SEC won't let sun shine in

In its application to the SEC for an exemption for these foreign partnerships, Enron prominently mentioned OPIC and the Ex-Im Bank, saying that these agencies' "guidelines indicate [an] intention to encourage foreign infrastructure activities of the type conducted by covered entities." Enron strongly implied that to deny its request for an exemption would be going against the administration's export policy.

Did Levitt or other Clinton-administration officials have a say in getting Enron this special break? The SEC is refusing to hand over documents that might provide an answer. In April, INSIGHT filed a Freedom of Information Act (FOIA) request with the SEC, asking for all documents related to the exemption, including communications between the SEC and the White House. In a reply sent in May, SEC FOIA Officer Barry D. Walters said he was "withholding approximately 40 pages of internal-staff memoranda, draft, e-mail, chart and handwritten notes." Walters claimed these records were "predecisional" and "exempt under the deliberative-process privilege" to "protect against public confusion that might result from disclosure of reasons and rationales that were not in fact ultimately the grounds for an agency's action."

Interestingly, the SEC sent out almost exactly the same response to Judicial Watch, but the public-interest legal group didn't ask about this specific exemption. It only asked for communications the SEC had with the Clinton and Bush White Houses about Enron. This leads Judicial Watch Chairman Larry Klayman to charge that the papers probably reveal a Clinton connection to Enron's exemption. "The SEC is a dysfunctional organization," Klayman tells INSIGHT. "It would not be surprising if that were a back-room deal that was illegal in some way."

Klayman plans to sue the SEC under the FOIA law to get the documents. The SEC's stonewalling also has sparked congressional interest. "These records may be very interesting to the American people to help put the puzzle together on how Enron did these deals and how they influenced government officials," says a House Republican staffer who has researched the matter.

Despite what the SEC told Congress, exemptions such as the one given to Enron are not routine. Enron itself in its application to the SEC said that it was "aware of no direct precedent for the exemptive order requested in this application."

The Clinton/Levitt years indeed were curious times at the SEC. Filings of big companies such as Enron were not reviewed because, as the Wall Street Journal recently put it, the agency "figured large, established public companies wouldn't engage in questionable accounting" Yet small startups that historically have been the lifeblood of the U.S. economy were hit with Levitt's reversals of Reagan-era policies that had made it easier to raise capital. There also were new regulations such as the "plain-English" rule, which meant that a new company's prospectus could be rejected if an SEC regulator disagreed with some point of grammar, even if there was nothing deceptive in the company's language.