Tags: Senate | Plans | Enron | Probe

Senate Plans Enron Probe

Wednesday, 02 January 2002 12:00 AM

Sen. Joe Lieberman said the Senate Governmental Affairs Committee he leads would investigate the financial collapse of Enron, and possibly look at connections between the company and the White House.

The committee's permanent subcommittee on investigations said it will subpoena documents next week and scheduled a hearing for Jan. 24.

Lieberman, D-Conn., described the Enron investigation as a committee priority for 2002.

"Enron's unexpected collapse raises some troubling questions that the governmental affairs committee will be asking," he said.

Based in Houston, Enron on Dec. 2 filed Chapter 11 in the largest bankruptcy court filing in U.S. history after its rival Dynegy Inc. terminated its $8.4 billion merger.

Chuck Watson, Dynegy's chairman and chief executive officer, said the deal was called off to protect its shareholders.

Enron's rapid demise was sparked when the company announced in October a discrepancy in its accounts. The firm later admitted that profits between 1997 and 2001 were $600 million lower than had been claimed.

The company is now under investigation by the U.S. Securities and Exchange Commission, the departments of Justice and Labor and at least five congressional committees.

At a briefing Wednesday, Lieberman told reporters he would not rule out the committee looking into ties between Enron and the Bush administration. However, the former Democrat candidate for vice president in 2000 promised a "nonpartisan" probe into Enron.

"It's a matter of public record that executives had close relationships with people who are now in the Bush administration. They also had close relations with some Democrats," he said.

While most media have focused exclusively on Enron's ties to Republicans, Fox News Channel reported Wednesday that Enron also has ties to such Democrats as Bill Clinton, Sen. Charles Schumer of New York and Rep. Martin Frost of Texas.

Lieberman said Enron Chairman Kenneth Lay "and others played an active role in the formulation of energy policy by the Bush administration.

"This is going to be a search for the truth, not a witch hunt, because it is the truth that will enable us to take steps that are necessary to prevent what happened to Enron from ever happening again," he said.

But, at the very least, Lieberman said the committee would want to find out if Lay's private conversations with Vice President Dick Cheney and other Bush administration officials were "self-serving."

The General Accounting Office has asked the vice president for details about private conversations with Lay and other energy industry office, but has been turned down by the Bush administration.

Lieberman stressed that the consequences of Enron's collapse are "economic and personal, not political."

Sen. Carl Levin, D-Mich., chairman of the permanent subcommittee, said the investigation would focus on the role of Enron's directors in the collapse, the accounting firm Arthur Andersen in its audit of Enron's financial statements, and the company's use of complex financial partnerships.

Enron's stock gained 3 cents, or 5 percent, to close at 63 cents a share on moderate volume of 14.7 million shares traded on the New York Stock Exchange. The one-time darling of Wall Street saw its shares trade as high as $90.56 in August 2000.

"The untimely and wholly unexpected failure of a corporate giant like Enron is an alarm call to all of us in government to make sure that we are doing all we can to protect the integrity of our markets and the savings and investments of the American people," Lieberman said.

The Wall Street Journal reported Wednesday that internal Enron documents show top management and directors knew about financial partnerships involved in the company's collapse and were aware of possible conflict of interest.

The documents include an internal memorandum from an Enron attorney to Skilling regarding the way to monitor transactions with the partnership, as well as excerpts of minutes from the company's board and board finance committee meetings.

The partnerships were run by former Andrew Fastow, its former chief financial officer, who was ousted in October.

He had been critical in forming outside partnerships, known as special-purpose entities, associated with Enron that are the focus of an investigation by the SEC.

Messages left with Mark Palmer, an Enron spokesman on Wednesday, were not returned.

Lieberman said no decision had been made on whether to subpoena Lay or other Enron executives. He did say that SEC Chairman Harvey Pitt would be called before the committee.

Lay, however, has committed to testifying before the Senate Commerce Committee on Feb. 4. The embattled chief executive officer of Enron has declined to appear before two of four congressional committees probing Enron, both times citing creditors' meetings as the reason.

In December, Byron Dorgan, D-N.D., who chairs the commerce committee, said lawmakers would try to get Enron's former Chief Executive Officer Jeffrey Skilling and Fastow to the February hearing.

Copyright 2002 by United Press International.

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Sen. Joe Lieberman said the Senate Governmental Affairs Committee he leads would investigate the financial collapse of Enron, and possibly look at connections between the company and the White House. The committee's permanent subcommittee on investigations said it will...
Wednesday, 02 January 2002 12:00 AM
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