Dave Eberhart, NewsMax.com
Thursday, Sept. 19, 2002

Instead of faltering under cross-examination, White completely won over critics with his candid testimony.

For months before his congressional appearance, White had been a favorite whipping boy of the media, which had been grasping at straws to link the Bush administration and scandal-ridden Enron.

Since White was the only top Enron executive appointed by President Bush, he became the convenient scapegoat.

But the "guilt by association" effort quickly faded when White made his appearance on Capitol Hill and stressed a critical point: The Enron division he headed had nothing to with the company's Wholesale division, which engaged in the financial gimmickry that ultimately brought down the energy services giant.

"[T]he interests of EES [Enron Energy Services, the division White headed] were entirely different from those of Enron Wholesale Services, and it always operated on a strictly arms-length basis with Enron Wholesale that reflected its different business interests," White testified.

"I was never aware of or read the memos on alleged power trading strategies at the Wholesale Services. … I never worked for Wholesale Services. I was never involved in its trading operations. ..."

Answers like this and other information White provided Congress seemed to mollify criticism about White's previous Enron ties.

Apparently the New York Times and columnist Paul Krugman are not so satisfied by the facts, and would prefer to keep White in the crosshairs.

On Tuesday, Krugman penned a scathing attack on White in his Times op-ed column entitled "Cronies in Arms."

Krugman's main criticism of White involves what Krugman describes as a smoking-gun e-mail sent by White during his Enron days.

Krugman says the e-mail, discovered by reporter Jason Leopold, proves that White was part of the financial conspiracy that brought down the company.

Krugman writes,"When one top executive [White] learned of millions in further losses, his emailed response summed up the whole strategy: 'Close a bigger deal. Hide the loss before the 1Q.'"

Secretary White was with U.S. troops in Bosnia this week, but sources close to the secretary tell NewsMax.com they were flabbergasted by Krugman's allegations.

One friend of White told NewsMax.com that the quoted e-mail had been taken completely out of context and irresponsibly cast in its worst light.

White's February 2001 e-mail, quoted by Krugman (Krugman himself was a former $50,000-a-year Enron "consultant"), was written in an environment when White's retail EES division began losing more than $3 million a month on some fixed-price energy contracts because of rising wholesale energy costs.

The losses White referred to had nothing to do with any of the trading and accounting practices that caused the demise of the company.

The source noted that any businessman, faced with growing losses during a particular quarter, might legitimately encourage his executives to increases revenues (make a "bigger deal") to compensate ("hide") for the losses.

"'Close a bigger deal' is nothing more than conventional business advice to compensate for a deal or deals that are losing money – 'find a bigger deal' that makes money that puts the loss in a more favorable perspective," White's associate explained.

"This is hardly criminal or nefarious," he said, noting: "I assume the New York Times doesn't make money on every venture, but tries to minimize overall losses by making money elsewhere. In short, the statement itself indicates no criminal intent."

Despite the Times' spin, White has a sterling, unblemished record in public service and business.

A self-made man, White rose from humble beginnings. He was the first man in his West Point class to make general. He joined the Bush administration as the Army's civilian chief in May of 2001. Prior to that, White had been head of one Enron retail division, Enron Energy Services (EES), a job he'd held since July of 1990.

More Times Distortions

Despite White's clear and clean record at Enron, and the fact that even congressional Democrats have given him a stamp of approval, the Times and Krugman continue to smear him.

Here are some examples of their distortion.

Distortion: White made a windfall on Enron stock by selling out before it collapsed.

Krugman wrote of White, "The strategy worked. Enron collapsed, but not before insiders made off with nearly $1 billion. The sender of that blunt e-mail [Tom White, later appointed secretary of the Army with the strong endorsement of Vice President Dick Cheney] sold $12 million in stocks just before they became worthless."

Fact:

One of White's defenders told NewsMax.com, "In fact, Tom White sold his remaining shares near the low point – not the high point [of Enron's trading price]."

He continued, "If he had insider knowledge that Enron was about to collapse, he would have sold his stock before he become secretary of the Army. Asking for an extension was one of the great financial misjudgments of his life. But it was based on his belief that the stock would rise, not fall."

Distortion: White was an incompetent businessman.

Krugman's column went on to say: "Mr. Cheney [Vice President Dick Cheney] supposedly chose Thomas White for his business expertise. But when it became apparent that the Enron division he ran was a money-losing fraud, the story changed. We were told that Mr. White was an amiable guy who had no idea what was actually going on, that his colleagues referred to him behind his back as Mr. Magoo. Just the man to run the Army in a two-front Middle Eastern war. …"

Fact:

White has maintained, as he testified to Congress under oath in July, that his division was making money when he left Enron. That fact has never been disputed, and not one member of the Senate Commerce Committee has challenged that assertion.

Distortion: Enron documents show White's malfeasance.

Krugman claims: "Jason Leopold, a reporter writing a book about California's crisis, has acquired Enron documents that show Mr. White fully aware of what his division was up to. Mr. Leopold reported his findings in the online magazine Salon, and has graciously shared his evidence with me. It's quite damning."

Fact:

Jason Leopold's conclusions, first reported in the left-wing Nation magazine, have been shown to be without merit.

One White friend called Leopold "a highly suspect source."

For example, a source quoted by Leopold in his Nation column, Lee Jestings, sent a letter to the Nation's editor maintaining that many of the allegations about White attributed to him were simply not true.

Jestings wrote: "He [Leopold] attributed comments to me that were never discussed and are absolutely not true. In reference to energy contracts signed with major California customers in 1998 the article incorrectly states, 'Jestings said he told White that EES would actually lose money this way, but White said Enron would make up the difference by selling electricity on the spot market … which Enron had bet would skyrocket in 2000.'"

Jestings added, "The article continues the lies by stating that 'Jestings said he continued to complain to White that the profits declared by the retail unit were not real.'"

Jestings responded: "These statements were never made to Leopold and are absolutely false. I had significant responsibility for these 1998 contracts and believed that they would be profitable, and therefore would never have made such statements...."

Jestings concluded: "Leopold then states that 'Jestings said he resigned from EES in 2000 because he did not agree with the way EES reported profits.' This is not true. I resigned in early 1999 for personal reasons and not because of the way EES reported profits. In fact, EES was not making profits when I left. … [White] is an honest and ethical man and deserves fair reporting."

Apparently, Krugman doesn't agree with Jestings' assessment of White.

One reason may be, as Slate writer Mickey Kaus recently noted, that Krugman is so "passionately anti-Bush" he doesn't care about the facts when they stand in the way of vilifying an opponent.

For example, Kaus pointed out that Krugman alleged in his July 30 New York Times column that a July 12 Office of Management and Budget statement about the effects of the Bush tax cuts was a "lie."

As it turned out, the OMB, soon after July 12 - and well before Krugman's July 30 article - had admitted publicly that it had published "erroneous" numbers. OMB quickly corrected its figures.

As Kaus notes, Krugman could have avoided making reckless charges against OMB had he simply bothered to call the OMB to check his facts.

Kaus cited other examples of Krugman shooting from the hip without engaging in the standard journalistic practice of checking facts.

Kaus concluded: "The pattern is a) Krugman gets a lot of things wrong; b) Krugman reflexively vilifies his opponents as evil and dishonest; c) Krugman gets a lot of things wrong because he reflexively vilifies his opponents as evil and dishonest; and d) rather than admitting it when he gets it wrong he tends to shift the topic to another, better-supported charge...."

Read more on this subject in related Hot Topics:
Enron
Media Bias