White out?

"I know everyone would like to implicate him, but he didn't know anything," says Margaret Ceconi, a former finance executive at EES. Ceconi had written a letter to ex-Enron chairman Ken Lay last August, raising concerns about EES, saying it was hemorrhaging cash despite showing strong earnings.

But Steve Barth, an EES vice president who left the company last July, said White was fully aware of EES's accounting practices and knew full well that the unit played a part in California's energy crisis. White "was there every step of the way," Barth told Salon. Barth left EES and went to Enron's broadband unit in 1999 before leaving the firm last July. He has spoken with investigators for the Senate committee.

The energy crisis that rocked California in 2000 and 2001, with its unprecedented power prices and rolling blackouts, played a key role in the rise and fall of the Enron Energy Services division, former executives said. Some former EES executives said skyrocketing power prices enabled the division to sign contracts with large businesses whose owners feared they would be hit with expensive electricity bills -- or would lose millions in blackouts. The crisis in California also helped the retail unit sign contracts with large businesses in other states because business executives feared deregulation of their electricity markets would result in a California-like crisis.

During the height of the crisis, EES signed more than $1 billion in long-term energy deals with companies such as Compaq Computer, Starwood Hotels & Resorts, Rich Products, and Prudential Insurance of America, all of which have operations in California.

Moreover, the December 2000 Enron memos, which detailed how the company's traders tried to boost wholesale electricity prices and exploit loopholes in California's electricity market, described the integral role played by EES. The Enron attorneys who wrote the memos outlined an example of a practice whereby Enron would schedule 1,000 megawatts of electricity for delivery to EES. But the unit would take only 500 megawatts, generating a bonus for Enron for the remaining electricity that California's grid operator would pay under the market rules.

Enron also facilitated the strategy for other companies using a "dummied-up" load from EES, the memos say.

White told reporters shortly after the memos were made public in May that he had no knowledge of the trading tactics.

"We were a customer of the wholesale group. We were not privy to their strategies," he told the Washington Post. If power buyers at his unit were involved, "I was not aware of it," he said.

Still, several former energy services executives told Salon that White's primary role, as "cheerleader," was to cultivate new business for EES and help Enron sign contracts with the military.

Either way, White appears to be in a tough position: Did he know about EES's shady practices? If not, why not? While taking the Fifth might mean political suicide, his options Thursday don't remain substantially more attractive. The Washington Monthly recently argued that if "White [had] made his missteps in any previous administration, he most certainly wouldn't have lasted." His performance Thursday will surely determine if he'll continue to.

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