Axis of Arnold

Enron e-mails and Bush connections catch up with the Governator

In the election’s aftermath, Arnold Schwarzenegger’s own ties to special interests are now becoming apparent.

In the election’s aftermath, Arnold Schwarzenegger’s own ties to special interests are now becoming apparent.

Photo By Larry Dalton

Having positioned himself as the candidate with no ties to special interests, California Governor-elect Arnold Schwarzenegger is now facing disclosures that suggest otherwise. A taxpayer watchdog group just released a series of Enron e-mails ( which indicate Schwarzenegger may have sidestepped the truth about his meeting with Ken Lay during the height of California’s energy crisis. Meanwhile, Schwarzenegger has turned his transition team over to David Dreier, a Washington insider who has opposed campaign-finance reform, taken money from Enron and referred to Bill Clinton as “the Antichrist.”

Developments in the Enron controversy took place during the final days of the recall campaign. Schwarzenegger had consistently maintained that he had no memory of the meeting held in May 2001 at the Peninsula Beverly Hills hotel. The candidate finally did acknowledge his presence at the meeting two weeks before the election (“Thugs and Hummers,” SN&R, October 2, 2003), explaining to SN&R that he had not remembered meeting Ken Lay there because the Enron chief was not yet “a star.”

“We looked at the record,” said Schwarzenegger, “and then we found out two days ago, yes, [Ken Lay] was in that room, but I don’t even remember meeting him.” Schwarzenegger then insisted he was just one of 30 people attending a presentation by “experts and community leaders.”

Yet a series of Enron e-mails, made public on October 3 by the Foundation for Taxpayer and Consumer Rights (FTCR), tells a different story. According to these, Schwarzenegger was actually one of only 13 attendees in Lay’s gathering of Republican players and energy company chief executive officers who could scarcely be characterized as experts and community leaders.

“We’d like to position this meeting as an insider’s conversation of what’s going on with the energy situation,” wrote an Enron vice president. “This meeting should be for principals only,” the e-mail continues, bolding the last two words for emphasis.

“Community leaders?!” said FTCR’s senior consumer advocate Douglas Heller when told about Schwarzenegger’s spin on the meeting. “I don’t know the last time somebody called Michael Milken or the CEO of Occidental Petroleum a community leader. No, these are big-money people—the CEO of Amgen, the CEO of Occidental Petroleum, the CEO of Kaufman & Broad—these are not community leaders. These are not people running the local food shelter.”

Heller believes Schwarzenegger remembers more than he’s letting on. “If you clear your schedule on three days’ notice to be part of an insiders’ conversation with the most prominent executive involved in the California energy crisis, you don’t forget that. It’s not believable,” Heller said.

Schwarzenegger’s truthfulness on the issue is of particular concern because the state is attempting to recover the $9 billion the state lost to Enron and other energy companies who were gaming the California electricity market.

Last week, Schwarzenegger announced that his transition team will be headed by Congressman David Dreier, R-San Dimas, a powerful Washington politician who co-chaired the Bush 2000 California campaign and has taken money from both Enron and Arthur Andersen. He has also opposed campaign-finance reform and runs the American Success PAC, the only congressional-member political action committee that’s 100 percent corporate-funded.

During their press conference on October 9, Schwarzenegger and Dreier—who in a St. Petersburg Times interview referred to Bill Clinton as “the Antichrist”—announced the “first act of the transition team,” appointing Karen Arduin to head an audit of California’s books.

Arduin is on loan from Florida, where she directs the state’s Office of Policy and Budget for Governor Jeb Bush.