Energy Adviser Who Solicited Enron to Help Write Nat’l Energy Policy to Be Named Chair of FERC

By Jason Leopold
© 2005 Jason Leopold

The audacity inside the Bush administration never ceases to amaze.

The latest example of chutzpah from Bush and co. is the announcement that Joseph Kelliher, a former policy adviser with the Department of Energy who currently serves as a commissioner on the Federal Energy Regulatory Commission, the agency that controls the country's natural gas industry, hydroelectric projects, electric utilities, and oil pipelines and has played a critical role in the deregulation of those industries, will be named by the White House Thursday to chair FERC.

President Bush had previously picked Rebecca Klein, the former Republican head of the Texas Public Utilities Commission and a close friend of the president, to chair FERC but red flags were raised recently during a routine FBI background check on Klein which forced the president to choose a new chairman at the last minute. The White House would not comment on the FBI’s probe on Klein. Klein did not return numerous calls for comment.

Still, news of Kelliher’s appointment to chair FERC came late Wednesday as a welcome surprise to many industry lobbyists and energy executives who view him as a staunch supporter of the free-market principles of deregulation and an advocate for eliminating regulatory restrictions that interferes with the free-market, despite the fact those rules are in place to protect consumers from energy price gouging and market manipulation that took place prior to the Enron scandal four years ago and, to some extent, is still somewhat routine in various parts of the country.

However, what’s most troubling about Kelliher’s appointment to head FERC, a role in which his main priority will now be to protect consumers from the manipulative tactics of the very industry he enjoys a cozy relationship with, is the relentless lobbying of bigwigs in the energy industry in early 2001, as a member of Vice President Dick Cheney’s energy task force, to help write President Bush’s National Energy Policy in such a way that would be financially beneficial to energy corporations—at the expense of consumers.

The extent to which Kelliher’s went to solicit key players in the energy industry to help write the National Energy Policy became apparent in 2003 when Judicial Watch, a bipartisan watchdog group that sued Vice President Dick Cheney to gain access to Cheney’s list of industry insiders who participated in secret meetings with Cheney’s energy task force, won a legal battle that forced the White House to release several hundred pages of task force related documents.

One such document, a March 10, 2001 email to energy lobbyist Dana Contratto, was damning in that Kelliher asked Contratto if he was “King” or “Il Duce” “what would you include in a national energy policy, especially with respect to natural gas issues?"

Contratto responded with a three-page list of ideas, many of which were included in the final version of the energy policy.

“Kelliher’s inappropriate relationship and communications with corporate lobbyists not only tainted the administration’s National Energy Policy, but raise questions about the ability of Mr. Kelliher to be an impartial voice at FERC,” Public Citizen Director Joan Claybrook said in a Feb. 11, 2003 letter sent to the Senate Committee on Energy and Natural Resources, in response to Bush’s announcement that Kelliher would fill one of the vacant seats on the FERC.

“FERC is weathering a storm of criticism for its deficient handling of the west coast energy crisis, the Commission’s failure to maintain any effective enforcement of dozens of corrupt energy corporations, the deteriorating relations between FERC and nearly half of the state utility regulators who continue to be mistrustful of the Commission’s jurisdictional intentions, and the Commission’s poor track record protecting consumers,” Claybrook said.

On another occasion, Kelliher sought out Stephen Craig Sayle, an Enron Corp. lobbyist, to make similar recommendations. Sayle, former counsel for the House Commerce Committee, sent Kelliher Enron’s "dream list," including a recommendation that the administration commit to market-based emissions trading, which was also used in administration’s National Energy Policy.

Sayle wrote Kelliher that the energy policy should also include “a multi-pollutant regulatory strategy should be estimated for the power generation sector including: Gradually phased in [mercury, nitrogen oxides and sulfur dioxide emissions] reductions; Reform/replacement of NSR; Use of market-based/emission trading programs; Inclusion of both existing and new plants and equal treatment for both. The last bullet is the critical one to ensure that: a) we encourage the new generation that is required b) we ensure that the new technologies developed through DOE programs can come into the market.

“Obviously, this is a dream list,” Sayle said in the March 23, 2001 email he sent to Kelliher. “Not all will be done. But perhaps some of these ideas could be floated and adopted.”

Sayle also provided Kelliher with a PowerPoint presentation on behalf of his other energy clients in the so-called Clean Power Group, a consortium made up of a handful of the country’s biggest energy companies, including NiSource Inc., Calpine Corp., Trigen Energy Corp., and El Paso Corp, whose mission, according to the group’s website, is to “streamline requirements under the Clean Air Act for electric generating facilities while at the same time making major reductions in air emissions.”

The PowerPoint presentation, A Comprehensive Multi-Pollutant Emission Control Strategy for Power Generation, summarized the Clean Power Group’s support of a “cap and trade” method in addressing emissions of mercury, nitrogen oxides and sulfur dioxide from power plants, but included a proposal for a voluntary cap on carbon dioxide. The Clean Power Group stood to benefit from the initiative it urged Kelliher to get the White House to adopt in that the companies could release more emissions under its proposed plan than under the more restrictive rules the Clinton administration had put in place.

After receiving Sayle’s email and supporting material, Kelliher recommended that President Bush “direct the Administrator of the Environmental Protection Agency (EPA) to propose multi-pollutant legislation that would establish a flexible, market-based program to significantly reduce and cap emissions provide regulatory certainty to allow utilities to make modifications to their plants without fear of new litigation; provide market based incentives, such as emissions-trading credits to help achieve the required reductions,” all of which the president approved and was eventually incorporated into the National Energy Policy.

In fact, President Bush’s “Clear Skies” initiative consists of many of the bullet points laid out months earlier in Sayle’s email to Kelliher.

In addition to Kelliher correspondence with Sayle, he also met with oil and gas industry lobbyists who helped write executive orders that Kelliher passed on directly to the White House. Two months later, the president issued executive orders nearly identical to those Kelliher received from the lobbyists months earlier.

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

Quick! Someone Tell Bush That Iraq Wasn’t Responsible for 9/11 Before another War Breaks Out

By Jason Leopold
© 2005 Jason Leopold

“We went to war because we were attacked,” President Bush said Saturday in his weekly radio address.

Yeah, by al-Qaeda not Iraq.

For President Bush to say publicly that the United States attacked Iraq because of 9/11 is not only an outright lie but it’s a disservice to the 1,700 men and women that died in combat in Iraq and thousands of other soldiers who were maimed believing they were fighting a war predicated on finding weapons of mass destruction. There have been no less than half-a-dozen federal probes into 9/11 all of which have concluded that there wasn’t a link between the al-Qaeda terrorists who blew up the World Trade Center and the Pentagon and Saddam Hussein’s regime.

But Bush is desperate. His ratings have slipped below 50 percent. The public is growing tired of the Iraq war. Republicans in Congress fear that a further decline in the president’s poll numbers could hurt their chances of being reelected next year. What to do? Once again, get the public to believe Iraq was responsible for 9/11 and that the war was justified. In other words, lie.

With Saturday’s radio address, Bush has publicly admitted that his rationale for launching a preemptive strike against Iraq was strictly personal. More than that, though, it proves what we, the dissenters, have said all along: the war was about regime change, nothing more.

The 9/11 terrorist attacks and the so-called threat from Iraq’s non-existent WMD’s was just an excuse—a smokescreen this administration used as a way to skirt international laws and to sell the war to a gullible media and a misinformed public—the president’s cabinet used so they could execute a decades-old plan cooked up by hardcore Neocons to spread democracy throughout the Middle East by conquering “rogue” nations such as Iraq like some modern day Roman Empire. They call it Pax Americana, Latin for “American Peace.”

“This war… is intended to mark the official emergence of the United States as a full-fledged global empire, seizing sole responsibility and authority as planetary policeman… carried out by those who believe the United States must seize the opportunity for global domination, even if it means becoming the "American imperialists" that our enemies always claimed we were,” said an editorial in the Sept. 29, 2002 edition of the Atlanta Journal-Constitution, one of the only mainstream newspapers to sound an early alarm, exposing the Neocons’ secret plan for world domination.

The truth is, however, that President Bush had set the stage for war with Iraq as soon as he was sworn into office. Richard Clarke, Bush’s former counterterrorism specialist wrote in his book, “Against All Enemies,” that the Bush administration was obsessed with Iraq before 9/11. Even Paul O’Neill, the former Treasury Secretary, made claims similar to Clarke’s in his book, “The Price of Loyalty.” The White House responded to those allegations by calling both men liars and disgruntled public officials but there’s no denying that Clarke and O’Neill were on the money.

In January 2000, Secretary of State Condoleeza Rice wrote an article for Foreign Affairs magazine titled Campaign 2000 -- Promoting the National Interest promoting regime change in Iraq.

“As history marches toward markets and democracy, some states have been left by the side of the road. Iraq is the prototype. Saddam Hussein's regime is isolated, his conventional military power has been severely weakened, his people live in poverty and terror, and he has no useful place in international politics. He is therefore determined to develop WMD. Nothing will change until Saddam is gone, so the United States must mobilize whatever resources it can, including support from his opposition, to remove him. These regimes are living on borrowed time, so there need be no sense of panic about them."

She echoed that line in August 2000, during an interview with the Council on Foreign Relations saying Iraq posed the gravest threat to the US and the world.

“The containment of Iraq should be aimed ultimately at regime change because as long as Saddam is there no one in the region is safe -- most especially his own people,” she said during the Aug. 9, 2000 interview. “If Saddam gives you a reason to use force against him, then use decisive force, not just a pinprick.”

The question of whether the Bush administration targeted Iraq prior to 9/11 has long been the center of heated debate between Democrats and Republicans. The Bush administration says Iraq was not in its crosshairs prior to 9/11. But former White House officials, such as Clarke and O’Neill, claim the administration was searching for reasons to attack Iraq as soon as Bush took office in January 2001.

A January 11, 2001 article in the New York Times, “Iraq Is Focal Point as Bush Meets with Joint Chiefs,” is proof.

“George W. Bush, the nation's commander in chief to be, went to the Pentagon today for a top-secret session with the Joint Chiefs of Staff to review hot spots around the world where he might have to send American forces into harm's way,” reads the lead paragraph of the Times article.

Bush was joined at the Pentagon meeting by Vice President Dick Cheney, Secretary of State Colin L. Powell, Secretary of Defense Donald H. Rumsfeld, and National Security Adviser Condoleezza Rice.

The Times reported that, "about half of the 75-minute meeting … focused on a discussion about Iraq and the Persian Gulf, two participants said. Iraq was the first topic briefed because 'it's the most visible and most risky area' Mr. Bush will confront after he takes office, one senior officer said."

"Iraqi policy is very much on his mind," one senior Pentagon official told the Times. "Saddam was clearly a discussion point."

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

Former Army Sec, Enron VP Thomas White Wants YOU to Fund His New Energy Project

Former Secretary of the Army and one-time Enron Executive Thomas White in a heated exchange during testimony before the US Senate in 2002 related to his role in Enron's demise.

By Jason Leopold
© 2005 Jason Leopold

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 gasificationproject in Medicine Bow, Wyoming. The coal will be supplied from Arch Coal mines neighboring the power facility; it will stuff carbon dioxideemissions into oil wells; and the facility will be located in a westernstate (Wyoming) at an altitude above 4,000 feet.”

The Houston Chronicle reported Wednesday that "Rocky Mountain lawmakers have been eager to help demonstrate that new technologies used with Eastern coal sources can be employed in the West as well, despite the high altitudes and their coal's high moisture and low energy content."

White's new project calls for using "western coal to produce ultra-clean diesel fuel and naptha, while also generating 1,000 megawatts of electric power," the Chronicle reported

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 masnsion 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 company specializing in "green" energy 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 www.jasonleopold.com for updates.

‘When is Someone Going to Toss Rumsfeld Into a Cage?’

By Jason Leopold
© 2005 Jason Leopold

If you want to ensure that the media doesn’t cover an important political story, send out a press release on a Friday, preferably at the end of the day. By the time reporters return on Monday, the story will be old news and will either be buried deep within a newspaper or not covered at all.

That’s what the Pentagon brass is praying for.

At the end of the day Friday, the Pentagon confirmed a pattern of widespread abuse of the Muslim holy book, the Quran, by military personnel dating back two and a half years. Releasing the report when most beat reporters have left for the weekend was a calculated move by White House and Pentagon spin doctors to control media coverage of the explosive report.

Where’s the outrage?

Last month, Bush and his cronies publicly stated that a 10 sentence item in Newsweek detailing that a prison guard flushed a Quran down a toilet sparked an uprising in Afghanistan, Pakistan and Indonesia that led to more than a dozen deaths, was flat out wrong. Bush’s mouthpiece, Scott McClellan, hammered away during his daily White House briefings, calling into question the veracity of the story, until Newsweek caved and retracted the item. The magazine’s editor claimed the source who tipped the publication to the news recanted.

But even though more evidence turned up of defacing the Quran, White House and Pentagon senior officials issued warnings to curious reporters who dared to follow up on the Newsweek story. A frightened press corps cowered and the story died.

Then Bush took a trip to Greece May 24 to talk about Social Security and offered up this doozy that explained why he says what he says, damn the facts.

“See, in my line of work, you got to keep repeating things over and over and over again for the truth to sink in, to kind of catapult the propaganda," Bush said.

Fast forward to the real truth. Friday, June 03, 4:40 p.m. The Pentagon identified more than a half-dozen cases where guards at Guantanamo Bay defaced the Quran, including scribbling obscenities inside one detainee’s holy book, urinating on another, kicking one and tossing water balloons in the direction of others to cite just a few examples.

To understand why defacing the Quran is such a serious matter it’s important to know that for Muslims the Quran is considered to be the literal word of God.

"Muslims believe the entire Quran is the word of God verbatim as dictated by the Angel Gabriel to the Prophet Muhammad," said Jamal Badawi, Islamic scholar at St. Mary's University, Halifax, Nova Scotia, in a June 2 interview with Knight Ridder News Service. "Muslims believe the Quran has been preserved exactly as it was given to the prophet, so that gives it special status."

Not one senior official in the Bush administration has ever lost his or her job or been held responsible for the widespread mistreatment of prisoners at Guantanamo Bay as well as the notorious Abu Ghraib prison in Iraq where detainees were beaten, stripped and led around on leashes. Instead, what the public is being fed is a line of BS that the ill-treatment of prisoners is an isolated case involving just a handful of soldiers. Sadly, a majority of Americans are eating that up.

The Bush administration is putting innocent American lives, here and on the frontline of the war in Iraq, in harms way for its constant refusal to hold people like Secretary of Defense Donald Rumsfeld and his most senior staff accountable for allowing the total breakdown of military prison operations at Guantanamo and in Iraq.

This latest news about abuse at Guantanamo Bay is just another example in the never ending saga of mistreatment of prisoners that has been reported by human rights groups such as Amnesty International and the Red Cross. Which begs another question: when is someone going to toss Rumsfeld into a cage?

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 www.jasonleopold.com for updates.