Federation of Connecticut Taxpayer Organizations

Gov. John G. Rowland retreated Thursday from his long-held denial that he spoke with former Enron Chairman Kenneth Lay - acknowledging for the first time that Lay may have participated in "numerous" phone conference calls with him and his staff.

"Ken Lay may have been involved in numerous conference calls that have taken place either with officials in my office or with me," Rowland said in answer to questions at a press conference in Hartford about new development plans at the Colt factory site.

That statement was made in response to newly surfaced internal Enron memos that said Rowland talked to Lay and was much different from the governor's flat statement in February 2002 that he never had spoken to top Enron executives such as Lay.

When Rowland issued his blanket denial - which his staff has repeated in the 20 months since - he was facing his 2002 re-election campaign and wanted to dissociate himself from the state trash authority's loss of $220 million in an energy-sales transaction with Enron. That deal, branded an illegal loan by the state attorney general, is being investigated by state and federal grand juries.

Rowland survived the Enron issue during his re-election campaign - but now, a year into his third term as governor, the issue is haunting him again.

Thursday's retreat from his past denial came after The Journal Inquirer of Manchester published internal Enron e-mails and a memo that have been made public through a federal investigation into manipulation of California's energy markets.

In one e-mail, on Nov. 5, 2001, Enron's senior vice president for government affairs, Steven J. Kean, wrote to Lay: "Some good news. Your call to Governor Rowland was helpful. We are not finished yet, but we are on our way."

The e-mail was headed "Fuel Cell Update" - a reference to an ultimately unsuccessful Enron fuel-cell development initiative separate from the $220 million deal that had been approved in December 2000 by the state's trash agency, the Connecticut Resources Recovery Authority. The CRRA's chairman at the time was Rowland's then-chief of staff, Peter Ellef.

A day earlier, Enron lobbyist Steven Montovano wrote an e-mail to Kean and others saying: "It appears that Gov. Rowland is going to move this ball forward as he promised to do. I have had several meetings since the Kean/Lay call with Rowland and the message from him has been consistent."

When Rowland issued his denial in early 2002, it had just been disclosed that a local consultant, who had arranged a Dec. 18, 2000, meeting between Rowland, Ellef and Enron executives, later threw a $50,000 fund-raiser for Rowland's re-election campaign.

Rowland had characterized that 2000 meeting as a casual, get-to-know-you encounter and has minimized his knowledge of, and involvement with, the company's local efforts. However, the newly available Enron e-mails suggest that Rowland had a deeper knowledge and involvement with the now-bankrupt company's efforts.

An example is an Oct. 30, 2001, memo to Montovano from Daniel Allegretti, Enron's then-public affairs director, who reported on a meeting about fuel cells that he said Rowland had with another Enron lobbyist and longtime Rowland friend, Mike Martone. (Allegretti incorrectly identified the CRRA name).

"Mike provided me the following information," Allegretti wrote. "Governor Rowland wants to do the project which must include our partner, the Connecticut Resource Recovery Authority. Governor Rowland does not want the project to be headed by Peter Ellef ... but by Arthur Diedrick [Rowland's development chief] who oversees the Renewable Energy Investment Fund. Governor Rowland wants a Connecticut project and does not want to put it out for an RFP [request for proposals] for an out-of-state development ..."

Copies of the Enron memos were distributed to reporters Thursday by Democratic State Chairman George Jepsen, who said: "It is now painfully clear that Gov. Rowland deceived the people of Connecticut as to the full scope of his relationship with the now-bankrupt Enron Corp. His repeated denials of anything more than limited, mostly social contact with Enron employees, including CEO Kenneth Lay, are simply not reliable given multiple internal corporate e-mails and documents linking Gov. Rowland to Enron's Connecticut business," Jepsen said.

"If you can't believe Rowland on his Ken Lay denial, how do you believe him in his denial of knowledge of the $220 million illegal loan?" Jepsen said.

He said it is "not plausible" that Rowland would not remember clearly whether or not he had talked - individually or in a conference call - with Lay, "who at the time was the head of the sixth-largest corporation in America and one of the top Republicans in the nation, having chaired a Republican national convention."

Rowland, at the press conference, sounded at times annoyed and impatient on the subject.

"The question is have I ever met Ken Lay, and the answer is no. The question is have I ever talked to him about CRRA proposals; the answer is no," he said. "The memo infers that he was involved in some kind of a conference call. There could have been 10 people on a conference call that I may have had three or four years ago. So if you want to say, `gee, I didn't explain about a discussion that I had with an official' - I have more conference calls and discussions with officials on any given day than you could shake a stick at."

He said it is difficult to "to try to re-create something that happened two or three years ago that's not on the [official record of the governor's] schedule."

Rowland said that even if Lay was on a conference call with him, it would have been about fuel cells, not the $220 million CRRA deal - so, he insisted, "it still has nothing to do with the CRRA and the whole other disaster that took place."