The Judicial Watch lawsuit was filed on behalf of shareholders Stephen S. Stephens of Indiana and Lyle and Deanna J. Lionbarger of New Mexico. It does not specify their hometowns or the number of shares they hold.

Besides Halliburton and Cheney, defendants in the lawsuit are accounting firm Andersen Worldwide and Arthur Andersen LLP, current Halliburton chairman David J. Lesar, 12 other Halliburton board members and Terrence Edward Hatchett, Halliburton's former managing partner for North America.