Applicants for jobs on the commission regulating the US energy market have been vetted by the Enron Corporation, the country's biggest electricity power company and a significant contributor to George Bush's election campaign, according to a report published yesterday.
Soon after being appointed chairman of the federal energy regulatory commission, Curtis Hébert told the New York Times, he received a telephone call from the Enron president, Kenneth Lay, offering the company's backing to help him keep his job if he adapted his views on deregulation.
Mr Hébert said he was offended by the approach and turned down the offer.
His appointment as chairman, which was provisional pending the nomination of other members of the commission, has since been called into question by Vice-President Dick Cheney.
Mr Hébert's chief of staff, Walter Ferguson, confirmed the newspaper account yesterday. "[Mr Hébert] has always been forthright and he's been a straight-shooter with folks in the industry," he said.
Mr Lay, a close friend of the Bush family, confirmed that the telephone call took place, but said it was Mr Hébert who asked for Enron's backing to keep his job.
Either way, environmentalists and other critics of President Bush argue, the fact that the conversation took place at all demonstrates the leading role corporations like Enron have in making energy policy in Washington under the new administration.
According to a joint investigation by the New York Times and Public Broadcasting Service (PBS), Mr Lay and other Enron executives interviewed other candidate members of the regulatory commission and supplied the president's personnel adviser, Clay Johnson, with a list of the company's preferred candidates.
The two commissioners Mr Bush chose to fill the vacant Republican seats both had the backing of Enron and other power companies.
"It just confirms what we believed and what we've been saying, that the Bush-Cheney energy plan is written by corporations and it's in the interests of the corporations," said Kevin Curtis, vice-president for government affairs of the National Environmental Trust, a Washington pressure group.
Enron, a $100 billion behemoth in the energy trading market, was a significant backer of Mr Bush in last year's election. It contributed $1.7m to Republican candidates, 72% of its total campaign spending.
It is a strong supporter of deregulation in the electric power market, in particular the opening up of state markets to outside suppliers.
At the time of the phone call from Mr Lay, Mr Hébert had launched an investigation of the pricing policies of big electricity traders, such as Enron.
"One of our problems is that we do not have the expertise to truly unravel the complex arbitrage activities of a company like Enron," he told the New York Times, adding: "We're trying to do it now and we may have some results soon."
Mr Ferguson confirmed yesterday that the investigation would continue.
The large-scale deregulation of regional electricity markets since 1996 has failed to reduce prices in many states, and since the chaos and power shortages produced by the botched deregulation in California, the pace of market reform has slowed down, much to the frustration of Enron.
In their telephone conversation, a few weeks after Mr Hébert's appointment, he said Mr Lay told him that "he and Enron would like to support me as chairman, but we would have to agree on principles".
Those principles would involve the pace and nature of deregulation.
Mr Lay said that there was "never any intent" to link Mr Hébert's employment with the commission's policies.
When Mr Hébert, a former Mississippi state regulator, was given the chairman's job in January, the White House told him he would keep it at least until Mr Bush's other nominees, Pat Wood and Nora Brownell, were confirmed by the Senate.
Their appointment was confirmed this week, and Vice-President Cheney told PBS that Mr Wood, head of the Texas public utility commission, should now get Mr Hébert's job.
Mr Ferguson said yesterday that the president was the only one who could decide whether Mr Hébert should keep his job.
Other candidates for seats on the commission also say that Enron played a role in the selection process. Joe Garcia, a Florida regulator and now a leader of the Cuban-American National Foundation, an exile pressure group, said he was interviewed by Mr Lay and other Enron officials.
© Guardian Newspapers Limited 2001