6-08-05, 10:13 am

Beware. This could be your tax dollars at work.

The federal government may guarantee hundreds of millions of dollars in loans to help a former energy executive who publicly admitted he had no idea that the division he once ran cooked its books and who is now trying to secure funding for a new energy company he started with three ex-colleagues.

Yes, Thomas White, the former vice chairman of Enron Energy Services and one-time Secretary of the Army, who testified before the U.S. Senate more than two years ago that he was clueless about the tactics the employees who worked for him used to manipulate electricity prices in the California power market in addition to the massive losses EES—under his leadership—hid in an effort to keep its parent company, Enron Corp, temporarily afloat, is back in the energy business and this time he’s looking for a handout.

(Full disclosure: I spent a year investigating White and wrote a lengthy news story in August 2002 that tied Thomas White to the fraud at Enron, specifically that he was aware the division he ran was hiding losses and that he instructed an underling to cover up losses from a particular energy contract. The story, published by Salon.com, was removed two months after it was posted because a single email I obtained proving the allegations was called into question by right-wing journalists and the White House. I was discredited and falsely accused of plagiarism by Salon. To this day, not one reporter has ever followed up on the story or has proved that the email wasn’t authentic, despite the fact that two years after the story was first published the allegations, detailed in a federal indictment against former Enron CEO Jeff Skilling, proved to be true.)

The federal energy bill that’s currently making the rounds through the Senate contains a provision that provides federal loan guarantees for “a project to produce energy from coal …mined in the western United States… and offers the potential to sequester carbon dioxide emissions and … shall be located in a western State at an altitude greater than 4,000 feet,” the energy bill states. According to the watchdog group Public Citizen, White and his business partners are trying to secure funding for a project to produce energy from coal in Wyoming, specifically, “a $2.8 billion coal gasification project in Medicine Bow, Wyoming. The coal will be supplied from Arch Coal mines neighboring the power facility; it will stuff carbon dioxide emissions into oil wells; and the facility will be located in a western state (Wyoming) at an altitude above 4,000 feet.”

But when contacted about the possibility of funding an energy project run by a person such as White, whose business acumen is questionable at best, an aide to Sen. Ken Salazar, D-Colorado, who was responsible for drafting the language in the energy bill, became alarmed and claimed the text in the energy bill was written specifically to fund an energy project proposed to lawmakers by executives with Minneapolis-based Xcel Energy and PacifiCorp in Portland and, possibly, a third unnamed company. Salazar wouldn’t comment on the specifics of the proposal because he said it hasn’t been publicly announced by the companies.

Yet Public Citizen’s Tyson Slocum said in an interview that the language in the energy bill is “very broadly written and could very well accommodate other energy proposals” including Thomas White’s new project.

Slocum said he is concerned because he has heard that White has been actively lobbying lawmakers to try and get loan guarantees for his new energy venture.

Senator “Salazar and the energy committee is saying that the language that’s written in the bill is not intended to fund White’s project but White’s company does qualify because of the way the bill is written.”

It’s been two years since Secretary of Defense Donald Rumsfeld fired Thomas White. Since then, White has kept himself busy writing a book, preparing his $15 million Florida for sale, and quietly getting back into the field that made him a very rich and reviled man.

White’s new endeavor, DKRW Energy (whose symbol has an eerie resemblance to Enron’s crooked E), is a joint business venture started in 2000 by three other former Enron executives: Robert C. Kelly, formerly the chairman and chief executive of Enron Renewable Energy, Jon C. Doyle, who worked at Enron in an executive capacity under Kelly and H. David Ramm, who used to be president and CEO of Enron Wind and was a co-managing director of Enron Renewable Energy, according to the bio’s on the company’s website. White joined DKRW last year. The company, formerly known as DKR Development, changed its name to DKRW after White promised his partners that his connections to Washington, D.C. lawmakers would help the company secure federal funding for various renewable energy projects, according to two people who are close to White.

Interestingly, though, there’s not a single reference to White’s tenure at Enron on his bio. Instead, White’s bio states that he “has 11 years experience in energy markets.”

So what’s he hiding?

Maybe it’s the fact that the division he once ran, EES, turned out to be largely responsible for the massive losses that contributed heavily to Enron’s bankruptcy; or that under his leadership the same division was responsible for jacking up electricity prices in California and creating artificial electricity shortages that resulted in widespread blackouts. Maybe it’s the dozens of calls he made to his former Enron colleagues, a month after 9/11, while he was serving as Army Secretary, to get the inside scoop on what was going on at the company right before he sold his stock.

It’s hard to say. Neither White nor anyone at DKRW responded to numerous calls for comment about the suspicious omission of his former employer from his bio. But this isn’t the first time White’s tried to erase the past. When White was tapped by President Bush in May 2001 to serve as Secretary of the Army his bio, posted on the Pentagon’s website, was virtually wiped clean of any reference to Enron. White also co-authored a book with new business partner Kelly on postwar planning in Iraq, in which his author bio listed his two year stint as Army Secretary but failed to mention that he spent 10 years at Enron.

If White and his partners are going to be the recipients of federal loan guarantees then taxpayers have the right to know that the money is going to a corporate con man who and that they may be on the hook for repaying the government hundreds of millions of dollars in loans if White falls asleep on the job again which he claimed was the case with Enron.

To be fair, Kelly, Ramm and Doyle left Enron well before the company’s bankruptcy and fraudulent activities became public. However, during Ramm and Kelly’s tenure running the unit Enron Wind and Enron Renewable, the division allegedly defrauded the federal government, according to federal investigators.

A few months after Enron bought Portland General Electric in February 1997, Enron’s three wind farms - Zond Windsystems, Victory Garden and Sky River - applied to the Federal Energy Regulatory Commission for recertification as qualifying facilities. To qualify, the farms had to be independently owned, according to a 1978 federal law.

Under that law, intended to lessen dependence on foreign oil by cutting demand for traditional fossil fuels, FERC designates which facilities qualify and oversees the rates that the producers charge buyers.

Each wind farm promised FERC that Enron would transfer ownership to partnerships that would not be affiliated with Enron. In June of 1997, FERC recertified the wind farms as qualified to sell wholesale electricity to U.S. utilities having been under the impression that Enron transferred its ownership stake in them.

However, civil and criminal lawsuits filed against Enron former Chief Financial Officer Andrew Fastow, the mastermind behind the company’s schemes, in federal court in Houston alleged he and other Enron executives created special partnerships to hide the company’s stake in the three wind farms.

“Fastow, and one of his subordinates, Michael Kopper, created “Friends of Enron” partnerships to enable Enron to maintain control over the wind farms after having ostensibly sold them to supposedly independent “Special Purpose Entities,” according to an Oct. 28, 2002 report in bizjournals.com.

“The Securities & Exchange Commission has alleged that Fastow and Kopper created off-balance-sheet partnerships to disguise Enron’s interest in the wind farms so that they could continue to receive beneficial regulatory treatment while secretly remaining under Enron’s control.”

Kelly and Hamm were never named in the government’s investigation of Enron nor is there any evidence that either of them knew about or took part in Fastow’s schemes involving the wind farms.

But White, on the other hand, is another story. The federal government’s indictment against Enron’s Jeff Skilling lays out in detail that the division White ran was nothing but a house of cards, its energy contracts a sham, and that company executives misled investors about the unit’s true financial condition. And while White testified that he stood behind the company’s energy contracts, was unaware of the malfeasance that went on at Enron, that he was totally in the dark about the shenanigans at EES, a former employee is on the record saying that White knew otherwise.

In the Enron documentary, “The Smartest Guys in the Room,” an ex-EES is employee recalls asking White how EES is going to make up for massive losses the division suffered during a particular quarter.

“One word,” the employee said he recalled White telling him and a few other people. “California.”



--Jason Leopold is the author of the explosive memoir, News Junkie, to be released in early 2006 by Process/Feral House Books. Visit Leopold’s website at http://www.jasonleopold.com for updates.