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The memo lists 25 potential invitees for Riordan to bring together with Lay in L.A., including prominent Democrats such as billionaire philanthropist Eli Broad. Schwarzenegger isn’t on the list, suggesting that he was added by Riordan or Riordan’s staff. In a later e-mail, a list of 13 "attendees" does not include Broad, but does mention Schwarzenegger and Milken.
The evidence indicates an agenda more obvious and direct than recalling Davis. "I think Lay and Enron were desperately looking for support for their deregulation agenda that had fallen into utter disrepute in California," says Heller. "I believe that Ken Lay knew there were some big problems ahead of him potentially. He was probably here, as the e-mails say, to shore up business-community support."
The Weekly’s Bill Bradley concluded as much in a November 2001 article — six months after the meeting — based on a source familiar with what transpired. Lay, wrote Bradley, sought "to enlist high-level support for the continuation of deregulation in California. He also criticized the just-enacted state power authority . . . He also stressed that deregulation can work, that prices for electricity can begin to moderate from their skyrocketing levels."
At the time, the focus on Riordan was prescient, because he shortly thereafter became the front-runner for the Republican gubernatorial nomination. Despite a thumbs-up from George W. Bush, Riordan lost out to the more conservative Bill Simon Jr. after a series of attack ads paid for by Governor Gray Davis.
Riordan apparently also had invited Simon to the meeting with Lay, but the e-mails imply Simon didn’t show up. So did Lay have enough of a crystal ball to see past Riordan, past the emergence of Simon, and past a thousand other occurrences of chance and fate to the future requisite of a Davis recall?
Ken Lay ain’t that smart, as his own company’s collapse aptly demonstrates.
Still, some legitimate questions remain for Governor Schwarzenegger. "All we know is that he met with Ken Lay," says Heller. "But what does he think about Lay and what he and his company did in California? Did they discuss the future of deregulation? Would he support legislation to re-regulate the system? Would he continue efforts against these companies? These are not lascivious details of actions on a movie set. These are issues that hit Californians’ pocketbooks."Schwarzenegger has said that he doesn’t remember the meeting with Lay, and as a candidate he was habitually short on specifics. Riordan also has not commented about the meeting. And the Weekly was unable to get more specifics from Palast about other evidence he may possess.
The state’s pursuit of energy providers continues, mainly under the aegis of the state Attorney General’s Office. "We’ve got $9 billion worth of refund claims pending before the Federal Energy Regulatory Commission that are based on gaming, withholding of power and violations of rules," says A-G spokesman Tom Dresslar. "Separately, we’re pursuing civil-enforcement actions in the courts for violations of antitrust laws, charging illegal rates and unlawful business practices, to name a few examples of misconduct."
Voters did not recall Attorney General Bill Lockyer, who has no intention of abandoning these efforts. If the Bush-appointed federal commission, as expected, fails to side with California, Lockyer is prepared to appeal in court. Governor Davis was largely an ally on this front, along with a broad coalition that includes the state Public Utilities Commission and the state’s largest investor-owned utilities — Southern California Edison and Pacific Gas & Electric.
Schwarzenegger’s position on these efforts is unclear. Palast predicts that the new governor will, as allegedly planned, bless "sweetheart settlements with the power companies." And "when that happens, Bustamante’s court cases are probably lost."
It’s worth noting that critics accused Gray Davis of any number of sweetheart deals with power companies. And he blessed a few settlements himself. Still, Palast’s concern about fair refunds for California is widely shared — because the feds are indeed willing to settle the state’s claims for pennies on the dollar. The counterattack, however, has been driven by Attorney General Lockyer and his own partners in litigation, not by Bustamante’s legal action, said state sources.
The Governor’s Office does hold sway over the state’s expensive long-term energy contracts. Davis had a difficult time renegotiating these deals, which were made under duress during the energy crisis. There’s not much more Schwarzenegger could do to sweeten the contracts for these providers, even if he wanted to. Nor could he do much for Lay or Enron, which for their part have been recalled to oblivion.