Bush, Lay Shielded
Errant TX
Businesses From Lawsuits
With a thicket of
high-profile lawsuits pending against Enron and its henchmen, it’s time
to review President Bush and Ken Lay’s ménage a trois with tort
reform.
In a January 1994 speech following his election as chair of Houston’s
leading business booster group, “Kenny Boy” Lay raised the topic of lawsuit
abuse in conjunction with his lifelong obsession with defending shareholder
interests. Denouncing run-away litigation, Lay warned that, “Many of us
who love this city and state wonder whether it is prudent for our shareholders
to keep operations or headquarters in this state.”
Later that year, Lay wrote two things that kept Enron in Texas: (1)
His first check to the newly formed Texans for Lawsuit Reform PAC; and
(2) A letter to newly elected Governor George W. Bush urging him to slash
legal liabilities to prevent corporate flight from Texas. It was the beginning
of a beautiful relationship.
Although neither one of them advertises it now, Bush and Texans for
Lawsuit Reform (TLR) both count Ken Lay among their top donors. The largest
single source of Bush’s gubernatorial money was Enron’s PAC and executives
($312,500). Another 10 percent of the $41 million that Bush raised for
his gubernatorial races came from the tort-reform lobby—led by TLR.
Bush gave Lay and other tort-sensitive big donors a fast payback after
he won his first election with just 53 percent of the vote. In his first
months in office, Governor Bush fast-tracked tort reform by declaring it
a legislative “emergency.” Tort laws that Bush signed in 1995 include:
-
Slashing punitive damages (used to punish the worst wrongdoers) to $200,000
or two times the economic damages inflicted;
-
Ending treble damages to punish deceptive trade practices on sales exceeding
$500,000 or involving personal injuries or deaths; and
-
Raising the threshold needed to be held jointly liable from 11 percent
of total re-sponsibility for an injury to 51 percent.
TLR's Auditors
| Donor |
TLR Money* |
| TX Society of CPAs |
$83,334
|
| Price Waterhouse |
$33,332
|
| Ernst & Young |
$18,097
|
| Arthur Anderson |
$16,667
|
| Deloitte & Touche |
$16,667
|
|
TOTAL:
|
$168,097
|
| *1994 through 2001 PAC contributions. |
Like Lay, many wealthy interests simultaneously bankrolled Bush and the
TLR PAC, which has raised $5,610,315 to influence Texas politicians since
its 1994 inception. More than half of this TLR PAC money ($2,850,834) came
from just 20 donors—most of whom made fortunes in toxic chemicals, construction,
energy or other dangerous industries with elevated legal liabilities.
The only non-tycoon among TLR’s top-20 donors is the Texas Society of
Certified Public Accountants ($83,334 to TLR). In fact, four of the Big
Five accounting firms (including Enron auditor Arthur Andersen) directly
contributed to TLR’s PAC, pushing its total accountant industry contributions
to $168,097.
20 Donors Gave 51% of TLR's PAC Money
| Donor* |
Business |
TLR PAC
Donations |
| Robert McNair |
Cogen Technologies (electricity) |
$475,000
|
| Richard Weekley |
David Weekley Homes |
$442,000
|
| Harlan Crow |
Trammell Crow (real estate) |
$331,500
|
| Gordon Cain |
Sterling Group (chemicals) |
$240,000
|
| William McMinn |
Sterling Group (chemicals) |
$190,000
|
| James Leininger |
Kinetic Concepts (hospital beds) |
$175,000
|
| Bob Perry |
Perry Homes |
$140,000
|
| Harold Simmons |
Contran (takeovers/toxic waste) |
$130,000
|
| David Underwood |
Everen Securities |
$97,500
|
| TX Society of CPAs |
Accountant trade group |
$83,334
|
| Kenneth Lay |
Enron Corp. |
$80,000
|
| Terry Huffington |
Huffco, Inc. (oil/gas) |
$65,500
|
| Peter O'Donnell |
First National Bank |
$65,000
|
| Dan Duncan |
Enterprise Products (oil/gas) |
$58,000
|
| Michael Stevens |
Stevens Interests (apartments) |
$56,000
|
| James Lightner |
Electrospace Systems (defense) |
$53,500
|
| Robert Folsom |
Folsom Investments (developer) |
$50,500
|
| Andrew Beal |
Beal Bank/Beal Aerospace |
$45,000
|
| T. Boone Pickens |
Mesa Oil |
$37,000
|
| S. Reed Morian |
DX Holding Co. (chemicals) |
$36,000
|
| |
TOTAL:
|
$2,850,834
|
| *Includes 1994 through 2000 donations by family members. |
A TLR-backed bill to protect accountants who sign off on cooked books floundered
in 1997. Members of a Texas House committee let the bill die after the
accountants could not provide any numbers to back their claim that they
were victims of runaway lawsuits.
Enron litigation
At a time when Enron-related decision makers face a barrage of litigation
(if not criminal charges), Ken Lay now looks prescient in his 1994 obsession
with granting legal protection to busi-nesses that harm people or communities.
But Ken Lay and Enron frequented the courts long before Enron’s collapse.
Even as the Bush tort revolution got underway in 1995 and 1996, Enron
was hit with 18 personal injury and damage suits in Harris County state
district courts. These included:
-
Gail Baker’s lawsuit charging her Enron supervisor with sexual discrimination;
-
Age discrimination claims by three gas controllers who were fired after
their 50th birthday; and
-
Technician Charles Hayslett’s hearing-loss claims following a 1994 explosion
at an Enron methanol plant.
Such lawsuits are nothing compared to what businesses file against each
other. In 1997, for example, Enron said it would pay $440 million to settle
claims filed after it reneged on gas contracts to supply its European power
plants.
From 1998 through 2001, Enron was a party to dozens of civil cases in
Harris County state district courts, often appearing as the plaintiff in
contract disputes that pitted one business against another. Contract disputes
accounted for far more of Enron’s litigation docket than did the personal
injury claims that the business lobby focuses on.
Lay litigation
In 1986 Ken Lay sued a motorist who rear-ended his daughter’s car.
Represented by Vinson & Elkins, Lay sued a special education aide,
seeking $6,025 for car damages and another $4,000 for such things as Robyn
Lay’s “pain and suffering” and “mental anguish.” Under questioning,
the plaintiffs admitted that Robyn did not seek medical attention until
a week after the accident and that their insurer had paid their car repair
bill—which was half of what they demanded.
TLR PAC's Enron Money
| Enron Donor |
TLR PAC Money |
| Ken Lay |
$80,000
|
| Forrest Hoglund |
$11,500
|
| Enron PAC |
$5,000
|
| Edward Gaylord |
$5,000
|
| Other Enron employees |
$1,750
|
|
TOTAL:
|
$103,250
|
| *1994
through 2001 |
Lay committed tort-reform heresy as chair of the University of Houston
Regents in 1991 by pursuing justice through litigation. After the regents
voted to sue university financial officers who were indicted in a $600,000
kickback scheme, Lay said, “We hope this action will help us recover lost
funds and bring this matter to justice.”
Despite Bush’s “tort reforms,” many people wish the same today for the
workers and investors who are suing Enron’s officers, directors and auditors.•
# # #
Texans for Public Justice is a non-partisan, non-profit policy &
research organization
which tracks the influence of money in politics.
