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Friday, November 2, 2012

Anatomy of a Smear; or, Dear Nan Hayworth: Aren't you Embarrassed to Approve This Message?

Disclaimer: the author has contributed to the Sean Patrick Maloney Congressional campaign.

In NY's 18 Congressional District, incumbent Nan Hayworth recently started running an ad against her Democratic opponent, Sean Patrick Maloney, attempting to tie him to Enron, the bankrupted energy company.

The connection is thin (two companies cross-marketing their products), but the Hayworth campaign and their supporters can't let facts get in the way of a good story.

Here's what you need to know:

After serving as White House Staff Secretary in the Clinton Administration from 1999-2000, Maloney joined a financial software company called Kiodex. Here's the Kiodex press release (PDF, accessed via Google Docs) announcing the move:

(NEW YORK; June 27, 2000) – Kiodex Inc., an online provider of technology-based risk-management solutions for the commodities markets, has named Sean Maloney as vice president and general counsel. Mr. Maloney will be developing and managing the company’s legal, regulatory and communications strategies.

"Kiodex is a revolutionary effort to bring greater fairness and efficiency to a critically important market sector," said Sean Maloney vice president and general counsel of Kiodex. "I can't imagine a better place in the private sector to apply the legal, regulatory and public policy expertise I gained working for President Clinton."

Mr. Maloney comes to Kiodex directly from the White House, where he was the youngest person ever to serve as assistant to the President and staff secretary -- one of the most senior and sensitive White House positions, involving direct, daily access to President Clinton. As staff secretary (a position formerly held by current White House chief of staff John Podesta and former Reagan/Bush adviser Richard Darman), Maloney managed the decision-making process in the West Wing; held exclusive authority to execute decisions on the President's behalf; oversaw a staff of more than 100 employees; and was the Oval Office gatekeeper of all material going to and from the President, including all national security information, domestic policy briefing and decision memos, appointments, executive orders, and legislation.

"We are extremely lucky to have Sean join the Kiodex management team," stated Martin Chavez, CEO of Kiodex. "The experience that Sean gained while at the White House is beyond comparison, making him the ideal leader for Kiodex's legal, regulatory, and communications strategies."

By November 2000, Maloney had been named Chief Operating Officer of the company. (press release packet, p.37)

Where does Enron come in?

Here, in a co-marketing agreement between Enron Networks (one of five divisions of Enron Corp) and Kiodex. What does the agreement state? That in exchange for letting Enron's customers use Kiodex's risk management tools on the Enron Online website, Kiodex would issue warrants to purchase shares of common stock to Enron.

Here's the announcement as posted to Business Wire:

"Kiodex, Inc., a provider of web-based risk management and trading systems, today announced the signing of a definitive agreement to market the Kiodex Risk Workbench(SM) in conjunction with EnronOnline."

"Under the terms of the agreement, EnronOnline customers will be able to calculate a basic set of risk management reports for all of their EnronOnline transactions in natural gas, crude oil and refined petroleum products. The reports will be generated by Kiodex's flagship software application, the Kiodex Risk Workbench(SM), and provided at no cost to the EnronOnline user. Customers requiring additional functionality from the Kiodex Risk Workbench(SM) will be able to access its features directly through a paid subscription to Kiodex."

In essence, Enron Networks is telling Kiodex: "Hi. We like your product. Can we put it on our website? We'll pay for the rights by buying some of your stock."

That's it. That's the brush that Nan Hayworth is trying to tar Sean Patrick Maloney with.

That's she's attempting to launch a smear this close to Election Day is bad enough - after all, these events happened back in 2001. If this line of criticism had any validity, her campaign would have brought it up much earlier than this. Maloney's primary opponents would have done the same... but no one did until now.

This attack looks and sounds like desperation - a "throw everything on the wall, and see if it sticks" attempt. Unfortunately for the Hayworth campaign, there's no there there.

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