Army secretary under fire

Appearing before a Senate committee, Tom White comes under withering attack from Democrats -- while Republicans leave him to his fate.

By Anthony York

Jul 19, 2002 | It was clear from the very beginning of Thursday's Senate Commerce Committee hearing that Democrats were going to treat Army secretary Tom White like the personification of corporate malfeasance. And White's dilemma seemed particularly tough: admit chicanery or admit incompetence. He either knew about and participated in schemes that critics say raided the budgets of several Western states or, as an executive in charge, was oblivious.

Instead, he tried to defend himself against both charges. But he did so alone before the committee and the cameras. The Republicans there offered him little assistance. And the Democrats were merciless.

It was clear long before White walked into that hearing room what kind of day it was going to be. The two-hour tuneup before White's appearance had the feeling of a show trial's opening act, with testimony from consumer advocates like Public Citizen president Joan Claybrook, who wasted little time before calling for White's resignation.

When White's testimony finally began, he faced particular abuse from Sens. Barbara Boxer, D-Calif., and Ron Wyden, D-Ore., whose states were affected heavily by the energy crisis of 1999-2001, and from the committee's chairman, Sen. Byron Dorgan, D-N.D.

But he at times made it pretty easy for them. "I am ashamed of what happened to that corporation and the damage that it has done to all of us," he said. He complained that he had more than 665,000 stock options that were now worthless -- not mentioning the more than $50 million he reportedly made in salary and benefits during his 11 years at Enron. Boxer said she was "appalled" that White would have the audacity to compare his plight to that of Enron employees whose life savings were decimated.

Boxer punctuated the day by releasing a letter addressed to White, claiming, "The cloud surrounding you has not been resolved. Indeed, it has grown darker." She then delivered the coup de grâce, which many have been expecting for some time: "I believe it is in the best interest of the country for you to step down as the secretary of the Army, as I believe today's hearing will spark more investigations and more distraction from your crucial duties."

Wyden and Boxer also called for the Securities and Exchange Commission to investigate possible insider trading by White. After becoming secretary of the Army in February 2001, leaving his job as vice chairman of Enron Energy Services, White delayed his sale of Enron stock. Eventually, between June and October 2001, White sold Enron stock worth more than $5 million. During that time, according to phone records he handed over to a House committee, White spoke to Enron officials a total of 77 times. He told the committee that neither the SEC nor the Federal Energy Regulatory Commission, which has an open investigation into the California energy crisis, has contacted him about his roll in the Enron debacle.

Boxer pointed to the fact that the SEC was investigating Martha Stewart for phone calls she had with ImClone CEO Sam Waksal just before she sold her stock and the share price tanked. Boxer said she was going to personally call SEC chairman Harvey Pitt after the hearing to demand he look into possible insider trading by White. On top of that, White confirmed to the panel that the Department of Defense is investigating claims that he twice used government planes for non-government business.

When it was all done, no one offered White an encouraging word, and the White House remained ominously silent.

Next Page: Did his division profit from the crisis or not?

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