Regent candidate could face questions about ties to Enron

By R.G. RATCLIFFE
Houston Chronicle Austin Bureau Staff
January 28, 2003

AUSTIN - A state senator said Monday he may question Houston investor H. Scott Caven's role in the controversial appointment of a former Enron executive to the Public Utility Commission if Gov. Rick Perry names Caven to the University of Texas Board of Regents.

Sen. Gonzalo Barrientos, D-Austin, a member of the Senate Nominations Committee, said he may grill Caven about serving as a go-between in Perry's 2001 appointment of former Enron executive Max Yzaguirre as chairman of the PUC.

At the time, the PUC was overseeing the deregulation of the Texas electric market in which an Enron subsidiary was competing. Perry received a $25,000 donation from Enron Chairman Ken Lay a day after Yzaguirre was appointed. Caven was Perry's campaign finance chairman.

"Anytime you mention Enron or anything around it, the public perks up their ears," Barrientos said.

A governor's appointment to the UT board requires Senate confirmation.

Barrientos' district includes the University of Texas at Austin. He also supported Democrat Tony Sanchez's run for governor.

Under fire from Sanchez, Yzaguirre resigned last year after it was revealed that he had been an officer in some of the dummy companies that Enron set up to alter its accounting to hide losses.

Enron filed for bankruptcy in December 2001.

Perry spokesman Kathy Walt said the Yzaguirre situation was irrelevant to any possible appointment of Caven as a regent.

"Scott Caven, if he is appointed, would be appointed to something entirely different," Walt said. "It has no bearing on the PUC to be on the UT board of regents."

Caven, 60, also said the Yzaguirre controversy is "irrelevant" to whether he is appointed to the UT system governing board.

Caven said Yzaguirre called him from Mexico, where he was head of Enron's operations there, and told him Enron wanted a long-term commitment to working in the country. He said Yzaguirre wanted to return to the United States.

So Caven said he called the governor's chief of staff, Barry McBee, to see if any appointments were available. He said several weeks later Perry's staff called back and asked whether he thought Yzaguirre would be a good appointment to the PUC.

"I told them he was a good guy," Caven said.

"There never was any calls from Ken Lay or any pressure. I never had contact at all with any person with Enron with regard to Max," Caven said. "It was a personal friendship we had through the Texas Business Hall of Fame."

Caven said he has no problem with telling his story again before the nominations committee.

"If he (Barrientos) brings it up, I will answer it the same way. I'm not sure that's relevant to service on the board of regents," he said.

A graduate of the UT schools of business and law, Caven said he wants the appointment because he has been involved in higher education for the past decade. He noted he has been an adviser to the business school since 1992.

Caven also chaired the Texas Growth Fund from 1989 to 1999. He is a former vice president of Goldman Sachs & Co.

Perry was asked Monday to confirm plans to appoint Caven and Austin businessman James Huffines to the UT board.

"They are both very good folks, and we'll announce that at the appropriate time," Perry said.