...Do A Favor For A G.O.P. VIP?

By Daniel Eisenberg

If Karl Rove did land an Enron consulting job for Ralph Reed, one thing is certain: Reed didn't really need his help. Reed's choirboy looks notwithstanding, he was no neophyte trying to get into the business. By the time he stepped down as executive director of the Christian Coalition in April 1997, Reed, now 40, was considered such a shrewd political operator and grass-roots organizer that any number of FORTUNE 500 firms were knocking on his door.

Still, there is no doubt that the Bush campaign had plenty of reasons to make Reed happy. After taking over Pat Robertson's fledgling religious organization in 1989, Reed turned it into a political force, exercising something close to veto power over the Republican presidential nominee. If Reed had signed up with one of Bush's conservative rivals, Bush's White House dreams might have been threatened. But if Reed had too visible a role in the Bush campaign, his right-wing reputation might step on Bush's compassionate-conservative message.

The answer may have been to have Reed play an informal, behind-the-scenes role in the campaign while earning a tidy sum working for one of Bush's most dedicated supporters. Late last week the White House confirmed that Rove did indeed recommend Reed to officials at Enron in 1997. Both Reed and Rove, however, vehemently deny that this was part of any kind of deal to secure Reed's backing. Reed insists he was not even aware that Rove had put in a good word for him and claims that he had pledged his support to Bush as far back as April 1997, five months before he was hired at Enron. "I was always going to be with him," Reed told TIME. "The idea this [Enron job] was an additional inducement is not only untrue, it's insulting." He also dismissed any notion that the Bush campaign had to keep him at a safe distance, citing dozens of campaign and TV appearances as evidence to the contrary.

Reed definitely paid dividends for Bush on the campaign trail. After the candidate's stunning loss to John McCain in the New Hampshire primary, Reed's firm came to the rescue in South Carolina, bombarding the state's 400,000 religious conservatives with negative phone calls and mailings about the maverick candidate from Arizona. Bush won handily.

Reed was almost as successful at Enron. He spent most of his time advising the company on how best to drum up support for energy deregulation. He made about $10,000 a month for 12 to 18 months of work, focusing initially in Pennsylvania, and Enron got much of what it wanted from the state, which deregulated its electricity market without making California's costly mistakes. But even Reed couldn't help Enron persuade the state to let it immediately compete for the customers of incumbent utility PECO Energy.

This isn't the first time Reed has been in hot water. During the 2000 presidential campaign, his firm publicly apologized for lobbying a Republican candidate on behalf of Microsoft, which was hoping to get a better hearing from a new Administration. The candidate, of course, was one of Reed's other clients at the time--Governor George W. Bush.

--By Daniel Eisenberg. Reported by Michael Weisskopf/Washington

With reporting by MICHAEL WEISSKOPF/WASHINGTON